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Servitization, Inequality, and Wages

18th November 2021
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Authors: Dominik Boddin, Thilo Kroeger (Labour Economics, forthcoming, 102011)

This paper studies the effect of servitization, i.e., within-establishment changes in the labor force composition towards higher shares of workers with service occupations, on within-establishment wage inequality. We identify servitization as being a main driver of increasing within-establishment wage inequality. Servitization accounts for roughly 7% of the observed increase in the within-establishment wage inequality in manufacturing industries between 1994 and 2017. Higher servitization of an establishment’s labor force is associated with, on average, a lower wage level for otherwise equal workers across the majority of occupations. The wage decrease is particularly pronounced for workers in low-skilled manufacturing occupations and workers at the lower end of the wage distribution. These heterogeneous wage effects explain the increase in within-establishment wage inequality.

 

Keywords: Employment Structure, Occupational Change, Within-Firm Adjustments, Inequality, Wages, Servitization, Germany

JEL: E24, J21, J24, J31, L23

 

DOI: https://doi.org/10.1016/j.labeco.2021.102011


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  • Dr. Thilo Kroeger

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Project 1
Cross-cultural differences in the perception of corporate social responsibility and consumer social responsibility along global supply chains
Project 1
Experimental studies of moral responsibility in global supply chains
Project 1
Modelling economic and social dimensions of global supply chains
Project 1
Global supply chains, environmental regulation and green innovation

Other Projects

Cross-cultural differences in the perception of corporate social responsibility and consumer social responsibility along global supply chains Experimental studies of moral responsibility in global supply chains
Modelling economic and social dimensions of global supply chains Global supply chains, environmental regulation and green innovation Further KCG Projects

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