Misalignment of Productivity and Wages Across Regions ?Evidence from Belgian Matched Panel Data

Francois Rycx, Yves Saks and Ilan Tojerow

No 16-043, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper is one of the first to estimate how the region in which an establishment is located affects its productivity, wage cost and costcompetitiveness (i.e. its productivity-wage gap). To do so, we use detailed linked employer-employee panel data for Belgium and rely on methodological approaches from both Hellerstein and Neumark (1995) and Bartolucci (2014) to estimate dynamic panel data models at the establishment level. Our findings show that inter-regional differences in productivity and wages are significant but vanish almost totally, both in industry and services, when controlling for a wide range of covariates, establishment fixed effects and endogeneity. Thus, our results suggest that wage cost and productivity differentials are ceteris paribus relatively well aligned across regions.

Keywords: Regions; productivity; labour costs; linked panel data (search for similar items in EconPapers)
JEL-codes: C33 J24 J31 R30 (search for similar items in EconPapers)
Pages: 37 p.
Date: 2016-11-08
New Economics Papers: this item is included in nep-eff, nep-eur, nep-geo, nep-lma and nep-ure
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Related works:
Working Paper: Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data (2016)
Working Paper: Misalignment of productivity and wages across regions ? Evidence from Belgian matched panel data (2016)
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