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On The Role Of Sectoral And National Wage Components In The Wage Bargaining Process

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  • DREGER, Christian
  • REIMERS, Hans-Eggert

Abstract

This paper provides an empirical analysis on the determination of wages at the sectoral level in main industrial economies. Nominal wages are bargained between labour unions and employers in imperfect competitive markets, where spillovers across sectors might occur. Using a principal component approach, sectoral wage growth rates are separated into common and idiosyncratic components. This defines the relative role of national and sector specific conditions in the wage determination process. The common component is highly relevant especially in continental Europe, and is more visible for manufacturing than for services sectors. It mainly reflects national inflation and productivity growth, while labour market tightness is almost negligible. The weight of the macroeconomic environment has declined in recent years. Wage growth tends to be more in line with idiosyncratic conditions like sectoral productivity and prices, probably due to advances in the globalization of markets.

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Bibliographic Info

Article provided by Euro-American Association of Economic Development in its journal Regional and Sectoral Economic Studies.

Volume (Year): 11 (2011)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:eaa:eerese:v:11:y2011:i:1_2

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Related research

Keywords: Sectoral wages; wage spillovers; common factors;

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References

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Cited by:
  1. Peeters, Marga & Den Reijer, Ard, 2011. "On wage formation, wage flexibility and wage coordination : A focus on the wage impact of productivity in Germany, Greece, Ireland, Portugal, Spain and the United States," MPRA Paper 31102, University Library of Munich, Germany.

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