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Wage flexibility and local labour markets: homogeneity of the wage curve in Spain

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  • Roberto Bande Ramudo

    ()

  • Melchor Fernández Fernández

    (GAME-IDEGA, University of Santiago de Compostela)

  • Víctor Montuenga Gómez

    (University of Zaragoza)

Abstract

In this paper we analyze wage flexibility in Spain and its regional differences, departing from the estimation of wage curves. Using data from the Wage Structure Survey, we proceed to estimate regional wage equations, relating the observed wage received by workers to a group of personal and job characteristics, as well as to the unemployment rate. This analysis allows us to test for the existence of regional differences in the degree of wage flexibility, which may have an important influence in the evolution of regional unemployment, given its impact on the ability of the local labour market to absorb negative shocks. Estimated results indicate that regions suffering from higher unemployment rates exhibit lower wage flexibility. Collective bargaining reforms should pursue greater wage flexibility, especially in regions with high rates of joblessness.

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Paper provided by IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia in its series Documentos de trabajo - Analise Economica with number 0044.

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Length: 31 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:edg:anecon:0044

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Keywords: Wage flexibility; wage curve; Wage Structure Survey; Spain; regional unemployment;

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