The link between wages and productivity

  1. Montuenga-Gómez, V.M. 2
  2. Fernández, M. 3
  3. Romeu, A. 1
  1. 1 Universitat d'Alacant

    Universitat d'Alacant

    Alicante, España


  2. 2 Universidad de La Rioja

    Universidad de La Rioja

    Logroño, España


  3. 3 Universidade de Santiago de Compostela

    Universidade de Santiago de Compostela

    Santiago de Compostela, España


International Review of Applied Economics

ISSN: 0269-2171

Year of publication: 2007

Volume: 21

Issue: 2

Pages: 247-272

Type: Article

DOI: 10.1080/02692170701189151 SCOPUS: 2-s2.0-34047236971 GOOGLE SCHOLAR

More publications in: International Review of Applied Economics

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This paper examines the effect of productivity on wages for Spanish industrial sectors by developing a model that captures effects from both sector-specific and aggregate variables. The results show that a dual behaviour can be inferred, at the sector level, in the wage-setting mechanism. It is also found that the linkage between wages and productivity varies over time. Some explanations for the increase in wage dispersion are provided, focusing on the increasing decentralisation in wage bargaining after 1986. Finally, we cast some light on the theoretical structure underlying the labour market.