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On Wage Formation, Wage Development and Unemployment

Author

Listed:
  • H.M.M. Peeters
  • A.H.J. den Reijer

Abstract

Since the mid nineties unemployment has substantially decreased in some EMU-countries. One important factor underlying this development is wage moderation. This paper investigates wage formation and wage development. Using a theoretical wage bargaining model main determinants of formation are described, a non-linear wage equation is derived and estimated with annual or quarterly data of the Netherlands, Spain and Ireland. The effects of the individual determinants on wages are calculated and, in addition, each determinant's contribution to the total wage developments is analysed over the last three decades. It follows that each decade is characterised by few dominating determinants. The contribution of unemployment has altered considerably.

Suggested Citation

  • H.M.M. Peeters & A.H.J. den Reijer, 2001. "On Wage Formation, Wage Development and Unemployment," WO Research Memoranda (discontinued) 677, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:wormem:677
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    Citations

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    Cited by:

    1. M. Demertzis & P.J.A. van Els & H.M.M. Peeters, 2002. "EUROMON: De Nederlandsche Bank's Multi-Country Model," WO Research Memoranda (discontinued) 718, Netherlands Central Bank, Research Department.
    2. Demertzis, Maria & Van Els, Peter & Grob, Sybille & Peeters, Marga, 2006. "EUROMON: The multi-country model of De Nederlandsche Bank," MPRA Paper 28512, University Library of Munich, Germany.
    3. Peeters, Marga & Den Reijer, Ard, 2011. "On wage formation, wage flexibility and wage coordination : A focus on the wage impact of productivity in Germany, Greece, Ireland, Portugal, Spain and the United States," MPRA Paper 31102, University Library of Munich, Germany.
    4. Tyrowicz, Joanna, 2009. "When Eastern Labour Markets Enter Western Europe CEECs. Labour Market Institutions upon Euro Zone Accession," MPRA Paper 15045, University Library of Munich, Germany.
    5. Kees Folmer, 2009. "Why do macro wage elasticities diverge? A meta analysis," CPB Discussion Paper 122, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Kees Folmer, 2009. "Why do macro wage elasticities diverge?," CPB Memorandum 224, CPB Netherlands Bureau for Economic Policy Analysis.
    7. H.M.M. Peeters & A.H.J. den Reijer, 2002. "On Wage Formation, Wage Development and Unemployment Flexibility: a Comparison between European Countries and the United States," WO Research Memoranda (discontinued) 712, Netherlands Central Bank, Research Department.

    More about this item

    Keywords

    wage formation; wage development; unemployment;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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