D'Adamo, Gaetano (2011): Wage spillovers across sectors in Eastern Europe.
Download (630kB) | Preview
This paper studies the interactions between wages in the public sector, the traded private sector and the sheltered private sector in ten EU Transition Countries and its relationship to international competitiveness during the decade 2000-2010. The theoretical literature on wage spillovers suggests that the internationally traded sector should be the leader in wage setting, with sheltered and public sector wages adjusting. Using a Cointegrated VAR approach we show that a large heterogeneity across countries is present, and non-traded and public sector wages are often leaders in wage determination or at least affect traded sector wages in the short run. In some countries, public sector wages are weakly exogenous, with the private sectors adjusting. This result is relevant from a policy perspective since wage spillovers, leading to costs growing faster than productivity, may affect the international cost competitiveness of the traded sector.
|Item Type:||MPRA Paper|
|Original Title:||Wage spillovers across sectors in Eastern Europe|
|Keywords:||Cointegrated VAR; wage setting; public sector|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy
C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials
|Depositing User:||Gaetano D'Adamo|
|Date Deposited:||03. Jan 2011 19:42|
|Last Modified:||14. Feb 2013 12:57|
Ardagna, S. (2007) “Fiscal Policy in unionized labor markets” Journal of Economic Dynamics and Control 31, 1498-1534.
Aukrust, O. (1977) “Inflation in the open economy: a Norwegian Model”, Artikler no.96, Statistisk Sentralbyra, Oslo.
Balassa, B. (1964) “The Purchasing-Power Parity Doctrine: a Reappraisal” Journl of Political Economy 72(6), December, pp. 584-96.
Demekas, D.G. and Z.G. Kontolemis (2000) “Government employment and wages and labour market performance” Oxford Bulletin of Economics and Statistics 62(3), 391-415.
Egert, B. (2002) “Investigating the Balassa-Samuelson hypothesis in the transition” Economics of Transition Vol. 10 (2), pp. 273-309.
Egert, B. (2003) “Nominal and Real Convergence in Estonia: The Balassa-Samuelson (dis)connection” William Davidson Institute Working Paper Series 556, William Davidson Institute at the University of Michigan Stephen M. Ross Business School.
Egert, B. and I. Drine, K. Lommatzsch, C. Rault, (2003) “The Balassa-Samuelson effect in Central and Eastern Europe: myth or reality?” Journal of Comparative Economics vol. 31 (3), pp. 552-72.
Egert, B. (2007) “Real convergence, Price level convergence and Inflation in Europe” Bruegel Working Paper N° 2007/2.
Fischer, C. (2004) “Real Currency Appreciation in Accession Countries: Balassa-Samuelson and Investment Demand” Review of World Economics 2004, 140 (2) pp.179-210.
Friberg, K. (2007) “Intersectoral Wage Linkages: the case of Sweden” Empirical Economics 32: 161-184.
Froot, K. and K. Rogoff (1995) “Perspectives on PPP and Long-Run Real Exchange Rates” in G. Grossman and K.Rogoff (eds.), Handbook of International Economics 3. Amsterdam: Elsevier.
Jacobson, T. and H. Ohlsson (1994) “Long-run relations between private and public sector wages in Sweden” Empirical Economics 19, 343-360.
Johansen, S. (1995) Likelihood-based inference in Cointegrated Vector Autoregressive Models, Oxford University Press.
Juselius, K. (2006) The Cointegrated VAR Model: Methodology and Application, Oxford University Press. Juselius, K. and J. Ordonez (2009) “Balassa-Samuelson and Wage, Price and Unemployment Dynamics in the Spanish Transition to EMU Membership” Economics e-journal 3, 2009-4.
Lamo, A., Perez, J.J. And L. Schuknecht (2008) “Public and Private sector wages. Co-Movement and Causality” ECB Working Paper No. 963.
Mihaljek, D. and M. Klau (2003) “The Balassa-Samuelson effect in central Europe: a disaggregated analysis” BIS Working Paper No. 143.
Quadrini, V. and A. Trigari (2007) “Public Employment and the Business Cycle” Scandinavian Journal of Economics 109 (4), 723-742.
Samuelson P.A. (1964) “Theoretical Notes on Trade Problems” The Review of Economics and Statistics vol. 46, No. 2, 145-154.
Strom, B. (1995) “Envy, Fairness and Political Influence in local government wage determination: evidence from Norway”, Economica 62, N. 247, 389-409.
Tagtstrom, S. (2000) “The wage spread between different sectors in Sweden” Sveriges Riksbank Economic Review 4/2000.