Wage flexibility and local labour markets: a test on the homogeneity of the wage curve in Spain

Roberto Bande, Melchor Fernandez and Victor Montuenga ()

INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, 2012, issue 24, 175-198

Abstract: In this paper we analyse wage flexibility in Spain and its regional differences, departing from the estimation of wage curves. Using data from the Structure of Earnings Survey for 1995, 2002 and 2006, we estimate regional wage equations, relating the observed wage received by workers to a group of personal and job characteristics, as well as to the regional unemployment rate. This analysis allows us to test for the existence of regional differences in the degree of wage flexibility, which may have an important influence on the evolution of regional unemployment, given its impact on the ability of the local labour market to absorb negative shocks. Estimated results indicate that regions suffering from higher unemployment rates exhibit lower wage flexibility. Collective bargaining reforms should pursue greater wage flexibility, especially in regions with high rates of joblessness.

Keywords: Wage flexibility; wage curve; Structure of Earnings Survey; regional unemployment (search for similar items in EconPapers)
JEL-codes: J31 J64 R15 R23 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (13)

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