 Wage leadership models: A country-by-country analysis of the EMUMariam Camarero, Gaetano D'Adamo () and Cecilio Tamarit Economic Modelling, 2014, vol. 44, issue S1, S2-S11 Abstract: According to the theory of wage leadership, if there is free inter-sectoral labor mobility, changes in the level of the wage in the leading sector cause changes in the same direction in other sectors' wage. Moreover, since the traded sector (i.e. Industry) is affected by international competitive pressure, it should act as the leader, because this would be conducive to wage restraint. We apply a Vector Error Correction Model on four macro sectors (Industry, Services, Construction and the Public Sector) in ten EMU countries to test for wage leadership and wage adaptability. Our results show significant cross-country differences, with the Public Sector acting as the leader in Germany, Belgium and Greece. Countries that recently experienced a construction bubble such as Spain and Ireland show wage leadership of the construction sector. Moreover, in half of the countries, wages in different sectors are, to some extent, set autonomously, which suggests low inter-sectoral labor mobility. Finally, adjustment after a positive vs. negative shock to the leading sector's wage, in Mediterranean countries, Ireland and the Netherlands is asymmetric. Keywords: Wage leadership; Cointegrated VAR; Labor market (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:eee:ecmode:v:44:y:2014:i:s1:p:s2-s11 DOI: 10.1016/j.econmod.2013.12.001 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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