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Wage flexibility and local labour markets: a test on the homogeneity of the wage curve in Spain

Author

Listed:
  • Bande, Roberto

    (GAME-IDEGA, University of Santiago de Compostela)

  • Fernández, Melchor

    (GAME-IDEGA, University of Santiago de Compostela)

  • Montuenga , Víctor

    (University of Zaragoza)

Abstract

In this paper we analyse wage flexibility in Spain and its regional differences, departing from the estimation of wage curves. Using data from the Structure of Earnings Survey for 1995, 2002 and 2006, we estimate regional wage equations, relating the observed wage received by workers to a group of personal and job characteristics, as well as to the regional unemployment rate. This analysis allows us to test for the existence of regional differences in the degree of wage flexibility, which may have an important influence on the evolution of regional unemployment, given its impact on the ability of the local labour market to absorb negative shocks. Estimated results indicate that regions suffering from higher unemployment rates exhibit lower wage flexibility. Collective bargaining reforms should pursue greater wage flexibility, especially in regions with high rates of joblessness.

Suggested Citation

  • Bande, Roberto & Fernández, Melchor & Montuenga , Víctor, 2012. "Wage flexibility and local labour markets: a test on the homogeneity of the wage curve in Spain," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 175-198.
    • Handle: RePEc:ris:invreg:0008
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    References listed on IDEAS

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    1. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, December.
    2. Peter Nijkamp & Jacques Poot, 2005. "The Last Word on the Wage Curve?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 421-450, July.
    3. Florentino Felgueroso & Manuel Hidalgo & SergiJiménez Martín, 2010. "Explaining the fall of the skill wage premium in Spain," Working Papers 2010-19, FEDEA.
    4. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, March.
    5. Campbell, Carl & Orszag, J. Michael, 1998. "A model of the wage curve," Economics Letters, Elsevier, vol. 59(1), pages 119-125, April.
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    Cited by:

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    2. Ángel L. Martín‐Román & Jaime Cuéllar‐Martín & Alfonso Moral, 2023. "Natural and cyclical unemployment: A stochastic frontier decomposition and economic policy implications," Bulletin of Economic Research, Wiley Blackwell, vol. 75(1), pages 5-39, January.
    3. Cuéllar Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "A composed error model decomposition and spatial analysis of local unemployment," MPRA Paper 79783, University Library of Munich, Germany.
    4. Cardenete, M.A. & López-Cabaco, R., 2021. "Economic and environmental impact of the new Mediterranean Rail Corridor in Andalusia: A dynamic CGE approach," Transport Policy, Elsevier, vol. 102(C), pages 25-34.
    5. Roberto Roson & Camille Van der Vorst, 2021. "The COVID crumbling of tourism in Andalusia: an assessment of economic and environmental consequences," Working Papers 2021: 18, Department of Economics, University of Venice "Ca' Foscari".
    6. Roson, Roberto & van der Voorst, Camille, 2021. "The COVID crumbling of tourism in Andalusia: an assessment of economic and environmental consequences," Conference papers 333247, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. 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.
    8. Roberto Roson & Camille Vorst, 2023. "Assessing the economic and environmental consequences of the COVID-19 tourism collapse in Andalusia: what lessons can we draw for South-East Asian regions?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 71(1), pages 269-297, August.
    9. Álvarez-Román, Laura & García-Posada, Miguel, 2021. "Are house prices overvalued in Spain? A regional approach," Economic Modelling, Elsevier, vol. 99(C).
    10. Ignacio Cazcarro & Rosa Duarte & Julio Sánchez Chóliz & Cristina Sarasa & Ana Serrano, 2016. "Modelling regional policy scenarios in the agri-food sector: a case study of a Spanish region," Applied Economics, Taylor & Francis Journals, vol. 48(16), pages 1463-1480, April.

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    More about this item

    Keywords

    Wage flexibility; wage curve; Structure of Earnings Survey; regional unemployment;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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