Are Wages in Southern Europe More Flexible? The Effects of Cohort Size on European Earnings
AbstractWe exploit the cross-country and time variation in the demographics and education structure in 11 European countries to study how cohort size has affected real earnings in Europe. When we pool the data of all countries, we find that cohort size has a negative and statistically significant effect on the earnings of the older cohorts – aged between 35 and 54 – but no statistically significant effect on the earnings of younger cohorts – aged 20 to 34. The negative effect of cohort size on earnings is completely driven by Southern European countries, a result which we relate to institutional differences. While the share of individuals aged 20 to 34 in the population has declined in the EU11 by 10.20 percent between 1991 and 2001, the share of individuals aged 35 and 54 has increased by 9.32 percent. Our estimates suggest that, as a consequence of these significant demographic changes, the real earnings of the younger cohorts have increased on average by a tiny 0.06 percent, while the earnings of the older cohorts have declined by 0.93 percent, a modest variation.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1299.
Length: 34 pages
Date of creation: Sep 2004
Date of revision:
Publication status: published as "The Effects of Cohort Size on European Earnings" in: Journal of Population Economics, 2010, 23 (1), 273 - 290
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Other versions of this item:
- Brunello, Giorgio & Lauer, Charlotte, 2005. "Are Wages in Southern Europe more Flexible? The Effects of a Cohort Size on European Earnings," ZEW Discussion Papers 05-45, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-EEC-2004-09-12 (European Economics)
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