How flexible are real wages in EU countries? A panel investigation

Desislava Rusinova, Vilen Lipatov and Frigyes Ferdinand Heinz

Journal of Macroeconomics, 2015, vol. 43, issue C, 140-154

Abstract: We estimate the degree of real wage flexibility in 19 EU countries in a wage Phillips curve panel framework. We find evidence for a reaction of wage growth to unemployment and productivity growth. The degree of real wage flexibility tends to be larger in the central and eastern European (CEE) countries than in the euro area; weaker in downturns than during upswings. There exists an inflation threshold, below which real wage flexibility is low. We also find that a part of the heterogeneity in real wage flexibility and unemployment may be related to differences in the wage bargaining institutions.

Keywords: Real wage flexibility; Phillips curve; Labour market institutions; Unemployment; Inflation; Productivity (search for similar items in EconPapers)
JEL-codes: E12 E24 E31 J41 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:43:y:2015:i:c:p:140-154

DOI: 10.1016/j.jmacro.2014.10.002

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