What Drove Relative Wages in France? Structural Decomposition Analysis in a General Equilibrium Framework, 1970-92

Sebastien Jean and Olivier Bontout
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Olivier Bontout: Ministry of Labour, France

No 5, Economics Working Papers from European Network of Economic Policy Research Institutes

Abstract: This paper confronts a CGE model to observed evolutions in France, between 1970 and 1992, through a structural decomposition analysis. The choice of the model and the assumption of constant elasticities over time enable the structural change of the economy between two equilibria to be summarised through a set of four types of state variables, reflecting the effect of technical change, changes in factor supplies, shifts in consumption patterns, and international trade. Simulations then allow the contribution of each of these shocks to be assessed. We find that technical change had a strong positive impact on the relative wage of skilled to unskilled workers, while the impact of changes in factor supplies is strongly negative. The effect of international trade is far less important. However, if we take into account a trade-induced effect on productivity, then we find that trade substantially increased wage inequalities.

Keywords: Decomposition analysis; General equilibrium model; Relative wages; France. (search for similar items in EconPapers)
JEL-codes: D58 F16 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2001-09
New Economics Papers: this item is included in nep-eec and nep-lab
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Chapter: What Drove Relative Wages in France? Structural Decomposition Analysis in a General Equilibrium Framework, 1970–92 (2002)
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