lower market rents and increased competition led to a greater demand for skilled labour and a more dispersed wage structure lower tax wedges also contributed to increased wage dispersion dwindling benefit replacement rates for lowwage workers but not for workers on the average wage also drove up wage dispersion lower replacement rates mean lower reservation wages furthermore less strict epl is associated with greater wage dispersion driven entirely by reforms to epl for temporary workers however the combined influence of these factors on overall earnings inequality and household income inequality is less straightforward promoting employment opportunities for underrepresented groups could increase market income for certain households and increase the overall resources available for redistribution