Assessing real wage flexibility in Albania

Meri Papavangjeli

MPRA Paper from University Library of Munich, Germany

Abstract: Based on aggregate level data for the period 2000Q1-2017Q2, this article aims at assessing the degree of real wage flexibility in Albania within a vector error-correction model, where real wage flexibility is conceptualized using two indicators: the responsiveness of real wages to unemployment rate and their responsiveness to changes in productivity. In the very short run (2-3 quarters), most of the variation in real wages forecast errors is explained by their past values (more than 70%) rather than by labor productivity or unemployment rate. The analysis confirms the fact that real wages are slightly flexible towards these two variables. However, these conclusions are based on a particular statistical methodology and may be affected by certain statistical problems due to the quality of the underlying data series.

Keywords: real wage; flexibility; productivity; unemployment (search for similar items in EconPapers)
JEL-codes: C22 E24 J30 (search for similar items in EconPapers)
Date: 2018-06-30
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Published in Bank of Albania Economic Review 2018H1 (2018): pp. 1-11

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:116861

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