IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11122.html
   My bibliography  Save this paper

Revisiting Interregional Wage Differentials: New Evidence from Spain with Matched Employer-Employee Data

Author

Listed:
  • Murillo Huertas, Inés P.

    (Universidad de Extremadura)

  • Ramos, Raul

    (University of Barcelona)

  • Simón, Hipólito

    (Universidad de Alicante)

Abstract

This study examines wage differences across Spain's regions along the entire wage distribution based on matched employer-employee microdata from 2006 to 2014. Unlike previous studies, we control for differences in regional purchasing power parities, which are very large in practice. Although many of the raw wage differences observed are explained by differences between regional productive structures and, to a lesser extent, in labour forces, noteworthy regional differences net of composition effects remain after controlling for a broad set of individual and firm characteristics. Unexplained wage differences are generally very similar throughout the wage distribution and are strongly persistent over time, despite significant changes in both economic cycle and labour regulations that occurred in Spain during the examined period. This evidence suggests the presence of common mechanisms in the generation of regional wage differentials that affect the whole labour force and that are strongly persistent over time, which is consistent with a key role of collective bargaining

Suggested Citation

  • Murillo Huertas, Inés P. & Ramos, Raul & Simón, Hipólito, 2017. "Revisiting Interregional Wage Differentials: New Evidence from Spain with Matched Employer-Employee Data," IZA Discussion Papers 11122, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11122
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp11122.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    2. Philip Du Caju & Erwan Gautier & Daphne Momferatu & Melanie Ward-Warmedinger, 2009. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 12(2), pages 57-108, Winter.
    3. Michael Porter, 2003. "The Economic Performance of Regions," Regional Studies, Taylor & Francis Journals, vol. 37(6-7), pages 549-578.
    4. Elder, Todd E. & Goddeeris, John H. & Haider, Steven J., 2010. "Unexplained gaps and Oaxaca-Blinder decompositions," Labour Economics, Elsevier, vol. 17(1), pages 284-290, January.
    5. Jimeno, Juan F. & Bentolila, Samuel, 1998. "Regional unemployment persistence (Spain, 1976-1994)," Labour Economics, Elsevier, vol. 5(1), pages 25-51, March.
    6. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    7. Blackaby, D H & Murphy, P D, 1995. "Earnings, Unemployment and Britain's North-South Divide: Real or Imaginary?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(4), pages 487-512, November.
    8. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    9. de la Fuente, Angel, 2002. "On the sources of convergence: A close look at the Spanish regions," European Economic Review, Elsevier, vol. 46(3), pages 569-599, March.
    10. David Card & Sara De La Rica, 2006. "Firm-Level Contracting and the Structure of Wages in Spain," ILR Review, Cornell University, ILR School, vol. 59(4), pages 573-592, July.
    11. Vieira, J.A.C. & Couto, J.P.A. & Tiago, M.T.B., 2006. "Inter-regional Wage Dispersion in Portugal," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(1).
    12. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
    13. João Pereira & Aurora Galego, 2014. "Inter-Regional Wage Differentials in Portugal: An Analysis Across the Wage Distribution," Regional Studies, Taylor & Francis Journals, vol. 48(9), pages 1529-1546, September.
    14. Jörg Decressin & Raphael A Espinoza & Ioannis Halikias & Michael Kumhof & Daniel Leigh & Prakash Loungani & Paulo A Medas & Susanna Mursula & Antonio Spilimbergo & TengTeng Xu, 2015. "Wage Moderation in Crises; Policy Considerations and Applications to the Euro Area," IMF Staff Discussion Notes 15/22, International Monetary Fund.
    15. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2007. "Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis," Tinbergen Institute Discussion Papers 07-079/3, Tinbergen Institute.
    16. Luca Agnello & Giorgio Fazio & Ricardo M. Sousa, 2016. "National fiscal consolidations and regional inequality in Europe," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 9(1), pages 59-80.
    17. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
    18. Juan R. Cuadrado-Roura & Andrés Maroto, 2016. "Unbalanced regional resilience to the economic crisis in Spain: a tale of specialisation and productivity," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 9(1), pages 153-178.
    19. Hipolito Simon & Esteban Sanroma & Raul Ramos, 2017. "Full- and part-time wage differences in Spain: an analysis along the wage distribution," International Journal of Manpower, Emerald Group Publishing Limited, vol. 38(3), pages 449-469, June.
    20. Fally, Thibault & Paillacar, Rodrigo & Terra, Cristina, 2010. "Economic geography and wages in Brazil: Evidence from micro-data," Journal of Development Economics, Elsevier, vol. 91(1), pages 155-168, January.
    21. Hipólito Simón & Esteban Sanromá & Raúl Ramos, 2008. "Labour segregation and immigrant and native-born wage distributions in Spain: an analysis using matched employer–employee data," Spanish Economic Review, Springer;Spanish Economic Association, vol. 10(2), pages 135-168, June.
