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The distribution of earnings in OECD countries

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Earnings inequality in the OECD countries is commonly seen to have widened considerably since 1980 - and this is generally explained by the steady increase in relative demand for skilled labour due to skill-biased technical change and the growing exposure of unskilled workers to international competition through globalization. But this single explanation now looks questionable: the increase in inequality has been uneven across countries, and greater earnings dispersion has mostly been occurring at the top of the distribution. This article takes a fresh look at the evidence and considers alternative explanations to supplement that provided by the race between technology and education.

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