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Culture and the Labour Market

Siobhan Austen

Culture and the Labour Market attempts to define the meaning of culture and the nature of its possible consequences on economic processes and outcomes. In particular, the book examines alternative theoretical and empirical approaches to the economic analysis of cultural effects in the labour market. Using extensive new data from fourteen countries, the author finds tangible evidence of substantial cross-cultural differences in beliefs about wage inequality.
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Chapter 6: Norms of Equality and the Wage Structure in Fourteen Countries

Siobhan Austen


6.1 INTRODUCTION This chapter extends the analysis of attitudes to wage differentials that was provided in Chapter Five by examining attitudes to pay inequality more generally in fourteen countries in 1992. The countries included in the study comprise eight Western industrialized countries — Australia, West Germany, Great Britain, the United States, Italy, Norway, New Zealand and Canada; and six transitional economies — Hungary, Poland, East Germany, Czechoslovakia, Bulgaria and Russia. A focus of the chapter is the nature, extent and causes of international differences in attitudes to earnings inequality, especially the different attitudes to pay inequality that exist between the Western industrialized countries and the transitional economies of Eastern and Central Europe. The period leading up to 1992 was one of rapid economic change in many of the countries included in this study. A common expectation of neoclassical economists at this time was that the market forces generated by programs of economic liberalization and globalization would cause the pay structures of various countries to become more similar. However, institutionalist scholars were more cautious. As Ogloblin (1999: 606–7) explains, the institutional perspective on wage determination emphasized that new practices relating to wage-setting introduced to each country would still be based on each country’s historical and cultural background. Furthermore, attempts to change wage-setting practices would confront a set of social attitudes that were largely unchanged. Thus, the process of economic change (such as changes in wage structures) within each country could be limited by the nature of existing wage-setting practices and by the...

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