Labor Markets, Inequality, and Change

It is well known that earnings inequality has trended up more rapidly in the United States than in continental Europe during the past 25 years. These cross-national differences in outcomes are typically attributed to cross-national differences in labor market institutions. But this characterization hides important theoretical disagreements concerning the role of technical forces, institutional change, and the interaction between technical and institutional factors in producing the observed trends. A brief review of the literature clarifies the major issues in the debate and frames the contributions of the articles in this special issue on European labor markets.