Begging thy coworker – Labor market dualization and the slow-down of wage growth in Europe
Paul Ramskogler and
Aleksandra Riedl ()
INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford
Does the structure of labor markets – and the possibility to employ temporary workers – a↵ect aggregate wage growth? After the global financial crisis (GFC) a rich debate had ensued about the reasons for the delayed pick up of wage growth. However, structural labor market aspects remained strangely absent from this discussion. We contribute by incorporating labor market dualization into the standard Phillips curve model to explain wage growth in 30 European countries in the period 2004-2017. We find that the presence of workers with temporary contracts in Europe's labor markets slows down aggregate wage growth due to the competition that temporary workers exert on permanent workers. This competition e↵ect is most pronounced in countries, where trade union density is low. Moreover, we establish that labor market dualization has been at least as important in slowing wage growth since the GFC as unemployment, i.e. the observed flattening of the Phillips curve.
Keywords: Wage Growth; Labor Market Dualization; Involuntary Temporary Work; Phillips Curve; Competition effect (search for similar items in EconPapers)
JEL-codes: J31 J42 J82 (search for similar items in EconPapers)
Pages: 52 pages
New Economics Papers: this item is included in nep-eec, nep-iue and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:amz:wpaper:2022-04
Access Statistics for this paper
More papers in INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by INET Oxford admin team ().