Variation in inter-sectoral wage differentials in Finland

The study examines the variation in inter-sectoral wage differentials in Finland. Wages simultaneously guide the demand for labour and the direction of its supply, which is why the wage structure is central to the allocation of labour. The recent debate on labour market flexibility has increased the need to investigate the extent to which a more market-based wage structure could alleviate the imbalance between labour demand and supply and improve employment.

International comparisons yield contradictory findings: in the United States and Japan, large inter-sectoral wage differentials are associated with favourable employment trends, while in Sweden small wage differentials have not led to inefficiency. These contradictions underscore the need to carefully analyse the variation in inter-sectoral wage differentials and its connection to the functioning of labour markets — which is precisely the subject of this study in the Finnish context. (AI translation)

• ISSN: 0358-5980
• ISBN: 951-9281-98-3