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Understanding inter-industry wage structures in the euro area

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  • Genre, Véronique
  • Kohn, Karsten
  • Momferatou, Daphne

Abstract

This paper focuses on the euro area wage structure and its potential determinants from a sectoral viewpoint. Merging information from the OECD Structural Analysis database with data from the EU Labour Force Survey, we construct a cross-country panel of 22 industries in 8 euro area countries for 1991-2002. Data inspection confirms the existence of a fairly stable inter- industry wage structure that is similar across countries. We then apply panel data techniques to identify factors explaining inter-industry wage differentials in the euro area. Both workforce characteristics (e.g., human capital variables) and firm-related characteristics (e.g., capital intensity, productivity) contribute significantly. However, considerable wage heterogeneity across sectors remains. Idiosyncratic sector and country specifics, reflecting different sociocultural and institutional backgrounds, appear to bear a major role. While our paper only uses direct evidence from workforce and firm-related characteristics, we also try to relate the remaining heterogeneity to institutional characteristics, based on available relevant literature. JEL Classification: J31, J24, J51

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1022.

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Date of creation: Mar 2009
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Handle: RePEc:ecb:ecbwps:20091022

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Keywords: euro area; firm and workforce characteristics; inter-industry wage differentials; Labour market institutions; panel estimation;

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References

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Cited by:
  1. Sile Padraigin O'Dorchai, 2008. "Do women gain or lose from becoming mothers? A comparative wage analysis in 20 European countries," ULB Institutional Repository 2013/135835, ULB -- Universite Libre de Bruxelles.
  2. Jakub Growiec, 2009. "Determinants of the Labor Share: Evidence from a Panel of Firms," National Bank of Poland Working Papers 69, National Bank of Poland, Economic Institute.
  3. Kwon, Ohyun & Fleisher, Belton M. & Deng, Quheng, 2011. "Evolution of the Industrial Wage Structure in China Since 1980," IZA Discussion Papers 5880, Institute for the Study of Labor (IZA).
  4. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, Elsevier.

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