Inter-country wage differences in the European union

We investigate the determinants of wage gaps between European Union countries along the wage distribution applying the methodology proposed by Firpo et al (2009) and Fortin et al. (2011). We conclude that both wage structure and wage composition effects contribute to explaining wage differentials, but that the wage structure effect is more important. This effect seems to be mainly explained by differences of unknown factors. The composition effect is mainly explained by differences in education, in the occupational structure, in the percentage of workers with supervisory responsibilities and to a lesser extent by differences in the industrial structure.