Earnings in Europe. A Comparative Study on Wage and Income Disparities in the European Union

Working Papers 202 Jutta Moisala

This paper explores wage and income disparities in 14 EU member states during 1994–2001
by using the ECHP data. The results reveal that there are noticeable differences in wages
across EU countries measured at both gross and net level. There is no evidence for wage
convergence across countries over the period, which indicates that if convergence does
exists, the process is rather slow. There are remarkable differences in the income levels
across 14 EU member states. Within countries, however, income disparities seem to have
declined in most cases. By using household-level data it is also possible to estimate a Gini
coefficient at the level of the European Union. This enables us to compare income
disparities between the United States and the EU. Based on the results, income disparities
across households in the European Union are substantially smaller than those in the US.