The paper seeks to distinguish between occupational wage structure and skill-based wage differentials. It is hypothesized that the wage widening factors are responsible for increasing skill differentials but they have also led for a narrowing of occupational wage structure. To substantiate the hypothesis, both a review of recent labor market studies and a macro analysis have been attempted. It is concluded that increasing demand for skilled labor, as reflected in skill composition, is positively correlated with skill differentials. Other variables, such as wage payment system, state regulation and trade unionism, have not been able to counteract market forces.