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Wage Persistence and Labour Market Institutions: An Analysis of Young European Workers

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  • Menezes, Antonio

    (University of the Azores)

  • Sciulli, Dario

    (University of Rome Tor Vergata)

  • Vieira, José António Cabral

    (University of the Azores)

Abstract

This paper investigates the effects of labour market institutions on wage persistence among young European workers at the beginning of their careers. We use ECHP data from 1995 to 2001 for 13 EU countries and estimate a three-level random intercept probit model that allows for unobserved heterogeneity both at the individual and country level. Overall, we find that labour market institutions explain wage persistence. In particular, we find that a high level of employment protection legislation and a high level of bargaining centralization increase wage persistence.

Suggested Citation

  • Menezes, Antonio & Sciulli, Dario & Vieira, José António Cabral, 2007. "Wage Persistence and Labour Market Institutions: An Analysis of Young European Workers," IZA Discussion Papers 2627, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2627
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    References listed on IDEAS

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    More about this item

    Keywords

    labour market institutions; unobserved heterogeneity; wage persistence;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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