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Is the Swedish Central Government a Wage Leader?

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Author Info
Lindquist, Matthew J. () (Swedish Institute for Social Research, Stockholm University)
Vilhelmsson, Roger () (Swedish Agency for Government Employers)

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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. Private sector salaries are found to be weakly exogenous to the system of equations. This means that the private sector is the wage leader in the long-run model. We also find that salaries in these two sectors do not converge to a common salary in the long-run and 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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Publisher Info
Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 8/2004.

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Length: 22 pages
Date of creation: 22 Nov 2004
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Handle: RePEc:hhs:sofiwp:2004_008

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Related research
Keywords: public sector wages; Sweden; vector error-correction model; wage leadership.;

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Find related papers by JEL classification:
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bemmels, Brian G & Zaidi, Mahmood A, 1990. "Wage Leadership in Canadian Industry," Applied Economics, Taylor and Francis Journals, vol. 22(4), pages 553-67, April.
  2. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January. [Downloadable!] (restricted)
  3. 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.
  4. Breitung, Jorg & Meyer, Wolfgang, 1994. "Testing for Unit Roots in Panel Data: Are Wages on Different Bargaining Levels Cointegrated?," Applied Economics, Taylor and Francis Journals, vol. 26(4), pages 353-61, April.
  5. Holmlund, B. & Ohlsson, H., 1990. "Wage Linkages Between Private and Public Sectors," Papers 1990t, Uppsala - Working Paper Series.
  6. Friberg, Kent, 2003. "Intersectoral Wage Linkages in Sweden," Working Paper Series 158, Sveriges Riksbank (Central Bank of Sweden). [Downloadable!]
  7. Johansen, Soren, 1992. "Determination of Cointegration Rank in the Presence of a Linear Trend," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 383-97, August.
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  8. Addison, John & Burton, John, 1979. "The Identification of Market and Spillover Forces in Wage Inflation: A Cautionary Note," Applied Economics, Taylor and Francis Journals, vol. 11(1), pages 95-104, March.
  9. Jacobson, Tor & Ohlsson, Henry, 1994. "Long-Run Relations between Private and Public Sector Wages in Sweden," Empirical Economics, Springer, vol. 19(3), pages 343-60.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stenkula, Mikael, 2009. "Taxation and Entrepreneurship in a Welfare State," Working Paper Series 800, Research Institute of Industrial Economics. [Downloadable!]
  2. Markus Knell & Alfred Stiglbauer, 2009. "The impact of reference norms on inflation persistence when wages are staggered," Working Paper Series 1047, European Central Bank. [Downloadable!]
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