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Understanding inter-industry wage structures in the euro area

Author

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  • Veronique Genre
  • Karsten Kohn
  • Daphne Momferatou

Abstract

This article focuses on the euro area wage structure and its potential determinants from a sectoral viewpoint. Merging information from the Organization for Economic Co-operation and Development (OECD) Structural Analysis database with data from the EU Labour Force Survey, we construct a cross-country panel of 22 industries in eight euro area countries for 1991-2002. Data inspection confirms the existence of a fairly stable inter-industry wage structure that is similar across countries. We then apply panel data techniques to identify factors explaining inter-industry wage differentials in the euro area. Both workforce characteristics (e.g. human capital variables) and firm-related characteristics (e.g. capital intensity, productivity) contribute significantly. However, considerable wage heterogeneity across sectors remains. Idiosyncratic sector and country specifics, reflecting different socio-cultural and institutional backgrounds, appear to bear a major role. While our empirical analysis only uses direct evidence from workforce and firm-related characteristics, we also relate the remaining heterogeneity to institutional characteristics, based on related literature.

Suggested Citation

  • Veronique Genre & Karsten Kohn & Daphne Momferatou, 2011. "Understanding inter-industry wage structures in the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1299-1313.
  • Handle: RePEc:taf:applec:v:43:y:2011:i:11:p:1299-1313
    DOI: 10.1080/00036846.2010.537637
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    9. Kwon, Ohyun & Fleisher, Belton M. & Deng, Quheng, 2011. "Evolution of the Industrial Wage Structure in China Since 1980," IZA Discussion Papers 5880, Institute of Labor Economics (IZA).
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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