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Assessing real wage flexibility in Albania

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  • Papavangjeli, Meri

Abstract

Based on aggregate level data for the period 2000Q1-2017Q2, this article aims at assessing the degree of real wage flexibility in Albania within a vector error-correction model, where real wage flexibility is conceptualized using two indicators: the responsiveness of real wages to unemployment rate and their responsiveness to changes in productivity. In the very short run (2-3 quarters), most of the variation in real wages forecast errors is explained by their past values (more than 70%) rather than by labor productivity or unemployment rate. The analysis confirms the fact that real wages are slightly flexible towards these two variables. However, these conclusions are based on a particular statistical methodology and may be affected by certain statistical problems due to the quality of the underlying data series.

Suggested Citation

  • Papavangjeli, Meri, 2018. "Assessing real wage flexibility in Albania," MPRA Paper 116861, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116861
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    References listed on IDEAS

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    More about this item

    Keywords

    real wage; flexibility; productivity; unemployment;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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