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An explorative empirical analysis of the influence of labour flows on wage formation using the Johansen approach

Author

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  • Broersma, Lourens

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

  • Butter, Frank A.G. den

Abstract

This study presents an explorative econometric analysis of the influence of labour market flows on wage formation. It applies the vector cointegration and common trends methodology of Johansen (1995). According to this approach, a combination of the flow of layoffs (flow from employment to unemployment) and the flow of filled vacancies (successful matches) appears to be an adequate alternative to the unemployment rate as indicator of labour market tightness in the wage equation for The Netherlands.

Suggested Citation

  • Broersma, Lourens & Butter, Frank A.G. den, 1999. "An explorative empirical analysis of the influence of labour flows on wage formation using the Johansen approach," Serie Research Memoranda 0059, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    • Handle: RePEc:vua:wpaper:1999-59
    as

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    References listed on IDEAS

    as
    1. Alain Hecq & Benoît Mahy, 1997. "Testing for the Price‐ and Wage‐Setting Model in Belgium Using Multivariate Cointegration Tests," LABOUR, CEIS, vol. 11(1), pages 177-199, April.
    2. Edmund S. Phelps, 1968. "Money-Wage Dynamics and Labor-Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 76(4), pages 678-678.
    3. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    4. Jarque, Carlos M. & Bera, Anil K., 1980. "Efficient tests for normality, homoscedasticity and serial independence of regression residuals," Economics Letters, Elsevier, vol. 6(3), pages 255-259.
    5. Nymoen, Ragnar, 1992. "Finnish manufacturing wages 1960-1987: Real-wage flexibility and hysteresis," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 429-451, August.
    6. Broersma, Lourens & Butter, Frank A.G. den, 1999. "Labour flows as determinants of the wage-price spiral : an empirical analysis for the Netherlands," Serie Research Memoranda 0058, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    7. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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