Labor Market Dynamics and Wage Dispersion: An Empirical Investigation Using Panel Data
Keywords:
Panel data, wage dispersion, labor market dynamics, informality, , skill premiumAbstract
Wage dispersion is a central indicator of how economic growth and structural change are distributed across workers. This study investigates the relationship between labor market dynamics and wage dispersion using panel-data methods that exploit within-unit variation over time. Using a wage-setting framework grounded in human capital and segmentation theories, we examine how labor force participation, unemployment, sectoral reallocation, informality, union presence, and skill premiums shape the distribution of wages. The empirical strategy estimates fixed-effects and random-effects specifications, complemented by distribution-sensitive models (e.g., quantile/inequality-based outcomes such as the 90–10 wage gap). Results are expected to show that shifts toward high-productivity sectors and rising returns to education widen dispersion, while stronger labor-market institutions and formalization can compress wage gaps. The paper contributes by integrating multiple labor-market channels within a unified panel framework and offering policy-relevant insights for inclusive wage growth.
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