Are Wages in Southern Europe More Flexible? The Effects of Cohort Size on European Earnings

Giorgio Brunello and Charlotte Lauer ()

No 1299, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We exploit the cross-country and time variation in the demographics and education structure in 11 European countries to study how cohort size has affected real earnings in Europe. When we pool the data of all countries, we find that cohort size has a negative and statistically significant effect on the earnings of the older cohorts – aged between 35 and 54 – but no statistically significant effect on the earnings of younger cohorts – aged 20 to 34. The negative effect of cohort size on earnings is completely driven by Southern European countries, a result which we relate to institutional differences. While the share of individuals aged 20 to 34 in the population has declined in the EU11 by 10.20 percent between 1991 and 2001, the share of individuals aged 35 and 54 has increased by 9.32 percent. Our estimates suggest that, as a consequence of these significant demographic changes, the real earnings of the younger cohorts have increased on average by a tiny 0.06 percent, while the earnings of the older cohorts have declined by 0.93 percent, a modest variation.

Keywords: Europe; cohort size; wages (search for similar items in EconPapers)
JEL-codes: J11 J31 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2004-09
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (7)

Published - published as "The Effects of Cohort Size on European Earnings" in: Journal of Population Economics, 2010, 23 (1), 273 - 290

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Working Paper: Are Wages in Southern Europe more Flexible? The Effects of a Cohort Size on European Earnings (2005)
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