18.5 LMIs and Wage Inequality: An Empirical Assessment
In this section we present an accounting framework and an empirical model aiming to assess the contribution of LMIs to shaping earnings inequality. Here we face the problem of identifying who are benefiting from (or disadvantaged by) the action of a specific LMI. Before we have mentioned the stepwise changes introduced by many institutional reforms, which seem to create two-tier systems (Boeri, 2011), implying that the effect of institutions on earnings inequality may significantly differ across age cohorts. To deal with this, the ideal data set would be longitudinal, in order to be able to compute inequality measures over the lifetime of earnings, conditional of attrition in the sample ...
