Wage Polarization in the Context of the Czech Republic

Abstract

Abstract Existing studies have provided evidence of job polarization in many developed countries. The issue of wage polarization is less obvious: many articles do not address it at all, and some even confuse it with job polarization. At the same time, the significance of the phenomenon of polarization results precisely from the consequence of wage polarization: the increase in wage inequality. The aim of this article is to find out whether wage polarization occurred in the Czech Republic during the period 2004–2018. Wage development in the private sphere does not imply wage polarization, but in the public sphere, results imply a very slight wage polarization mainly due to the development between 2004 and 2010. This phenomenon has occurred in both male and female occupations. Panel regression analysis shows that globalization reduces upper-tail inequality (the ratio Q90/Q50) while increasing lower-tail inequality (the ratio Q50/Q10). At the level of the whole economy, technology seems to contribute to reducing both upper-tail and lower-tail inequality. These results probably correspond to the nature of the Czech economy, which is based on middle-skilled workers with a pro-export focus.