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Wage persistence and labour market institutions: an analysis of young European workers

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  • A. G. Menezes
  • D. Sciulli
  • J. C. Vieira

Abstract

This article investigates the effects of Labour Market Institutions (LMIs) on wage persistence among young European workers at the beginning of their careers. We use European Community Household Panel (ECHP) data from 1995 to 2001 for 13 EU countries and estimate a three-level random intercept probit model that allows for unobserved heterogeneity both at the individual and country level. Overall, we find that LMIs explain wage persistence. In particular, we find a high level of Employment Protection Legislation (EPL) and a high level of Bargaining Centralization (BC) increase wage persistence.

Suggested Citation

  • A. G. Menezes & D. Sciulli & J. C. Vieira, 2011. "Wage persistence and labour market institutions: an analysis of young European workers," Applied Economics Letters, Taylor & Francis Journals, vol. 18(9), pages 823-828.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:9:p:823-828
    DOI: 10.1080/13504851.2010.505554
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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