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Wage Flexibility in Regional Labour Markets: Evidence from Italy and Germany

Author

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  • Andreas Ammermuller
  • Claudio Lucifora
  • Federica Origo
  • Thomas Zwick

Abstract

Ammermuller A., Lucifora C., Origo F. and Zwick T. Wage flexibility in regional labour markets: evidence from Italy and Germany, Regional Studies. This paper investigates the functioning of regional labour markets in Italy and Germany for different employee groups and regions. It derives theoretical hypotheses on group-specific correlations between regional unemployment and individual wages distinguishing between regions. Using micro-data matched to local unemployment rates, wage equations are specified and empirically tested. For Italy, no evidence is found in favour of a relationship between wages and local unemployment. In Germany, results appear to be sensitive to model specification and type of employees. In both countries, the reaction of wages to local unemployment varies significantly along the wage distribution, being more sensitive around median quantiles. [image omitted] Ammermuller A., Lucifora C., Origo F. et Zwick T. La flexibilite des salaires dans les marches du travail regionaux: des preuves provenant de l'Italie et de l'Allemagne, Regional Studies. Cet article cherche a examiner les rouages des marches du travail regionaux en Italie et en Allemagne pour des regroupements de salaries et de regions differents. Pour des groupes specifiques on elabore des hypotheses theoriques sur la correlation du chomage regional avec les salaires individuels en distinguant entre les regions. A partir des donnees microeconomiques assorties aux taux de chomage locaux, on precise et teste de facon empirique des equations sur les salaires. Pour l'Italie, il ne s'avere aucune preuve en faveur d'un rapport entre les salaires et le chomage local. En Allemagne, les resultats s'averent sensibles a la specification du modele et a la categorie socio-professionnelle. Dans les deux pays, la reponse des salaires au chomage local varie sensiblement le long de la distribution des salaires, etant plus sensible autour des quantiles medians. Courbe des salaires Marches du travail locaux Regressions des quantiles Ammermuller A., Lucifora C., Origo F. und Zwick T. Lohnflexibilitat in regionalen Arbeitsmarkten: Belege aus Italien und Deutschland, Regional Studies. In diesem Beitrag untersuchen wir die Funktionsweise regionaler Arbeitsmarkte in Italien und Deutschland fur verschiedene Arbeitnehmergruppen und Regionen. Wir leiten theoretische Hypothesen uber gruppenspezifische Korrelationen zwischen regionaler Arbeitslosigkeit und individuellen Lohnen ab, wobei wir zwischen den einzelnen Regionen unterscheiden. Anhand von auf die lokalen Arbeitslosenquoten abgestimmten Mikrodaten stellen wir Einkommensgleichungen auf und unterziehen sie einer empirischen U¨berprufung. Fur Italien konnten wir keine Anzeichen fur eine Beziehung zwischen Lohnen und lokaler Arbeitslosigkeit feststellen. In Deutschland scheinen die Ergebnisse von der Spezifikation des Modells und von der Art der Arbeitnehmer abzuhangen. In beiden Landern variiert die Reaktion der Lohne auf die lokale Arbeitslosigkeit signifikant entlang der Lohnverteilung, wobei im Bereich der medianen Quantile die hochste Sensitivitat festzustellen ist. Lohnkurve Lokale Arbeitsmarkte Quantile Regressionen Ammermuller A., Lucifora C., Origo F. y Zwick T. Flexibilidad de salarios en los mercados laborales regionales: el ejemplo de Italia y Alemania, Regional Studies. En este articulo analizamos el funcionamiento de los mercados laborales regionales de Italia y Alemania para diferentes grupos de empleados y regiones. Distinguiendo entre las distintas regiones, derivamos hipotesis teoreticas sobre las correlaciones de grupos especificos entre el desempleo regional y los diferentes salarios individuales. Usando micro-datos adaptados a las tasas de desempleo local, especificamos y comprobamos empiricamente las ecuaciones de salarios. Para Italia no observamos muestras a favor de una relacion entre salarios y desempleo local. En Alemania los resultados parecen ser sensibles a la especificacion del modelo y el tipo de empleados. En ambos paises varia significativamente la reaccion de los salarios al desempleo local en la distribucion de salarios siendo mas sensible en los cuantiles medios. Curva salarial Mercados laborales locales Regresiones cuantiles

Suggested Citation

  • Andreas Ammermuller & Claudio Lucifora & Federica Origo & Thomas Zwick, 2010. "Wage Flexibility in Regional Labour Markets: Evidence from Italy and Germany," Regional Studies, Taylor & Francis Journals, vol. 44(4), pages 401-421.
    • Handle: RePEc:taf:regstd:v:44:y:2010:i:4:p:401-421
    DOI: 10.1080/00343400903002705
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    References listed on IDEAS

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. P Canziani, 1997. "The Wage Curve in Italy and Spain. Are European Wages Flexible?," CEP Discussion Papers dp0375, Centre for Economic Performance, LSE.
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    Cited by:

