 Beggaring Thy Co-Worker: Labor Market Dualization and the Wage Growth Slowdown in EuropeLukas Lehner, Paul Ramskogler and Aleksandra Riedl ILR Review, 2024, vol. 77, issue 5, 659-684 Abstract: As temporary employment has become a pervasive feature of modern labor markets, reasons for wage growth have become less well understood. To determine whether these two phenomena are related, the authors investigate whether the dualized structure of labor markets affects macroeconomic developments. Specifically, they incorporate involuntary temporary workers into the standard wage Phillips curve to examine wage growth in 30 European countries for the period 2004–2017. Relying on individual-level data to adjust for a changing employment composition, their findings show, for the first time, that the incidence of involuntary temporary workers has strong negative effects on permanent workers’ wage growth, thereby dampening aggregate wage growth. This effect, which the authors name the competition effect, is particularly pronounced in countries where wage bargaining institutions are weak. The findings shed further light on the reasons for the secular slowdown of wage growth after the global financial crisis. Keywords: wages; unemployment; wage responsiveness to unemployment; labor market segmentation; labor market institutions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:ilrrev:v:77:y:2024:i:5:p:659-684 DOI: 10.1177/00197939241248162 Access Statistics for this article More articles in ILR Review from Cornell University, ILR School |
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