New measures of wage adequacy

Abstract: Despite the fact that labour income inequalities have been documented extensively, there is no widely accepted definition of what constitutes an adequate wage measure. This study aims at constructing new indicators of relative wage adequacy across the EU. Building on an extensive review of the literature on wage inequalities, we identify and estimate new indicators related to different dimensions of wage adequacy. We start by presenting estimates of common indicators of wage inequalities, including the labour income share, deciles ratios, the Palma Index, the share of low-paid workers. Next, we provide estimates on  new measures of wages inequalities related to workers’ socio-economic characteristics – including gender, migrant status, educational attainment – and labour market status – including industries and occupations. Additionally, we introduce two new measures investigating the adequacy of wages in relation to housing costs and the degree of persistency in low-paid jobs. The main data source used for the study is the EU-SILC. Additionally, we provide guidelines on the way in which the SES and the EU-LFS could be used by future researchers to provide complementary estimates of the metrics.