This paper provides new empirical evidence on the changes in the Italian wage distribution using administrative data from 1985 to 1996. Various statistical indicators are used to document a slight, but not negligible, increase in wage inequality. Standard decompositions of inequality indices by population subgroups shed light on the underlying causes of the observed distributional changes. Following Junh et al. (1993), econometric-type decompositions are also employed to disentangle the effects of observable quantities, prices and unobservable factors on inequality trends. The changing prices of observable characteristics are found to play a major role in accounting for the observed inequality increase._x000d_ _x000d_ JEL Classification: J31, D63_x000d_ _x000d_ Key Words: wage inequality, inequality decomposition, observable/unobservable inequality components.
