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Real Wage Resistance and Unemployment: Multivariate Analysis of Cointegrating Relations in 10 OECD Countries

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  • Timo Tyrväinen

Abstract

Over the past twenty years or so, unemployment has been increasing in most OECD economies. In the same period, there has been a considerable increase in the wedge between the real cost to the employer of hiring a worker and the net real wage received by the worker. The present study examines whether changes in the wedge (including various tax rates) may have generated long-lasting effects on real labour costs. Behaviour which generates this kind of outcome is called "real wage resistance". If there is real wage resistance, a rise in the wedge leads to higher unemployment. If this outcome persists in the long run, the primary problem related to the functioning of the wage setting mechanism is not necessarily the speed of adjustment but rather the equilibrium in which adjustment terminates.The countries examined are the United States, Japan, Germany, France, the United Kingdom, Italy, Canada, Australia, Sweden and Finland. The study covers the private business sector and the ... La résistance des salaires réels et le chômage analyse à plusieurs variables des relations de cointégration dans 10 économies de l'OCDE Depuis une vingtaine d'années, le chômage progresse dans la plupart des économies de l’OCDE. Durant la même période on a vu se creuser sensiblement l’écart entre le coût réel d’un travailleur pour l’employeur et le salaire net réel perçu par le travailleur. La présente étude examine si l’évolution de cet écart (notamment des divers taux d’imposition) a pu avoir des effets durables sur les coûts réels de main d'oeuvre. On appelle "résistance des salaires réels" le comportement qui aboutit à ce type de résultat. S'il y a résistance des salaires réels un accroissement de l’écart entraîne une montée du chômage. Si cet effet persiste longtemps, le problème essentiel pour le bon fonctionnement du mécanisme de détermination des salaires n’est pas nécessairement la rapidité d’ajustement, mais plutôt l’équilibre obtenu.Les pays étudiés sont les États-Unis, le Japon, l’Allemagne, la France, le Royaume-Uni, l’Italie, le Canada, l’Australie, la Suède et la Finlande. L’étude porte sur les ...

Suggested Citation

  • Timo Tyrväinen, 1995. "Real Wage Resistance and Unemployment: Multivariate Analysis of Cointegrating Relations in 10 OECD Countries," OECD Jobs Study Working Papers 10, OECD Publishing.
    • Handle: RePEc:oec:elsaac:10-en
    DOI: 10.1787/136050768537
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    Cited by:

    1. Leon Bettendorf & Albert van der Horst & Ruud A. De Mooij, 2009. "Corporate Tax Policy and Unemployment in Europe: An Applied General Equilibrium Analysis," The World Economy, Wiley Blackwell, vol. 32(9), pages 1319-1347, September.
    2. Pissarides, Christopher A., 1998. "The impact of employment tax cuts on unemployment and wages; The role of unemployment benefits and tax structure," European Economic Review, Elsevier, vol. 42(1), pages 155-183, January.
    3. Thomas Bauer & Regina Riphahn, 2002. "Employment effects of payroll taxes - an empirical test for Germany," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 865-876.
    4. Herwig Immervoll, 2006. "Fiscal Drag – An Automatic Stabiliser?," Research in Labor Economics, in: Micro-Simulation in Action, pages 141-163, Emerald Group Publishing Limited.
    5. Loïc Cadiou & Stéphanie Guichard & Mathilde Maurel, 2000. "Disparités institutionnelles et flexibilité des marchés du travail dans l'UE," Économie et Statistique, Programme National Persée, vol. 332(1), pages 49-63.
    6. Ruud A. De Mooij & Bas Jacobs & Kees Folmer, 2007. "Analyzing a Flat Income Tax in the Netherlands," CESifo Working Paper Series 1890, CESifo.
    7. G. Carone & A. Salomäki, 2001. "Reforms in tax-benefit systems in order to increase emplyoment incentives in the EU," European Economy - Economic Papers 2008 - 2015 160, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Pierre Koning & J. Vyrastekova & S. Onderstal, 2006. "Team incentives in public organisations; an experimental study," CPB Discussion Paper 60.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Loïc Cadiou & Stéphanie Guichard & Mathilde Maurel, 1999. "La diversité des marchés du travail en Europe : Quelles conséquences pour l'Union Monétaire," Working Papers 1999-11, CEPII research center.
    10. Ruud de Mooij, 2006. "Reinventing the welfare state," CPB Special Publication 60, CPB Netherlands Bureau for Economic Policy Analysis.
    11. BURGGRAEVE Koen & DU CAJU Philip, 2010. "How Do Reference Values for Wages and Wage Indexing Influence the Impact of Labour Tax Reductions?," EcoMod2003 330700028, EcoMod.
    12. repec:hal:spmain:info:hdl:2441/711 is not listed on IDEAS
    13. repec:spo:wpecon:info:hdl:2441/711 is not listed on IDEAS
    14. repec:hal:wpspec:info:hdl:2441/711 is not listed on IDEAS
    15. Alain Serres & Stefano Scarpetta & Christine Maisonneuve, 2001. "Falling Wage Shares in Europe and the United States: How Important is Aggregation Bias?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(4), pages 375-401, December.
    16. Ruud de Mooij, 2006. "Reinventing the welfare state," CPB Special Publication 60.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    17. Loïc Cadiou & Julien Genet & Jean-Louis Guérin, 2002. "Évolutions démographiques et marché du travail : des liens complexes parfois contradictoires," Économie et Statistique, Programme National Persée, vol. 355(1), pages 139-156.
    18. Alfonso Arpaia & Giuseppe Carone, 2004. "Do labour taxes (and their composition) affect wages in the short and the long run? - Alfonso Arpaia and Giuseppe Carone," European Economy - Economic Papers 2008 - 2015 216, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    19. Laszlo Goerke, 2005. "Tax Liability and Tax Evasion in a Competitive Labor Market," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(2), pages 347-359, May.

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