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Wage Dynamics and Bulgaria Co-Movement and Causality

Author

Listed:
  • Aleksandar Vasilev

    (Lincoln International Business School)

  • Hristina Manolova

    (University of Mannheim, Germany)

Abstract

Motivated by recent debates on the possible role of wages as an income policy tool, in this study we examine the dynamic inter-relationship between wages in Bulgaria, mainly in the context of its EU accession. Relative to the WDN studies on the other EU member states, the novelty in this paper is the inclusion of the minimum wage as a possible conditional determinant of the other two wages. We demonstrate that minimum wage increases do not cause changes in average wages in either the government or the private sector. Using variety of econometric tests, we also demonstrate the leadership of private sector wage over public compensation and recommend the implementation of policy measures aimed at labor productivity growth.

Suggested Citation

  • Aleksandar Vasilev & Hristina Manolova, 2019. "Wage Dynamics and Bulgaria Co-Movement and Causality," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 17(1), pages 91-127.
  • Handle: RePEc:seb:journl:v:17:y:2019:i:1:p:91-127
    as

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    References listed on IDEAS

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    1. repec:bla:jpbect:v:19:y:2017:i:2:p:565-582 is not listed on IDEAS
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    3. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-355, December.
    4. Aleksandar Vasilev, 2017. "On the Cost of Opportunistic Behavior in the Public Sector: A General-Equilibrium Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(2), pages 565-582, April.
    5. Ana Lamo & Javier J. Pérez & Ludger Schuknecht, 2008. "Public and private sector wages:comovement and casuality," Economic Working Papers at Centro de Estudios Andaluces E2008/14, Centro de Estudios Andaluces.
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    7. Vasilev, Aleksandar, 2013. "Technical Appendix to "Macroeconomic effects of public sector unions"," MPRA Paper 68235, University Library of Munich, Germany, revised Dec 2015.
    8. Aleksandar Vasilev, 2016. "Search and Matching Frictions and Business Cycle Fluctuations in Bulgaria," Bulgarian Economic Papers (www.bep.bg) bep-2016-03, St Kliment Ohridski University of Sofia, Faculty of Economics and Business Administration / Center for Economic Theories and Policies, revised Feb 2016.
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    11. Aleksandar Vasilev, 2015. "Macroeconomic Effects of Public-Sector Unions," LABOUR, CEIS, vol. 29(2), pages 101-126, June.
    12. George Economides & Thomas Moutos, 2014. "Minimum Wages as a Redistributive Device in the Long Run," CESifo Working Paper Series 5052, CESifo Group Munich.
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    15. repec:bla:jpbect:v:18:y:2016:i:6:p:961-978 is not listed on IDEAS
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    More about this item

    Keywords

    Public Sector Wages; Private Sector Wages; Minimum Wages; Causality;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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