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Sectoral wage and price formation and working time in Germany: An econometric analysis

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  • Franz, Wolfgang
  • Smolny, Werner

Abstract

In this paper a variety of theories concerning the wage and price formation in Germany are tested. More specifically, wage and price equations are specified in a fairly general manner which nests several theoretical arguments (such as the target real wage bargaining model, hysteresis effects, outsider ineffectiveness, interindustry wage competition) and a perceived tradeoff between reductions in working time and wage increases. Related arguments hold for the price setting process. Recently developed econometric techniques such as error correction models are applied.

Suggested Citation

  • Franz, Wolfgang & Smolny, Werner, 1993. "Sectoral wage and price formation and working time in Germany: An econometric analysis," Discussion Papers 5, University of Konstanz, Center for International Labor Economics (CILE).
    • Handle: RePEc:zbw:koncil:5
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    References listed on IDEAS

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    1. Nickell, Stephen J & Wadhwani, Sushil, 1990. "Insider Forces and Wage Determination," Economic Journal, Royal Economic Society, vol. 100(401), pages 496-509, June.
    2. Franz, Wolfgang & Gordon, Robert J., 1993. "German and American wage and price dynamics : Differences and common themes," European Economic Review, Elsevier, vol. 37(4), pages 719-754, May.
    3. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
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    7. Robert J. Gordon, 1991. "Productivity, Wages, and Prices Inside and Outside of Manufacturing in the U.S., Japan, and Europe," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 153-207, National Bureau of Economic Research, Inc.
    8. Assar Lindbeck & Dennis J. Snower, 1989. "The Insider-Outsider Theory of Employment and Unemployment," MIT Press Books, The MIT Press, edition 1, volume 1, number 026262074x, April.
    9. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
    10. Maccini, Louis J, 1981. "On the Theory of the Firm Underlying Empirical Models of Aggregate Price Behavior," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(3), pages 609-624, October.
    11. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-392, June.
    12. Thaler, Richard H, 1989. "Interindustry Wage Differentials," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 181-193, Spring.
    13. Sneessens, H. & Dreze, J., 1985. "A discussion of Belgian unemployment, combining traditional concepts and disequilibrium econometrics," LIDAM Discussion Papers CORE 1985040, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    14. Dreze, Jacques H. & Modigliani, Franco, 1981. "The trade-off between real wages and employment in an open economy (Belgium)," European Economic Review, Elsevier, vol. 15(1), pages 1-40.
    15. Coe, David T, 1990. "Insider-Outsider Influences on Industry Wages: Evidence from Fourteen Industrialized Countries," Empirical Economics, Springer, vol. 15(2), pages 163-183.
    16. repec:bla:econom:v:53:y:1986:i:210(s):p:s89-119 is not listed on IDEAS
    17. Holmlund, Bertil & Zetterberg, Johnny, 1991. "Insider effects in wage determination : Evidence from five countries," European Economic Review, Elsevier, vol. 35(5), pages 1009-1034, July.
    18. Bertil Holmlund, 1991. "Unemployment Persistence and Insider-Outsider Forces in Wage Determination," OECD Economics Department Working Papers 92, OECD Publishing.
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    Cited by:

    1. de la Croix, David, 1994. "Wage Interdependence through Decentralized Bargaining," Journal of Economic Surveys, Wiley Blackwell, vol. 8(4), pages 371-403, December.
    2. Franz, Wolfgang & Heidbrink, Gustav W. & Smolny, Werner, 1993. "The impact of German unification on West Germany's goods and labor market: A macroeconometric disequilibrium model in action," Discussion Papers 7, University of Konstanz, Center for International Labor Economics (CILE).
    3. Fitzenberger, Bernd & Franz, Wolfgang, 1993. "Dezentrale versus zentrale Lohnbildung in Europa: Theoretische Aspekte und empirische Evidenz," Discussion Papers 9, University of Konstanz, Center for International Labor Economics (CILE).

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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