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Common and country specific factors in the distribution of real wages

Author

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  • Chatzivgeri, Eleni
  • Mumtaz, Haroon
  • Tavasci, Daniela
  • Ventimiglia, Luigi

Abstract

We use a dynamic factor model to consider if real wage growth in the US, UK and Germany at different percentiles of the distribution can be explained by factors that are common across countries or specific to each country. Our results suggest that common factors explain a large proportion of the movement in wages when considering the left tail of the distribution indicating that shocks that are common across countries are important for low wage households.

Suggested Citation

  • Chatzivgeri, Eleni & Mumtaz, Haroon & Tavasci, Daniela & Ventimiglia, Luigi, 2019. "Common and country specific factors in the distribution of real wages," Economics Letters, Elsevier, vol. 184(C).
    • Handle: RePEc:eee:ecolet:v:184:y:2019:i:c:s0165176519302861
    DOI: 10.1016/j.econlet.2019.108582
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    More about this item

    Keywords

    Household wages; Dynamic factor model;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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