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Inter-industry wage differentials in EU countries: what do cross-country time varying data add to the picture?

Author

Listed:
  • Philip Du Caju

    (National Bank of Belgium)

  • Gábor Kátay

    (Magyar Nemzeti Bank)

  • Ana Lamo

    (European Central Bank)

  • Daphne Nicolitsas

    (Bank of Greece)

  • Steven Poelhekke

    (Bank of Greece)

Abstract

This paper documents the existence and main patterns of inter-industry wage differentials across a large number of industries for 8 EU countries at two points in time and explores possible explanations for these. The analysis uses the European Structure of Earnings Survey (SES), an internationally harmonised matched employer-employee dataset, to estimate inter-industry wage differentials conditional on a set of employee, employer and job characteristics. After investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials, a hypothesis which cannot be accepted, the paper investigates the role of institutional, industry structure and performance characteristics in explaining inter-industry wage differentials. The results suggest that inter-industry wage differentials are consistent with rent sharing mechanisms and that rent sharing is more likely in industries with firm-level collective agreements and with higher collective agreement coverage.

Suggested Citation

  • Philip Du Caju & Gábor Kátay & Ana Lamo & Daphne Nicolitsas & Steven Poelhekke, 2010. "Inter-industry wage differentials in EU countries: what do cross-country time varying data add to the picture?," Working Papers 121, Bank of Greece.
    • Handle: RePEc:bog:wpaper:121
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    inter-industry wage differentials; rent sharing; unobserved ability;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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