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Is the Swedish central government a wage leader?

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  • J. Lindquist
  • Roger Vilhelmsson

Abstract

Is the Swedish central government a wage leader? This question is studied empirically in a vector error-correction model using a unique, high quality data set. It is first shown that salaries of white-collar workers in the private sector and central government are cointegrated. It is then found that private sector salaries are weakly exogenous to the system of equations. This means that the private sector is the wage leader in the long-run model. It is also found that changes in central government salaries do not Granger cause changes in private sector salaries. Together, these findings clearly demonstrate that the central government is not placing undue pressure on salaries in the private sector. The central government is not acting as a wage leader.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 38 (2006)
Issue (Month): 14 ()
Pages: 1617-1625

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Handle: RePEc:taf:applec:v:38:y:2006:i:14:p:1617-1625

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  1. Latreille, Paul L & Manning, Neil, 2000. " Inter-industry and Inter-occupational Wage Spillovers in UK Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(1), pages 83-99, February.
  2. Johansen, S., 1991. "Determination of Cointegration Rank in the Presence of a Linear Trend," Papers 76a, Helsinki - Department of Economics.
  3. Aukrust, Odd, 1970. "PRIM I: A Model of the Price and Income Distribution Mechanism of an Open Economy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 16(1), pages 51-78, March.
  4. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-72, August.
  5. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, Octomber.
  6. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
  7. Jocobson, T. & Ohlsson, H., 1991. "Cointegrating Sectoral Wages in Sweden - a Maximum Likelihood Approach," Papers 1991t, Uppsala - Working Paper Series.
  8. Friberg, Kent, 2003. "Intersectoral Wage Linkages in Sweden," Working Paper Series 158, Sveriges Riksbank (Central Bank of Sweden).
  9. Holmlund, B. & Ohlsson, H., 1990. "Wage Linkages Between Private and Public Sectors," Papers 1990t, Uppsala - Working Paper Series.
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Citations

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Cited by:
  1. Javier Pérez & A. Sánchez, 2011. "Is there a signalling role for public wages? Evidence for the euro area based on macro data," Empirical Economics, Springer, vol. 41(2), pages 421-445, October.
  2. Knell, Markus & Stiglbauer, Alfred, 2009. "The impact of reference norms on inflation persistence when wages are staggered," Working Paper Series 1047, European Central Bank.
  3. Ana Lamo & Javier J. Pérez & Ludger Schuknecht, 2012. "Public or Private Sector Wage Leadership? An International Perspective," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(1), pages 228-244, 03.
  4. Goran Vukšić, 2012. "Sectoral wage dynamics and intersectoral linkages in the context of export competitiveness: the case of Croatia," wiiw Balkan Observatory Working Papers 99, The Vienna Institute for International Economic Studies, wiiw.
  5. Gonzalo Fernández-de-Córdoba & Javier J. Pérez & José L. Torres, 2009. "Public and private sector wages interactions in a general equilibrium model," Banco de Espa�a Working Papers 0924, Banco de Espa�a.
  6. Mikael Stenkula, 2012. "Taxation and entrepreneurship in a welfare state," Small Business Economics, Springer, vol. 39(1), pages 77-97, July.
  7. repec:onb:oenbwp:y::i:153:b:1 is not listed on IDEAS
  8. Annette Zeilstra & Adam Elbourne, 2014. "Follow the leader? Public and private wages in the Netherlands," CPB Discussion Paper 274, CPB Netherlands Bureau for Economic Policy Analysis.

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