    1. Roberto Bande Ramudo & Melchor Fernández Fernández & Víctor Montuenga Gómez, 2011. "Wage flexibility and local labour markets: homogeneity of the wage curve in Spain," Documentos de trabajo - Analise Economica 0044, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
    2. Koenig, Felix & Manning, Alan & Petrongolo, Barbara, 2014. "Reservation wages and the wage flexibility puzzle," LSE Research Online Documents on Economics 60613, London School of Economics and Political Science, LSE Library.
    3. Sergio Destefanis & Giovanni Pica, 2010. "It’s wages, it’s hours, it’s the Italian wage curve," CSEF Working Papers 247, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    4. Kosfeld, Reinhold & Dreger, Christian, 2019. "Towards an East German wage curve - NUTS boundaries, labour market regions and unemployment spillovers," Regional Science and Urban Economics, Elsevier, vol. 76(C), pages 115-124.
    5. Martin Falk & Thomas Leoni, 2011. "Estimating the Wage Curve with Spatial Effects and Spline Functions," Economics Bulletin, AccessEcon, vol. 31(1), pages 591-604.
    6. Fei Peng & Sajid Anwar & Lili Kang, 2020. "Job Movement and Real Wage Flexibility in Eastern and Western Parts of Germany," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(4), pages 764-789, October.
    7. Michaela Fuchs & Anja Rossen & Antje Weyh & Gabriele Wydra‐Somaggio, 2021. "Where do women earn more than men? Explaining regional differences in the gender pay gap," Journal of Regional Science, Wiley Blackwell, vol. 61(5), pages 1065-1086, November.
    8. Giorgio Garau & Patrizio Lecca, 2015. "The Impact of Regional R&D Subsidy in a Computable General Equilibrium Model," International Regional Science Review, , vol. 38(4), pages 319-357, October.
    9. Kang, Lili & Peng, Fei, 2012. "Selection and Real wage cyclicality: Germany Case," MPRA Paper 42452, University Library of Munich, Germany.
    10. Fei Peng & Lili Kang, 2013. "Labor Market Institutions and Skill Premiums: An Empirical Analysis on the UK, 1972-2002," Journal of Economic Issues, Taylor & Francis Journals, vol. 47(4), pages 959-982.
    11. Brunello, Giorgio & Langella, Monica, 2014. "Local Agglomeration, Entrepreneurship and the Great Recession: Evidence from Italian Industrial Districts," IZA Discussion Papers 8331, Institute of Labor Economics (IZA).
    12. Lorena M. D'Agostino & Rosina Moreno, 2019. "Green regions and local firms' innovation," Papers in Regional Science, Wiley Blackwell, vol. 98(4), pages 1585-1608, August.
    13. Ipek Ilkkaracan & Haluk Levent & Sezgin Polat, 2013. "Exploring different measures of wage flexibility in a developing economy context: the case for Turkey," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(3), pages 297-315, May.
    14. Peng, Fei & Anwar, Sajid & Kang, Lili, 2017. "New technology and old institutions: An empirical analysis of the skill-biased demand for older workers in Europe," Economic Modelling, Elsevier, vol. 64(C), pages 1-19.
    15. Rycx, François & Saks, Yves & Tojerow, Ilan, 2016. "Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data," IZA Discussion Papers 10336, Institute of Labor Economics (IZA).
    16. 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.
    17. Gucciardi, Gianluca, 2014. "The Italian wage curve reloaded: Does occupation matter?," Economics Discussion Papers 2014-44, Kiel Institute for the World Economy (IfW Kiel).
    18. Steve Bradley & Giuseppe Migali & Maria Navarro Paniagua, 2019. "Spatial variations and clustering in the rates of youth unemployment and NEET," Working Papers 262342718, Lancaster University Management School, Economics Department.
    19. Koenig, Felix & Manning, Alan & Petrongolo, Barbara, 2014. "Reservation wages and the wage flexibility puzzle," LSE Research Online Documents on Economics 60613, London School of Economics and Political Science, LSE Library.
    20. Steve Bradley & Giuseppe Migali & Maria Navarro Paniagua, 2020. "Spatial variations and clustering in the rates of youth unemployment and NEET: A comparative analysis of Italy, Spain, and the UK," Journal of Regional Science, Wiley Blackwell, vol. 60(5), pages 1074-1107, November.
    21. Lili Kang & Fei Peng, 2017. "Wage flexibility in the Chinese labour market, 1989–2009," Regional Studies, Taylor & Francis Journals, vol. 51(4), pages 616-628, April.
    22. García-Mainar , Inmaculada & Montuenga-Gómez , Víctor M., 2012. "Wage dynamics in Spain: evidence from individual data (1994-2001)," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 41-58.
    23. repec:cep:cepdps:dp1319 is not listed on IDEAS

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