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Inter-industry wage differentials in EU countries: what do cross-country time varying data add to the picture?

  • Du Caju, Philip
  • Kátay, Gábor
  • Lamo, Ana
  • Nicolitsas, Daphne
  • Poelhekke, Steven

This paper documents the existence and main patterns of inter-industry wage differentials across a large number of industries for 8 EU countries (Belgium, Germany, Greece, Hungary, Ireland, Italy, Netherlands, and Spain) at two points in time (in general 1995 and 2002) and explores possible explanations for these patterns. The analysis uses the European Structure of Earnings Survey (SES), an internationally harmonised matched employer-employee dataset, to estimate inter-industry wage differentials conditional on a rich set of employee, employer and job characteristics. After investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials, a hypothesis which cannot be accepted, the paper investigates the role of institutional, industry structure and industry performance characteristics in explaining inter-industry wage differentials. The results suggest that inter-industry wage differentials are consistent with rent sharing mechanisms and that rent sharing is more likely in industries with firm-level collective agreements and with higher collective agreement coverage. JEL Classification: J31, J41, J51

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Paper provided by European Central Bank in its series Working Paper Series with number 1182.

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Date of creation: Apr 2010
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Handle: RePEc:ecb:ecbwps:20101182
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  17. Erkan Erdil & I. Hakan Yetkiner, 2001. "A comparative analysis of inter-industry wage differentials: industrialized versus developing countries," Applied Economics, Taylor & Francis Journals, vol. 33(13), pages 1639-1648.
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