Understanding Inter-Industry Wage Structures in the Euro Area

Veronique Genre, Karsten Kohn and Daphne Momferatou ()

No 4114, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper focuses on the euro area wage structure and its potential determinants from a sectoral viewpoint. Merging information from the OECD Structural Analysis database with data from the EU Labour Force Survey, we construct a cross-country panel of 22 industries in 8 euro area countries for 1991-2002. Data inspection confirms the existence of a fairly stable inter-industry wage structure that is similar across countries. We then apply panel data techniques to identify factors explaining inter-industry wage differentials in the euro area. Both workforce characteristics (e.g., human capital variables) and firm-related characteristics (e.g., capital intensity, productivity) contribute significantly. However, considerable wage heterogeneity across sectors remains. Idiosyncratic sector and country specifics, reflecting different socio-cultural and institutional backgrounds, appear to bear a major role. While our empirical analysis only uses direct evidence from workforce and firm-related characteristics, we also try to relate the remaining heterogeneity to institutional characteristics, based on related literature.

Keywords: firm and workforce characteristics; panel estimation; inter-industry wage differentials; labour market institutions; euro area (search for similar items in EconPapers)
JEL-codes: J24 J31 J51 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2009-04
New Economics Papers: this item is included in nep-eec, nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Applied Economics, 2011, 43 (11), 1299 - 1313

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Related works:
Journal Article: Understanding inter-industry wage structures in the euro area (2011)
Working Paper: Understanding inter-industry wage structures in the euro area (2009)
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