Inequalities in Talents’ Earnings: A Tale of Two European Countries

Abstract This paper explores the wage inequalities for the population group of highly talented youth in Italy and Germany, that is the main destination country of Italian talents. We use cross sectional data from the European Union Statistics and Living Conditions Survey for the years 2012 and 2022. We estimate unconditional quantile regression to investigate the wage of Italian and German talents and, within talents, between genders (Italian male versus German male, and Italian female versus German female), across the overall wage distribution. We also apply a decomposition technique of the wage gaps. Our findings suggest a substantial increase in the wage gap at the disadvantage of Italian talents in 2022 largely determined by differences in returns with a higher change for female talents. The gap, indeed, is increasing more for female talents especially at the top of the wage distribution. The gender wage gap within talent shows an increase for talents in Italy (from 10% in 2012 to 22.5% in 2022) and a reduction in Germany (from 27.5% in 2012 to 15% in 2022), with a higher unexplained share of the gender wage gap in Italy than in Germany. An increasing wage gap at the disadvantage of Italian talents, together with better conditions for employed talents in Germany, are consistent with the observed flow of talents from Italy to Germany and call, wishing to increase attractiveness for Italian talents, for policies able to reduce the observed distance within the two countries.