Wage Inequality and Labour-market Performance. A Role for Corporate Social Responsibility?

In this paper we assess the scope for corporate social responsibility (CSR) within the area of wage inequality. We begin by noting that the salient trends in wage structures and employment across European and US labour markets are more complicated than implied by the so-called ‘unified theory’. This leads us to examine in detail the factors mentioned in the literature as contributing to poor labour-market performance in Europe. We find that (a) strong unions, a factor often believed to bring about wage compression and poor labour-market performance, are not necessarily associated with the latter when bargaining is sufficiently coordinated; (b) successful welfare reforms can bring about considerable improvements in performance without significant impact on inequality; © territorial mobility and child-care policies may considerably increase work participation, especially among women. We conclude that there is room for CSR to affect wage inequality, especially through firm-provided training.