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• Stefano Scarpetta
• Alain de Serres

This paper sheds light on the importance of aggregation bias in the analysis of wage shares developments over time and across countries. We focus on five European countries and the United States and show that the trend decline in the aggregate wage share observed in these countries over much of the 1980s and 1990s partly reflects changes in the sectoral composition of the economy. The application of a fixed-weight aggregation method changes the profile of the observed wage share in a significant way: in particular there is no longer sign of an overshooting of the wage share levels of the early-1970s. Error-correction wage equations based on the adjusted wage shares generally have a better regression fit and show long-run elasticities of real wages to unemployment that vary less across countries and are substantially lower than those obtained with observed shares. These results are broadly confirmed by wage regressions using sectoral data and the Pooled Mean Group estimator ...

Changements sectoriels en Europe et aux Etats-Unis : Impact sur les parts salariales globales et les propriétés des équations de salaire
Cette étude examine l’importance du biais d’agrégation dans l’analyse de l’évolution des parts salariales au cours du temps et entre pays. L’étude couvre cinq pays européens ainsi que les Etats-Unis et montre que la baisse tendancielle de la part salariale agrégée observée dans ces pays durant la majeure partie des années 80 et 90 reflète en partie des changements dans la composition sectorielle de l’économie. L’application d’une méthode d’agrégation basée sur des poids fixes change de manière significative le profil des parts salariales observées: plus particulièrement, les parts salariales ainsi ajustées ne descendent plus en deçà du niveau du début des années 1970. Les équations de salaires à correction d’erreurs basées sur les parts salariales ajustées ont en général de meilleures propriétés statistiques et génèrent des élasticités de long-terme des salaires par rapport au niveau de chômage qui varient moins à travers les pays et qui sont significativement inférieures à celles obtenues à partir des parts observées. Ces résultats sont dans l’ensemble confirmés par les estimations d’équations de salaire basées sur des données sectorielles et l’estimateur de « pooled mean group ».

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Paper provided by OECD Economics Department in its series OECD Economics Department Working Papers with number 326.

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Date of creation: 08 Apr 2002
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Handle: RePEc:oec:ecoaaa:326-en

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Keywords: wage shares aggregation bias wage equations part salariale biais d'aggrégation équation de salaire

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

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1. Dorothy Power & Gerald Epstein, 2002. "The Return of Finance and Finance's Returns: Recent Trends in Rentier Incomes in OECD Countries, 1960-2000," Research Briefs rb2002-2, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
2. Simone Bertoli & Francesco Farina, 2007. "The functional distribution of income: a review of the theoretical literature and of the empirical evidence around its recent pattern in European countries," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 005, Department of Economic Policy, Finance and Development (DEPFID), University of Siena. [Downloadable!]
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   • Daniele Checchi & Cecilia García Peñalosa, 2005. "Labour Market Institutions and the Personal Distribution of Income in the OECD," UNIMI - Research Papers in Economics, Business, and Statistics 1009, Universitá degli Studi di Milano. [Downloadable!]
4. Olivier Blanchard, 2005. "European Unemployment: The Evolution of Facts and Ideas," NBER Working Papers 11750, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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   • Olivier Blanchard, 2006. "European unemployment: the evolution of facts and ideas," Economic Policy, CEPR, CES, MSH, vol. 21(45), pages 5-59, 01. [Downloadable!] (restricted)
5. Roberto Torrini, 2005. "Profit Share and Returns on Capital Stock in Italy: the Role of Privatisations behind the Rise of the 1990s," CEP Discussion Papers dp0671, Centre for Economic Performance, LSE. [Downloadable!]

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