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Are Wages Equal Across Sectors of Production? A Panel Data Analysis for Tradable and Non-Tradable Goods

Achim Schmillen

No 102, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: The assumption that national labor markets are homogenous across tradable and non-tradable goods is common in multisector (open-economy) macro models and crucial for the prominent Balassa-Samuelson hypothesis. This study tests it with a novel method to distinguish the tradable and non-tradable sectors grounded in economic theory, modern empirical methods and a large and detailed macro data set. It nds that both the internal relationship between productivity and wages in the tradable and non-tradable sectors postulated by the Balassa-Samuelson hypothesis and its external transmission mechanism are rejected.

Keywords: Balassa-Samuelson; Wage equalization; Tradability (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2011-06
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http://www.bgpe.de/texte/DP/102_Schmillen.pdf First version, 2011 (application/pdf)

Related works:
Working Paper: Are Wages Equal Across Sectors of Production? A Panel Data Analysis for Tradable and Non-Tradable Goods (2010) Downloads
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