ABSTRACT
In the United States, wage differentials have for many years been much larger than in most European countries. How can this be? Both world regions are highly developed and utilize similar technologies. Both regions have a highly educated labour force. Based on the usual theories of supply and demand, one would expect that the market mechanism would result in a comparable wage distribution in both regions. If no explanation can be found in supply and demand, the obvious step is to seek a solution in the sphere of institutions.
