Understanding Inter-Industry Wage Structures in the Euro Area

43 Pages Posted: 21 Apr 2009

See all articles by Veronique Genre

Veronique Genre

European Central Bank (ECB)

Karsten Kohn

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank; IZA Institute of Labor Economics

Daphne Momferatou

European Central Bank (ECB)

Multiple version iconThere are 2 versions of this paper

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: euro area, inter-industry wage differentials, panel estimation, firm and workforce characteristics, labour market institutions

JEL Classification: J31, J24, J51

Suggested Citation

Genre, Veronique and Kohn, Karsten and Momferatou, Daphne, Understanding Inter-Industry Wage Structures in the Euro Area. IZA Discussion Paper No. 4114, Available at SSRN: https://ssrn.com/abstract=1391786

Veronique Genre (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Karsten Kohn

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank ( email )

Palmengartenstr. 5-9
Frankfurt, 60325
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Daphne Momferatou

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
441
PlumX Metrics