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Inter-industry wage differentials in EU countries : What do cross-country time-varying data add to the picture ?

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Author Info

  • Philip Du Caju

    ()
    (National Bank of Belgium, Research Department)

  • Gábor Kátay

    ()
    (Magyar Nemzeti Bank)

  • Ana Lamo

    ()
    (European Central Bank)

  • Daphne Nicolitsas

    ()
    (Bank of Greece)

  • Steven Poelhekke

    ()
    (De Nederlandsche Bank)

Abstract

This paper documents the existence of inter-industry wage differentials across a large number of industries for eight EU countries (Belgium, Germany, Greece, Hungary, Ireland, Italy, the Netherlands and Spain) at two different points in time (in general, 1995 and 2002). It then looks into possible explanations for the main patterns observed. The analysis uses the European Structure of Earnings Survey (SES), an internationally-harmonised matched employer-employee dataset, to estimate inter-industry wage differentials conditional on a rich set of employee, employer and job characteristics. After investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials, a hypothesis which cannot be accepted, the paper considers the role of institutional features, as well as industry structure and performance in explaining inter-industry wage differentials. The results suggest that inter-industry wage differentials are consistent with rent-sharing mechanisms and that rent-sharing is more likely in industries with firm-level collective agreements and with higher collective agreement coverage

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Bibliographic Info

Paper provided by National Bank of Belgium in its series Working Paper Research with number 189.

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Length: 41 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:nbb:reswpp:201004-04

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Keywords: inter-industry wage differentials; rent sharing; unobserved ability;

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References

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  1. Druant, Martine & Fabiani, Silvia & Kezdi, Gabor & Lamo, Ana & Martins, Fernando & Sabbatini, Roberto, 2009. "How are firms’ wages and prices linked: survey evidence in Europe," Working Paper Series 1084, European Central Bank.
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  4. Philip Du Caju & François Ryckx & Ilan Tojerow, 2009. "Inter-industry wage differentials : How much does rent sharing matter ?," Working Paper Research 180, National Bank of Belgium.
  5. Philip Du Caju & Erwan Gautier & Daphne Momferatu & Melanie Ward-Warmedinger, 2009. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 12(2), pages 57-108, Winter.
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  14. Katz, Lawrence & Gibbons, Robert & Lemieux, Thomas & Parent, Daniel, 2005. "Comparative Advantage, Learning, and Sectoral Wage Determination," Scholarly Articles 2766651, Harvard University Department of Economics.
  15. Robert Gibbons & Lawrence F. Katz, 1989. "Does Unmeasured Ability Explain Inter-Industry Wage Differentials?," NBER Working Papers 3182, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Hartmut Egger & Daniel Etzel, 2010. "The Impact of Trade on Employment, Welfare, and Income Distribution in Unionized General Oligopolistic Equilibrium," Working Papers 088, Bavarian Graduate Program in Economics (BGPE).
  2. Christopoulou, Rebekka & Jimeno, Juan F. & Lamo, Ana, 2010. "Changes in the wage structure in EU countries," Working Paper Series 1199, European Central Bank.
  3. Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ramírez, 2010. "Wage differentials across economic sectors in the Colombian formal labour market: evidence from a survey of firms," BORRADORES DE ECONOMIA 007736, BANCO DE LA REPÚBLICA.
  4. Du Caju, Philip & Rycx, Francois & Tojerow, Ilan, 2011. "Wage Structure Effects of International Trade: Evidence from a Small Open Economy," IZA Discussion Papers 5597, Institute for the Study of Labor (IZA).
  5. Stephan Kampelmann & François Rycx, 2011. "Does institutional diversity account for pay rules in Germany and Belgium?," DULBEA Working Papers 11-12, ULB -- Universite Libre de Bruxelles.
  6. Philip Du Caju & François Rycx & Ilan Tojerow, 2012. "Wage structure effects of international trade in a small open economy: The case of Belgium," ULB Institutional Repository 2013/138896, ULB -- Universite Libre de Bruxelles.
  7. Philip Du Caju & François Rycx & Ilan Tojerow, 2008. "Rent-sharing and the cyclicality of wage differentials," DULBEA Working Papers 08-23.RS, ULB -- Universite Libre de Bruxelles.
  8. Jaylson Jair Da Silveira & Gilberto Tadeu Lima, 2014. "Endogenous Labor Effort And Wage Differentials In A Dynamic Model Of Capacity Utilization And Economic Growth," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 095, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  9. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
  10. Telegdy, Álmos, 2013. "The Effect of Public Wages on Corporate Compensation in Hungary," IZA Discussion Papers 7524, Institute for the Study of Labor (IZA).
  11. Mathijs Gerritsen & Jens Høj, 2013. "The Dutch Labour Market: Preparing for the Future," OECD Economics Department Working Papers 1012, OECD Publishing.
  12. Giulio Bosio & Chiara Noè, 2011. "Higher Education Expansion, Human Capital Externalities and Wages: Italian Evidence within Occupation," Working Papers 39, AlmaLaurea Inter-University Consortium.

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