Different economic characteristics between developing and developed countries may require worker with different skills, resulting in different returns to the same ability. Moreover, it is also possible that different countries require different skills depending on their economic fundamentals....

Swedish census data and tax records reveal an astonishing wage compression; the Swedish skill premium fell by more than 30 percent between 1970 and 1990 while the U.S. skill premium, after an initial decline in the 1970s, rose by 8-10 percent. Since then both skill premia have increased by...