June 1, 1999

Inter-industry wage differentials in the Netherlands

Loondifferentiatie tussen bedrijfstakken beperkt

Press release

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The skewed composition of supply and demand also emerges on a sectoral level. In some industries labour demand exceeds labour supply, in other industries it is the other way round.

In a well-functioning labour market, inter-industry wage differentials should improve the efficiency of the job matching process. Using sectoral data, this Research Memorandum shows that inter-industry wage differentials in the Netherlands are remarkably stable over time. Even after 1982, a period with more decentralised wage formation, wage differentials have remained small. Dutch inter-industry wage differentials appear to be noticeably small compared to other (OECD) countries. One explanation may be that Dutch wage formation is dominated by wage leading sectors. The wages in these sectors mainly depend on macroeconomic developments instead of sectoral-specific conditions, especially in the event of an economic upturn.

An abbreviated version of this Research Memorandum in English was published in CPB Report 1998/4.



Henry van der Wiel Read more