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Stochastic and Club Convergence in Real Wages in European Union: Evidence from Aggregate and Sector Level Data

Author

Listed:
  • Ivan D. Trofimov

    (Kolej Yayasan Saad (KYS) Business School, Lebuh Ayer Keroh, Melaka 75450, Malaysia)

  • Ahmed Sharaan

    (��Aveiro University, 3810-193 Aveiro, Portugal)

Abstract

The paper examined real wage convergence across 27 European economies, at aggregate and sectoral levels, using the panel unit root tests of stochastic convergence and the club clustering procedure. Convergence was absent for a panel as a whole, but present within the clubs. In most sectors, the common component of the relative wages was stationary, while idiosyncratic component contained unit roots, suggesting the country- and sector-specific drivers of convergence and only transitory effects of exogenous forces. The most pronounced club convergence was observed in the sectors characterized by significant labor mobility, knowledge intensity and speed of technological change.

Suggested Citation

  • Ivan D. Trofimov & Ahmed Sharaan, 2023. "Stochastic and Club Convergence in Real Wages in European Union: Evidence from Aggregate and Sector Level Data," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 14(01), pages 1-33, February.
    • Handle: RePEc:wsi:jicepx:v:14:y:2023:i:01:n:s1793993323500023
    DOI: 10.1142/S1793993323500023
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    More about this item

    Keywords

    Convergence; panel unit root tests; industry; Europe;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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