IDEAS home Printed from https://ideas.repec.org/a/eaa/ijaeqs/v5y2008i2_2.html
   My bibliography  Save this article

Wage Dynamics In A Structural Time Series Model For Luxembourg

Author

Listed:
  • Aka, Bédia F.
  • P. Pieretti

Abstract

This paper examines the relationships between monetary wage and its theoretical explanatory variables using a Structural Time Series (STS) model in order to take into account the unobserved components (trend, cycle, seasonal and irregular) of wage. Theoretically, the monetary wage is negatively related to labor productivity and unemployment rate but positively to the consumer price index and foreign prices. Our empirical results for a small open economy as Luxembourg indicate that the wage is positively related to the consumer price index and foreign prices as predicted by the theory, but the labor productivity and unemployment rate are not significant in the explanation of wages dynamics in the Luxembourg economy.

Suggested Citation

  • Aka, Bédia F. & P. Pieretti, 2008. "Wage Dynamics In A Structural Time Series Model For Luxembourg," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 5(2).
    • Handle: RePEc:eaa:ijaeqs:v:5:y2008:i:2_2
    as

    Download full text from publisher

    File URL: http://www.usc.es/economet/reviews/ijaeqs522.pdf
    Download Restriction: No
    ---><---

    References listed on IDEAS

    as
    1. Holden,S., 1999. "Wage setting under different monetary regimes," Memorandum 12/1999, Oslo University, Department of Economics.
    2. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-666, September.
    3. Ben Lockwood & Alan Manning, 1993. "Wage Setting and the Tax System: theory and Evidence for the UK," CEP Discussion Papers dp0115, Centre for Economic Performance, LSE.
    4. Manning, Alan, 1993. "Wage Bargaining and the Phillips Curve: The Identification and Specification of Aggregate Wage Equations," Economic Journal, Royal Economic Society, vol. 103(416), pages 98-118, January.
    5. Lockwood, Ben & Manning, Alan, 1993. "Wage setting and the tax system theory and evidence for the United Kingdom," Journal of Public Economics, Elsevier, vol. 52(1), pages 1-29, August.
    6. Nymoen, Ragnar & Rodseth, Asbjorn, 2003. "Explaining unemployment: some lessons from Nordic wage formation," Labour Economics, Elsevier, vol. 10(1), pages 1-29, February.
    7. Thórarinn G. Pétursson & Torsten Sløk, 2001. "Wage formation and employment in a cointegrated VAR model," Econometrics Journal, Royal Economic Society, vol. 4(2), pages 1-2.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Forslund, Anders & Gottfries, Nils & Westermark, Andreas, 2005. "Real and nominal wage adjustment in open economies," Working Paper Series 2005:23, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    2. Daniel Cardona & Fernando Sánchez-Losada, 2004. "The Unemployment Benefit System: a Redistributive or an Insurance Institution?," DEA Working Papers 8, Universitat de les Illes Balears, Departament d'Economía Aplicada.
    3. Paul Turner, 1999. "Estimates of a bargaining model of wages for the UK economy 1870-1995," Applied Economics Letters, Taylor & Francis Journals, vol. 6(2), pages 63-66.
    4. Kory Kroft & Kavan Kucko & Etienne Lehmann & Johannes Schmieder, 2020. "Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach," American Economic Journal: Economic Policy, American Economic Association, vol. 12(1), pages 254-292, February.
    5. Albert Jan Hummel, 2021. "Unemployment and tax design," Tinbergen Institute Discussion Papers 21-061/VI, Tinbergen Institute.
    6. Lehmann, Etienne & Parmentier, Alexis & Van Der Linden, Bruno, 2011. "Optimal income taxation with endogenous participation and search unemployment," Journal of Public Economics, Elsevier, vol. 95(11), pages 1523-1537.
    7. Yannick L'horty & Christophe Rault, 2003. "Why Is French Equilibrium Unemployment So High? an Estimation of the Ws-Ps Model," Journal of Applied Economics, Taylor & Francis Journals, vol. 6(1), pages 127-156, May.
    8. Nick Zubanov & W.S. Siebert, 2009. "Management economics in a large UK retailer," CPB Discussion Paper 125.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Etienne Lehmann & Claudio Lucifora & Simone Moriconi & Bruno Van der Linden, 2016. "Beyond the labour income tax wedge: the unemployment-reducing effect of tax progressivity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(3), pages 454-489, June.
    10. repec:zbw:bofrdp:1995_012 is not listed on IDEAS
    11. Marc van der Steeg & Roel van Elk & Dinand Webbink, 2012. "Does intensive coaching reduce school dropout?," CPB Discussion Paper 224.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Leon Bettendorf & Joeri Gorter & Albert van der Horst, 2006. "Who benefits from tax competition in the European Union?," CPB Document 125.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Tyrväinen, Timo, 1995. "Wage determination in the long run, real wage resistance and unemployment : Multivariate analysis of cointegrating relations in 10 OECD economies," Research Discussion Papers 12/1995, Bank of Finland.
    14. Kees Folmer, 2009. "Why do macro wage elasticities diverge?," CPB Memorandum 224, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Chun‐Chieh Huang & Juin‐Jen Chang & Hsiao‐Wen Hung, 2020. "Progressive Tax and Inequality in a Unionized Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(1), pages 38-80, January.
    16. Yannick L'Horty & Renaud Méary & Nicolas Sobczak, 1994. "Le coin salarial en France depuis 1970," Économie et Prévision, Programme National Persée, vol. 115(4), pages 93-106.
    17. Kees Folmer, 2009. "Why do macro wage elasticities diverge?," CPB Memorandum 224.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Graafland, J.J. & Huizinga, F.H., 1998. "Taxes and benefits in a non-linear wage equation," MPRA Paper 21076, University Library of Munich, Germany.
    19. Albert Jan Hummel, 2021. "Unemployment and Tax Design," CESifo Working Paper Series 9177, CESifo.
    20. Kees Folmer, 2009. "Why do macro wage elasticities diverge? A meta analysis," CPB Discussion Paper 122, CPB Netherlands Bureau for Economic Policy Analysis.
    21. Martin T. Robson & Colin Wren, 1999. "Marginal and Average Tax Rates and the Incentive for Self‐Employment," Southern Economic Journal, John Wiley & Sons, vol. 65(4), pages 757-773, April.

    More about this item

    Keywords

    Wage Bargaining; Labor Unions; Unobserved Components Models; Structural Time Series;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eaa:ijaeqs:v:5:y2008:i:2_2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: M. Carmen Guisan (email available below). General contact details of provider: http://www.usc.es/economet/eaa.htm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.