A Study of How Labour Market Institutions Affect within- and Between Occupation Wage Inequalities in Norway in the Period from 2003-2014.

Wage inequalities in Norway are small compared with other Western countries, but inequality is rising. In this article, we will investigate whether the wage returns to institutions of occupational closure, such as licensure, credentialization and unionization, can account for (growing) earnings differences between occupations. Occupationally based wage differences have received more scholarly interest in the past few years, and an increasing number of studies document that these institutions raise mean wage levels. Have the significance of these institutions changed in Norway during the 2000s? So far, little attention has been paid to how occupations are internally structured with regard to inequality among incumbents, and there is a lack of studies on how closure institutions affect the wage dispersion within occupations. It has been shown that unions raise mean wage levels and compress the wage distribution, resulting in greater earnings equality among union members compared to non-union members. According to Bol and Weeden, to grasp the link between closure and income inequality requires an investigation of how closure affects internal distributions of income. Thus, the second research questions guiding this article are: what are the effects of occupational closure on the dispersion of wages within occupations? We use Norwegian register data to investigate the effect of licensure, unionization and credentialization on between- and within occupational wages. The register data has yearly records on education, employment and income, which allows for a longitudinal design. The results show the significance of licensing and credentialization has increased during the period 2003-2014. Moreover, unionization tends to decrease wage dispersion, but there is no significant effect of licensure or credentialization.