IDEAS home Printed from https://ideas.repec.org/p/ecb/ecbwps/20101225.html

Price and wage formation in Portugal

Author

Listed:
  • Robalo Marques, Carlos
  • Martins, Fernando
  • Portugal, Pedro

Abstract

This paper brings together empirical research on price and wage dynamics for the Portuguese economy based both on micro and macro data. As regards firms' pricing behaviour the most noticeable finding is that prices in Portugal are somewhat less flexible than in the United States but more flexible than in the Euro Area. Regarding firms' wage setting practices, we uncover evidence favouring the hypothesis of aggregate and disaggregate wage flexibility. Despite the existence of mandatory minimum wages, the presence of binding wage floors and the general use of extension mechanisms, the firms still retain some ability to circumvent collective agreements via the mechanism of the wage cushion. The evidence also suggests that Portuguese wages behave in a fashion consistent with the wage curve literature, but the responsiveness of real wages to unemployment changes may have declined over the last decade. JEL Classification: C42, D40, E31, J30

Suggested Citation

  • Robalo Marques, Carlos & Martins, Fernando & Portugal, Pedro, 2010. "Price and wage formation in Portugal," Working Paper Series 1225, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20101225
    as

    Download full text from publisher

    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1225.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Guimaraes, Paulo & Portugal, Pedro, 2009. "A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects," IZA Discussion Papers 3935, Institute of Labor Economics (IZA).
    2. Varejão, José & Portugal, Pedro, 2007. "Spatial and Temporal Aggregation in the Estimation of Labor Demand Functions," IZA Discussion Papers 2701, Institute of Labor Economics (IZA).
    3. José Varejão & Pedro Portugal, 2007. "Employment Dynamics and the Structure of Labor Adjustment Costs," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 137-165.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:ksp:journ3:v:1:y:2015:i:4:p:256-274 is not listed on IDEAS
    2. Ana Iregui & Ligia Melo & María Ramírez, 2012. "Wage Adjustment Practices and the Link between Price and Wages: Survey Evidence from Colombian Firms," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 76, pages 17-53.
    3. Fernando Borraz & Gerardo Licandro & Daniela Sola, 2020. "Wage and price setting: new evidence from Uruguayan firms," Journal of Applied Economics, Taylor & Francis Journals, vol. 23(1), pages 560-582, January.
    4. Marta C. Lopes, 2016. "Using the variation in potential duration of unemployment benefits to estimate the causal effect of unemployment duration on re-employment wages," Nova SBE Working Paper Series wp608, Universidade Nova de Lisboa, Nova School of Business and Economics.
    5. Tafirenyika SUNDE, 2015. "The effects of monetary policy on unemployment in Namibia," Journal of Economic and Social Thought, KSP Journals, vol. 2(4), pages 256-274, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ptu:bdpart:b201016 is not listed on IDEAS
    2. Pedro S. Martins, 2007. "Heterogeneity In Real Wage Cyclicality," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 684-698, November.
    3. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    4. repec:spo:wpmain:info:hdl:2441/58gkob9fur9g692gbiqnqb3mdj is not listed on IDEAS
    5. repec:hum:wpaper:sfb649dp2008-056 is not listed on IDEAS
    6. Luca David Opromolla & Pedro Martins, 2011. "Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels," Working Papers w201123, Banco de Portugal, Economics and Research Department.
    7. Nicolas Berman & Vincent Rebeyrol & Vincent Vicard, 2019. "Demand Learning and Firm Dynamics: Evidence from Exporters," The Review of Economics and Statistics, MIT Press, vol. 101(1), pages 91-106, March.
    8. Pedro Portugal, 2015. "On fallacies surrounding the discussion about the reduction of social security contributions," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    9. Øivind A. Nilsen & Magne Vange, 2019. "Intermittent Price Changes in Production Plants: Empirical Evidence Using Monthly Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(1), pages 98-122, February.
    10. Marta Silva & Luis Filipe Martins & Helena Lopes, 2015. "Asymmetric labour market reforms and wage growth with fixed-term contracts: does learning about match quality matter?," Working Papers Series 2 15-04, ISCTE-IUL, Business Research Unit (BRU-IUL).
    11. Anabela Carneiro & Paulo Guimaraes & Pedro Portugal, 2009. "Real Wages and the Business Cycle: Accounting for Worker and Firm Heterogeneity," CEF.UP Working Papers 0903, Universidade do Porto, Faculdade de Economia do Porto.
    12. Izumi YOKOYAMA & Kazuhito HIGA & Daiji KAWAGUCHI, 2015. "The Effect of Exchange Rate Fluctuations on Employment in a Segmented Labor Market," Discussion papers 15139, Research Institute of Economy, Trade and Industry (RIETI).
    13. Mittag, Nikolas, 2016. "A Simple Method to Estimate Large Fixed Effects Models Applied to Wage Determinants and Matching," IZA Discussion Papers 10447, Institute of Labor Economics (IZA).
    14. Baptista, Rui & Lima, Francisco & Preto, Miguel Torres, 2012. "How former business owners fare in the labor market? Job assignment and earnings," European Economic Review, Elsevier, vol. 56(2), pages 263-276.
    15. Pedro Naso & Yi Huang Author Name: Tim Swanson, 2017. "The Porter Hypothesis Goes to China: Spatial Development, Environmental Regulation and Productivity," CIES Research Paper series 53-2017, Centre for International Environmental Studies, The Graduate Institute.
    16. Houde, Sébastien & Myers, Erica, 2021. "Are consumers attentive to local energy costs? Evidence from the appliance market," Journal of Public Economics, Elsevier, vol. 201(C).
    17. Jordi Galí & Thijs van Rens, 2021. "The Vanishing Procyclicality of Labour Productivity [Why have business cycle fluctuations become less volatile?]," The Economic Journal, Royal Economic Society, vol. 131(633), pages 302-326.
    18. Pedro Portugal & John T. Addison, 2008. "Six Ways To Leave Unemployment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(4), pages 393-419, September.
    19. Yolanda F. Rebollo-Sanz, 2017. "Decomposing the structure of wages into firm and worker effects: some insights from a high unemployment economy," Working Papers 17.10, Universidad Pablo de Olavide, Department of Economics.
    20. João Pereira & Raul Ramos & Pedro S. Martins, 2025. "Wage Cyclicality and Labor Market Institutions," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 64(4), pages 598-615, October.
    21. Koen Jochmans, 2017. "Two-Way Models for Gravity," The Review of Economics and Statistics, MIT Press, vol. 99(3), pages 478-485, July.
    22. Lapatinas, Athanasios, 2009. "Labour adjustment costs: Estimation of a dynamic discrete choice model using panel data for Greek manufacturing firms," Labour Economics, Elsevier, vol. 16(5), pages 521-533, October.
    23. Emanuel Ornelas & Marcos Ritel, 2020. "The not‐so‐generalised effects of the Generalized System of Preferences," The World Economy, Wiley Blackwell, vol. 43(7), pages 1809-1840, July.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecb:ecbwps:20101225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Official Publications (email available below). General contact details of provider: https://edirc.repec.org/data/emieude.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.