Relative Supply and Demand for Skills in Switzerland

Whereas Anglo-Saxon economies have recently experienced a widening wage distribution between skill groups, the Swiss wage structure has remained almost stable. This raises the question whether the Swiss labour market did not experience a decrease in the relative demand for low-skilled workers as the Anglo-Saxon economies or whether it was supply changes that kept the wage distribution between skill groups constant. I show that immigration policy played a negligible role and that the stable wage structure was made possible by adequate increases in the relative supply of skills that neutralised the increasing relative demand. From a policy perspective, my results are supportive of existing supply-side policies aiming to improve the skills of the workforce, like the expansion of higher education.