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A dynamic spatial panel data approach to the German wage curve

Author

Listed:
  • Baltagi, Badi H.
  • Blien, Uwe
  • Wolf, Katja

Abstract

A wage curve is a decreasing function of wages on the regional unemployment rate. Most empirical studies on the wage curve ignore possible spatial interaction effects between the regions which are the primary units of research. This paper reconsiders the western German wage curve with a special focus on the geography of labour markets. Spillovers between regions are taken into account. The paper tests whether the unemployment rate in the larger surrounding region also affects wages. In addition, agglomeration effects and effects of local monopsony are assessed.

Suggested Citation

  • Baltagi, Badi H. & Blien, Uwe & Wolf, Katja, 2012. "A dynamic spatial panel data approach to the German wage curve," Economic Modelling, Elsevier, vol. 29(1), pages 12-21.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:1:p:12-21
    DOI: 10.1016/j.econmod.2010.08.019
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    References listed on IDEAS

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    1. Claus Schnabel & Joachim Wagner, 2007. "The Persistent Decline in Unionization in Western and Eastern Germany, 1980-2004 - What Can We Learn from a Decomposition Analysis?," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 14(2), pages 118-132.
    2. Blanchflower, David G. & Oswald, Andrew J., 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA).
    3. Baltagi, Badi H. & Blien, Uwe & Wolf, Katja, 2009. "New evidence on the dynamic wage curve for Western Germany: 1980-2004," Labour Economics, Elsevier, vol. 16(1), pages 47-51, January.
    4. Markus Pannenberg & Johannes Schwarze, 2000. "Wage Dynamics and Unemployment in Germany: Evidence from Regional Panel Data," LABOUR, CEIS, vol. 14(4), pages 645-655, December.
    5. Simonetta Longhi & Peter Nijkamp & Jacques Poot, 2006. "Spatial Heterogeneity And The Wage Curve Revisited," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 707-731.
    6. Manning, Alan, 2004. "Monopsony and the efficiency of labour market interventions," Labour Economics, Elsevier, vol. 11(2), pages 145-163, April.
    7. Gianmarco I. P. Ottaviano & Giovanni Peri, 2016. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 2, pages 35-80 World Scientific Publishing Co. Pte. Ltd..
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    9. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section..
    10. Schnabel, Claus & Wagner, Joachim, 2003. "Trade union membership in Eastern and Western Germany: convergence or divergence?," Discussion Papers 18, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    11. David Card, 1995. "The Wage Curve: A Review," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 285-299, June.
    12. Bell, Brian & Nickell, Stephen & Quintini, Glenda, 2002. "Wage equations, wage curves and all that," Labour Economics, Elsevier, vol. 9(3), pages 341-360, July.
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    Citations

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    Cited by:

    1. Reinhold Kosfeld & Christian Dreger, 2017. "Towards an East German wage curve - NUTS boundaries, labour market regions and unemployment spillovers," MAGKS Papers on Economics 201729, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Raul Ramos & Catia Nicodemo & Esteve Sanromá, 2015. "A spatial panel wage curve for Spain," Letters in Spatial and Resource Sciences, Springer, vol. 8(2), pages 125-139, July.
    3. Zierahn, Ulrich, 2012. "Monocentric cities, endogenous agglomeration, and unemployment disparities," HWWI Research Papers 130, Hamburg Institute of International Economics (HWWI).
    4. Kazuyuki Inagaki, 2015. "Wage curve in dual labor markets: cross-sectional evidence from Japan," Economics and Business Letters, Oviedo University Press, vol. 4(2), pages 51-56.
    5. Reinhold Kosfeld & Christian Dreger, 2018. "Local and spatial cointegration in the wage curve – a spatial panel analysis for german regions," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 38(1), pages 53-75, February.
    6. repec:eee:ecmode:v:71:y:2018:i:c:p:159-173 is not listed on IDEAS
    7. Blien Uwe & Möller Joachim & Hong Van Phan thi & Brunow Stephan, 2016. "Long-Lasting Labour Market Consequences of German Unification," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(2), pages 181-216, March.
    8. Baltagi, Badi H. & Rokicki, Bartlomiej, 2014. "The spatial Polish wage curve with gender effects: Evidence from the Polish Labor Survey," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 36-47.
    9. Ana Barufi & Eduardo Haddad & Peter Nijkamp, 2016. "A comprehensive analysis of the wage curve in Brazil: Non-linearities, urban size, and the spatial dimension," ERSA conference papers ersa16p279, European Regional Science Association.
    10. Zheng, Xinye & Wang, Jing & Li, Xilu & Yu, Yihua, 2013. "On the supply of China's healthcare resources in a decentralized healthcare system," MPRA Paper 56030, University Library of Munich, Germany.
    11. repec:taf:specan:v:12:y:2017:i:2-3:p:138-160 is not listed on IDEAS
    12. Atems, Bebonchu, 2015. "Another look at tax policy and state economic growth: The long-run and short-run of it," Economics Letters, Elsevier, vol. 127(C), pages 64-67.
    13. Victor Montuenga & Inmaculada Garcia, 2011. "The wage dynamics in Spain: evidence from individual data," ERSA conference papers ersa11p585, European Regional Science Association.

    More about this item

    Keywords

    Wage curve; Regional labour markets; Spatial panel;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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