Skill-bias and wage inequality in the EU New Member States: Empirical investigation

We use individual-level data on income and education level from the EU-SILC database to investigate the trends in income distribution and wage polarization in the EU New Member States. We do not confirm the existence of job polarization in wages and employment that has been observed in the United States or other developed countries. We find a decreasing skill premium, particularly in Czechia, Poland, Hungary, and Slovakia, in the context of educational upgrading. Contrary to the Skill-Biased Technological Change hypothesis, the regression results do not confirm the existence of a significant shift in demand for high-skilled workers and suggest that the wage dynamics were caused by a combination of the substitution effect linked to the growing relative supply of skills and labour market institutions. Despite descriptive evidence, our results do not confirm the expected effect of higher Global Value Chain involvement on the labour markets in the investigated countries.