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Co-movements between public and private wages in the EU: what factors and with what policy implications?

Author

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  • Benedicta Marzinotto

    (University of Udine)

  • Alessandro Turrini

    (European Commission and IZA)

Abstract

This paper assesses the relationship between public and private wages in the EU, as measured by general government and manufacturing compensations, respectively. We find that the long-run relation between the two is stronger when the government is a large employer. Manufacturing compensations are better aligned with productivity and unemployment when general government compensations, to which they generally respond, are set through bargaining. Finally, manufacturing compensations react in the same way whether those in the general government sector are increased or cut, a relation that seems to hold also under fiscal consolidation provided the government is a large employer. JEL Classification: C32, E24, E62, H59

Suggested Citation

  • Benedicta Marzinotto & Alessandro Turrini, 2017. "Co-movements between public and private wages in the EU: what factors and with what policy implications?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-16, December.
    • Handle: RePEc:spr:izaels:v:6:y:2017:i:1:d:10.1186_s40174-016-0074-1
    DOI: 10.1186/s40174-016-0074-1
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    References listed on IDEAS

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    More about this item

    Keywords

    General government compensations; Wage setting; Cost competitiveness; Fiscal consolidation; Co-integration;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other

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