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Is the Swedish Central Government a Wage Leader?

Author

Listed:
  • Lindquist, Matthew J.

    (Swedish Institute for Social Research, Stockholm University)

  • Vilhelmsson, Roger

    (Swedish Agency for Government Employers)

Abstract

Is the Swedish central government a wage leader? This question is studied empirically in a vector error-correction model using a unique, high quality data set. Private sector salaries are found to be weakly exogenous to the system of equations. This means that the private sector is the wage leader in the long-run model. We also find that salaries in these two sectors do not converge to a common salary in the long-run and that changes in central government salaries do not Granger cause changes in private sector salaries. Together, these findings clearly demonstrate that the central government is not placing undue pressure on salaries in the private sector. The central government is not acting as a wage leader.

Suggested Citation

  • Lindquist, Matthew J. & Vilhelmsson, Roger, 2004. "Is the Swedish Central Government a Wage Leader?," Working Paper Series 8/2004, Stockholm University, Swedish Institute for Social Research.
    • Handle: RePEc:hhs:sofiwp:2004_008
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    References listed on IDEAS

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    More about this item

    Keywords

    public sector wages; Sweden; vector error-correction model; wage leadership.;
    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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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