Worker autonomy and wage divergence: Evidence from European survey data

This paper contributes to the understanding of occupational wage inequality in Western Europe. We assess the effect of worker autonomy, defined as the degree of control workers have over their own work process, on occupational wage growth using data for 15 European countries from 2003 to 2018. We present econometric analyses using individual-level wage data from the EU Survey of Income and Living Conditions and find that real wages in occupations with high autonomy have grown significantly faster than in occupations with low autonomy. We call this finding an increase in the ‘autonomy wage premium’. Because workers in high autonomy occupations are at the top of the wage distribution, faster wage growth in these occupations has increased wage inequality. Using additional worker survey data, we conjecture about technological, institutional, and demographic determinants of the autonomy premium. Our analysis suggests that: (i) the autonomy wage premium increases more in industries and countries with faster technological change; (ii) strong collective bargaining reduces the autonomy premium, but the autonomy wage premium rises in countries with strong and weak collective bargaining; (iii) the autonomy wage premium increases more among older and more experienced workers; (iv) the autonomy wage premium rises for men and women similarly, but the increase in the autonomy premium intensifies gender inequality because women are more often employed in low autonomy occupations.