Wage inequality; occupations; innovation; skill bias

J24, J31; O33

This article examines the drivers of wage inequality between occupational groups across 41 manufacturing and service industries in four European countries (Germany, France, Italy, and Spain) over the period 2008-2018. We investigate how the wage ratio between managers and manual workers is shaped by firm profitability, technology, education, and labour market characteristics. Our findings indicate that wage disparities are driven by shifts in the balance of power from labour to capital, as reflected in higher profitability, by increased educational attainment, represented by the share of university-educated workers, and by rising labour market precarization, measured by the share of workers with non-standard contracts. Conversely, technological upgrading, particularly through innovation-related investment, fosters a more equal wage distribution.