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Follow the leader? Public and private wages in the Netherlands

Author

Listed:
  • Annette Zeilstra

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Adam Elbourne

    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

This study investigates wage leadership in the Netherlands. We empirically examine public and private wages using several wage definitions for the period 1980-2012. We find no evidence for public wage leadership. Moreover, public wages return to their previous equilibrium value three to four years after an exogenous shock in public wages. By contrast, an exogenous shock to private wages has a permanent influence on both private and public wages. These findings suggest that although a public wage freeze lowers public expenditure in the short-run, it is not an effective policy measure to lower public expenditure in the medium and long-run.

Suggested Citation

  • Annette Zeilstra & Adam Elbourne, 2014. "Follow the leader? Public and private wages in the Netherlands," CPB Discussion Paper 274, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:274
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    References listed on IDEAS

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    Cited by:

    1. Lamo, Ana & Pérez, Javier J. & Moral-Benito, Enrique, 2016. "Does slack influence public and private labor market interactions?," Working Paper Series 1890, European Central Bank.
    2. Javier J. Perez & Ana Lamo & Enrique Moral-Benito, 2015. "Does Slack Influence Public and Private Labor Market," EcoMod2015 8792, EcoMod.
    3. M. Ivanova., 2015. "The Interaction between Public and Private Sector Wages," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
    4. Robert-Paul Berben & Ide Kearney & Robert Vermeulen, 2018. "DELFI 2.0, DNB's Macroeconomic Policy Model of the Netherlands," DNB Occasional Studies 1605, Netherlands Central Bank, Research Department.

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    More about this item

    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
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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