Wage Diversity in the Euro Area: An Overview of Labour Cost Differentials Across Industries

49 Pages Posted: 7 Dec 2005

See all articles by Veronique Genre

Veronique Genre

European Central Bank (ECB)

Daphne Momferatou

European Central Bank (ECB)

Gilles Mourre

European Union - European Commission

Date Written: February 2005

Abstract

This Paper provides an overview of the magnitude of sectoral wage differentials in the euro area as a whole. Even when adjusting for structural sectoral features such as the skill structure or the proportion of part-timers, average wage levels in services are substantially lower than in manufacturing. The paper also studies how the euro area wage structure compares with that of the United States and the United Kingdom. It discusses some possible determinants of intersectoral wage differentials in the euro area and their likely implications from a policy perspective. A number of worker characteristics (e.g. age, skills, the proportion of temporary or self-employed) are highly correlated with the structure of wage differentials. At the same time, wage differentials are also highly correlated with sector-specific features such as average firm size or capital intensity. Finally, the paper presents some stylised facts on how the euro area wage structure has evolved since the early 1980s.

Keywords: Intersectoral wage differential, wage determination, euro area

JEL Classification: J31, E24, J41

Suggested Citation

Genre, Veronique and Momferatou, Daphne and Mourre, Gilles, Wage Diversity in the Euro Area: An Overview of Labour Cost Differentials Across Industries (February 2005). ECB Occasional Paper No. 24, Available at SSRN: https://ssrn.com/abstract=752073

Veronique Genre (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Daphne Momferatou

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Gilles Mourre

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

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