Digital Commons Network^™

In searching for the causes of the general increase of inequality in Europe over the past two decades, technological change and increasing international integration are major forces that need to be investigated. While they have affected the overall changes in economic structures with complex – direct and indirect – influences on income distribution, we focus here on their specific impact on three issues: a) inequalities between profits and wages; b) the polarisation of employment by professional skills; c) wage polarisation.

Inequality is a multidimensional phenomenon involving both economic and social processes, and regulated by a variety of political processes and policies. Measures of economic inequality, in terms of income and wealth, however, provide an effective picture of broad patterns of inequality. Between the end of the 1970’s and mid-2000’s, such indicators have documented a general growth in inequalities within and between countries, highlighting a major aspect of economic development over that period.

In this article we improve on the literature dealing with the polarising effects of technological change on wages by proposing more rigorous definitions of wage dispersion within industries and of the different types and effects of innovation. We carry out an analysis across 10 manufacturing and service sectors in seven European countries (France, Italy, Germany, the Netherlands, Portugal, Spain and the UK), for two time periods. In addition to structural economic variables, we draw data from two waves of the Community Innovation Surveys (CIS 2, 1994–1996 and CIS3, 1998–2000) and from two waves of the European Community Household Panel (ECHP, …