    22. João Pereira & Aurora Galego, 2011. "Regional wage differentials in Portugal: Static and dynamic approaches," Papers in Regional Science, Wiley Blackwell, vol. 90(3), pages 529-548, August.
    23. Hipolito Simon & Raul Ramos & Esteban Sanroma, 2006. "Collective bargaining and regional wage differences in Spain: an empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 38(15), pages 1749-1760.
    24. Plümper, Thomas & Troeger, Vera E., 2007. "Efficient Estimation of Time-Invariant and Rarely Changing Variables in Finite Sample Panel Analyses with Unit Fixed Effects," Political Analysis, Cambridge University Press, vol. 15(2), pages 124-139, April.
    25. Aurora Galego & João Pereira, 2014. "Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: The Importance of Covariates," Environment and Planning A, , vol. 46(10), pages 2514-2532, October.
    26. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    27. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
    28. Roberta Capello & Peter Nijkamp (ed.), 2009. "Handbook of Regional Growth and Development Theories," Books, Edward Elgar Publishing, number 12874.
    29. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
    30. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    31. Stefan P.T. Groot & Henri L.F. Groot & Martijn J. Smit, 2014. "Regional Wage Differences In The Netherlands: Micro Evidence On Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 54(3), pages 503-523, June.
    32. Paula Herrera-Idárraga & Enrique López-Bazo & Elisabet Motellón, 2016. "Regional Wage Gaps, Education and Informality in an Emerging Country: The Case of Colombia," Spatial Economic Analysis, Taylor & Francis Journals, vol. 11(4), pages 432-456, October.
    33. Athanasios Vamvakidis, 2009. "Regional Wage Differentiation and Wage Bargaining Systems in the European Union," Financial Theory and Practice, Institute of Public Finance, vol. 33(1), pages 73-87.
    34. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    35. Florian Lehmer & Joachim Möller, 2010. "Interrelations between the urban wage premium and firm-size wage differentials: a microdata cohort analysis for Germany," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 31-53, August.
    36. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    37. Heather Dickey, 2007. "Regional Earnings Inequality in Great Britain: Evidence from Fixed‐effects Regressions," LABOUR, CEIS, vol. 21(4‐5), pages 763-787, December.
    38. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
    39. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982–1997," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 219-256, May.
    40. International Monetary Fund, 2015. "Spain: Selected Issues," IMF Staff Country Reports 2015/233, International Monetary Fund.
    41. Heather Dickey, 2007. "Regional Earnings Inequality In Great Britain: Evidence From Quantile Regressions," Journal of Regional Science, Wiley Blackwell, vol. 47(4), pages 775-806, October.
    42. Blackaby, D H & Manning, D N, 1990. "The North-South Divide: Questions of Existence and Stability?," Economic Journal, Royal Economic Society, vol. 100(401), pages 510-527, June.
    43. Stefan Groot & Henri de Groot, 2011. "Wage inequality in the Netherlands: Evidence, trends and explanations," CPB Discussion Paper 186, CPB Netherlands Bureau for Economic Policy Analysis.
    44. Henri L.F. Groot & Jacques Poot & Martijn J. Smit, 2016. "Which Agglomeration Externalities Matter Most And Why?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 756-782, September.
    45. Inmaculada Garcia & Jose Alberto Molina, 2002. "Inter-regional wage differentials in Spain," Applied Economics Letters, Taylor & Francis Journals, vol. 9(4), pages 209-215.
    46. Michael Rusinek & Ilan Tojerow, 2014. "The Regional Dimension of Collective Wage Bargaining: The Case of Belgium," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 301-317, February.
    47. Mr. Jörg Decressin & Mr. Raphael A Espinoza & Mr. Ioannis Halikias & Mr. Michael Kumhof & Mr. Daniel Leigh & Mr. Prakash Loungani & Mr. Paulo A Medas & Susanna Mursula & Mr. Antonio Spilimbergo & Ms. , 2015. "Wage Moderation in Crises: Policy Considerations and Applications to the Euro Area," IMF Staff Discussion Notes 2015/022, International Monetary Fund.
    48. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, vol. 27(2), pages 519-564, June.
    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. Sarah Brown & Gurleen Popli & Alessandro Sasso, 2022. "Decomposing the gender reservation wage gap in Italy: A regional perspective," Journal of Regional Science, Wiley Blackwell, vol. 62(2), pages 499-540, March.
    2. Francisco Sánchez-Cubo & José Mondéjar-Jiménez & Alejandro García-Pozo & Mauro Maltagliati, 2023. "Keep It Simple: A Methodological Discussion of Wage Inequalities in the Spanish Hospitality Industry," Mathematics, MDPI, vol. 11(5), pages 1-12, February.
    3. Abdullah, Borhan & Zangelidis, Alexandros & Theodossiou, Ioannis, 2023. "Demand and supply effects on native-immigrant wage differentials: the case of Malaysia," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-22.

