The returns to skill or education can differ at different parts of the skill distribution. Indeed, a widely shared explanation for the observed increase in earning inequality is that technological change has been skill-biased, causing a larger increase in the returns to education in the upper part of the skill distribution. At the same time, the link between skills (or productivity) and earnings is mediated by a wide number of labour market institutions, the most prominent in this context being minimum wages, the degree of unionisation, and the rules governing wage bargaining (Blau and Khan, 1996). On the other hand, recent research by Greenwood et al. (