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

Listed author(s):
  • Bande, Roberto

    ()

    (GAME-IDEGA, University of Santiago de Compostela)

  • Fernández, Melchor

    (GAME-IDEGA, University of Santiago de Compostela)

  • Montuenga , Víctor

    (University of Zaragoza)

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.

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Article provided by Asociación Española de Ciencia Regional in its journal Investigaciones Regionales.

Volume (Year): (2012)
Issue (Month): 24 ()
Pages: 175-198

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Handle: RePEc:ris:invreg:0008
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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, January.
  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. 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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