    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. Aurora Galego & João Pereira, 2014. "Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: The Importance of Covariates," Environment and Planning A, , vol. 46(10), pages 2514-2532, October.
    2. Sonja C. Kassenboehmer & Mathias G. Sinning, 2014. "Distributional Changes in the Gender Wage Gap," ILR Review, Cornell University, ILR School, vol. 67(2), pages 335-361, April.
    3. Paula Herrera-Idárraga & Enrique López-Bazo & Elisabet Motellón, 2016. "Regional Wage Gaps, Education and Informality in an Emerging Country: The Case of Colombia," Spatial Economic Analysis, Taylor & Francis Journals, vol. 11(4), pages 432-456, October.
    4. João Pereira & Aurora Galego, 2014. "Inter-Regional Wage Differentials in Portugal: An Analysis Across the Wage Distribution," Regional Studies, Taylor & Francis Journals, vol. 48(9), pages 1529-1546, September.
    5. Joao Pereira & Aurora Galego, 2013. "Intra-Regional Regional Wage Inequality In Portugal: A Quantile Based Decomposition Analisys," ERSA conference papers ersa13p158, European Regional Science Association.
    6. Inés P. Murillo & Hipólito Simón, 2014. "La Gran Recesión y el diferencial salarial por género en España," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 39-76, March.
    7. Sloczynski, Tymon, 2015. "Average Wage Gaps and Oaxaca–Blinder Decompositions," IZA Discussion Papers 9036, Institute of Labor Economics (IZA).
    8. Antonio Garofalo & Rosalia Castellano & Gennaro Punzo & Gaetano Musella, 2018. "Skills and labour incomes: how unequal is Italy as part of the Southern European countries?," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(4), pages 1471-1500, July.
    9. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    10. Raúl Ramos & Esteban Sanromá & Hipólito Simón, 2014. "Public-Private Sector Wage Differentials by Type of Contract: Evidence from Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 107-141, March.
    11. Casado-Díaz, José M. & Simón, Hipólito, 2016. "Wage differences in the hospitality sector," Tourism Management, Elsevier, vol. 52(C), pages 96-109.
    12. Sloczynski, Tymon, 2018. "Average Gaps and Oaxaca's Blinder Decompositions: A Cautionary Tale about Regression Estimates of Racial Differences in Labor Market Outcomes," IZA Discussion Papers 12041, Institute of Labor Economics (IZA).
    13. Carla Canelas & Silvia Salazar, 2014. "Gender and ethnic inequalities in LAC countries," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-15, December.
    14. Carla Canelas & Silvia Salazar, 2014. "Gender and Ethnicity in Bolivia, Ecuador and Guatemala," Documents de travail du Centre d'Economie de la Sorbonne 14021, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    15. Sloczynski, Tymon, 2013. "Population Average Gender Effects," IZA Discussion Papers 7315, Institute of Labor Economics (IZA).
    16. Rycx, François & Saks, Yves & Tojerow, Ilan, 2016. "Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data," IZA Discussion Papers 10336, Institute of Labor Economics (IZA).
    17. VAN KERM Philippe & YU Seunghee & CHOE Chung, 2014. "Wage differentials between native, immigrant and cross-border workers: Evidence and model comparisons," LISER Working Paper Series 2014-05, Luxembourg Institute of Socio-Economic Research (LISER).
    18. Ghosh, Pallab Kumar, 2014. "The contribution of human capital variables to changes in the wage distribution function," Labour Economics, Elsevier, vol. 28(C), pages 58-69.
    19. Francisco Lasso-Valderrama & Laura Rodríguez-Quintero, 2018. "Ciclo y composición del cambio en los salarios: una aproximación a la estructura salarial de Colombia," Borradores de Economia 1057, Banco de la Republica de Colombia.
    20. Sergio P. Firpo & Nicole M. Fortin & Thomas Lemieux, 2018. "Decomposing Wage Distributions Using Recentered Influence Function Regressions," Econometrics, MDPI, vol. 6(2), pages 1-40, May.

    More about this item

    Keywords

    interregional wage differentials; decomposition methods; matched employer-employee data; wage setting institutions;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

    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:iza:izadps:dp11122. 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: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.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.