45126-Invest. Qual-No111

Investment in Quality●●The growth of trade with less developed countries, where theprice of unskilled labour is far lower (Wood, 1995; Esping-Andersen, 1996);Changes in technology that are biased in favour of skilledlabour; and● The move from manufacturing to services which creates agreater trade-off between employment and equality (Esping-Andersen, 1996; Iversen and Wren, 1998).Yet the rise in inequality has been higher in the Anglo-Saxoncountries than in continental Europe. Explanations for thisdifference include:●●Stronger labour market institutions in Europe—wage bargaining,unionisation, minimum wage laws and social welfaresystems—have limited the rise in earnings inequality associatedwith technological change (Krugman, 1994; OECD, 1994);Stronger labour market institutions in Europe, by compressingthe dispersion of wages, create an incentive to adopt technologythat enhances the productivity of unskilled as well as skilledworkers (Acemoglu, 2002); and● Countries now find it harder to simultaneously achieve highemployment, earnings equality and budgetary restraint.Scandinavian countries tend to achieve high employment andearnings equality, but risk tax revolts. Continental Christiandemocracies achieve budgetary restraint and earnings equality,but are tending to high levels of unemployment. Countries witha more liberal welfare state achieve high levels of employmentand budgetary restraint, but tend towards inequality (Iversen andWren, 1998).The relative merits of these different theories remains the subject ofon-going discussion and research. But it is clear that they share theobservation that the level of inequality has increased and newthinking is required to achieve the goal of fairness and cohesion(Esping-Andersen, 1996).116