Wage flexibility and local labour marketsa test on the homogeneity of the wage curve in Spain

  1. Bande Ramudo, Roberto
  2. Fernández Fernández, Melchor
  3. Montuenga Gómez, Víctor Manuel
Revista:
Investigaciones Regionales = Journal of Regional Research

ISSN: 1695-7253 2340-2717

Año de publicación: 2012

Título del ejemplar: Wages and Regional Labour Markets

Número: 24

Páginas: 175-198

Tipo: Artículo

Otras publicaciones en: Investigaciones Regionales = Journal of Regional Research

Resumen

In this paper we analyse wage flexibility in Spain and its regional differences, departing from the estimation of wage curves. Using data from the Structure of Earnings Survey for 1995, 2002 and 2006, we estimate regional wage equations, relating the observed wage received by workers to a group of personal and job characteristics, as well as to the regional unemployment rate. This analysis allows us to test for the existence of regional differences in the degree of wage flexibility, which may have an important influence on the evolution of regional unemployment, given its impact on the ability of the local labour market to absorb negative shocks. Estimated results indicate that regions suffering from higher unemployment rates exhibit lower wage flexibility. Collective bargaining reforms should pursue greater wage flexibility, especially in regions with high rates of joblessness

Referencias bibliográficas

  • Ammermüller, A. et al. (2010): Wage flexibility in regional labour markets: Evidence from Italy and Germany, Regional Studies, 44 (4), 400-421.
  • Baddeley M. et al. (1998): European regional unemployment disparities: convergence or persistence?, European Urban and Regional Studies, 5, 195-215.
  • Bande, R. et al. (2007): Regional disparities in the unemployment rate: the role of the wage setting mechanism in Spain, 1987-1992, Regional Studies, 41(2), 235-251.
  • Bande, R. et al. (2008): Regional Unemployment in Spain: Disparities, Business Cycle and Wage-Setting, Labour Economics, vol. 15(5), 885-914.
  • Bande, R. et al. (2009): Las tasas de paro regionales españolas: ¿convergencia o polarización?, in Fernández, M.; Montuenga, V., and Riveiro, D. (coords.): El mercado de trabajo en España: otros aspectos relevantes, Ed. Lóstrego, Santiago de Compostela: 199-221.
  • Bande, R. et al. (2010): Desequilibrios territoriales en el mercado laboral español y la estructura de la negociación colectiva, Papeles de Economía Española, 124, 193-213.
  • Bande, R., and Karanassou, M. (2011): The NRU and the Evolution of Regional Disparities in Spanish Unemployment, Working Paper no 681, Queen Mary, University of London, School of Economics and Finance.
  • Basile, R., and De Benedictis, L. (2008): Regional unemployment and productivity in Europe, Papers in Regional Science, 87(2), 173-192.
  • Bentolila, S. et al. (2008): Does immigration affect the Phillips curve? Some evidence for Spain, European Economic Review, 52, 1398-1423.
  • Bentolila, S., and Jimeno, J. F. (2006): Spanish unemployment: the end of the wild ride?, in M. Werding (ed.), Structural Unemployment in Western Europe: Reasons and Remedies, Cambridge MA, London UK: MIT Press.
  • Bertola, G. et al. (2001): Comparative analysis of labor market outcomes: lessons for the US from international long-run evidence, in A. Krueger and R. Solow (eds.), The Roaring Nineties: Can Full Employment Be Sustained?, Russell Sage Foundation, New York.
  • Blanchard, O. (2006): European unemployment: the evolution of facts and ideas, Economic Policy, 21, 5-59.
  • Blanchard, O., and Wolfers, J. (2000): The role of shocks and institutions in the rise of European unemployment: the aggregate evidence, Economic Journal, 110, 1-33.
  • Blanchflower, D., and Oswald, A. (1994): The Wage Curve, Cambridge, MA, MIT Press.
  • Blanchflower, D., and Oswald, A. (2005): The wage curve reloaded, WP. 11338, NBER.
  • Brunello, G. et al. (2001): Widening differences in Italian regional unemployment, Labour Economics, 8, 103-129.
  • Canziani, P. (1997): The wage curve in Italy and Spain: are European wages flexible?, Discussion Paper, 358, Centre for Economic Performance, LSE.
  • Deller, S. (2011): Spatial heterogeneity in the wage curve, Economics Letters, 113 (3), 231-233.
  • Dolado, J. J. et al. (2008): Two-tier employment protection reforms: the Spanish experience, CES-Ifo-DICE, Journal for International Comparisons, 6 (4), 49-56.
  • Eichhorst, W. et al. (2008): What have we learned? Assessing labor market institutions and indicators, DP 3470, IZA, Bonn.
  • Elhorst, J. P. (2003): The mystery of regional unemployment differentials: Theoretical and empirical explanations, Journal of Economic Surveys, 17, 709-749.
  • European Commission (2000): Sixth periodic report on the social and economic situation and development of regions in the European Union, Bruxelles.
  • García, I., and Montuenga, V. (2003): The Spanish wage curve: 1994-96, Regional Studies, 37, 929-945.
  • Hart, R. A. (2003): Overtime working, the Phillips curve and the wage curve: British engineering, 1926-66, The Manchester School, 71(2), 97-112.
  • Jimeno, J. J., and Bentolila, S. (1998): Regional unemployment persistence (Spain, 1976-1994), Labour Economics, 5, 25-51.
  • Kennedy, S., and Borland, J. (2000): A wage curve for Australia?, Oxford Economic Papers, 52, 774-803.
  • Livanos, I. (2010): The wage-local unemployment relationship in a highly regulated labour market: Greece, Regional Studies, 44(4), 389-400.
  • López-Bazo E. et al. (2002): The regional distribution of Spanish unemployment. A spatial analysis, Papers in Regional Science, 81, 365-89.
  • López-Bazo, E., and Motellón, E. (2011): The regional distribution of unemployment. What do micro-data tell us?, IREA Working Papers 201125, University of Barcelona, Research Institute of Applied Economics.
  • Marston, S. (1985): Two views of the geographic distribution of unemployment, Quarterly Journal of Economics, 100, 57-79.
  • Monastiriotis, V. (2006): A panel of regional indicators of labour market flexibility: the UK, 1979-1998, in F. Caroleo and S. Destefanis (eds.), Regions, Europe and the Labour Market. Recent Problems and Developments, Physica Verlag, 221-244.
  • Montuenga, V. et al. (2003): Wage flexibility: evidence from five EU countries based on the wage curve, Economics Letters, 78 (2), 169-174.
  • Montuenga, V., and Ramos, J. M. (2005): Reconciling the wage curveand the Phillips curve, Journal of Economic Surveys, 19, 735-765.
  • Moulton, B. (1986): Random group effects and the precision of regression estimates, Journal of Econometrics, 32, 385-397.
  • Nijkamp, P., and Poot, J. (2005): The last word on the wage curve?, Journal of Economic Surveys, 19, 421-450
  • Sala, H., and Silva, J. (2009): Flexibility at the margin and labour market volatility: the case of Spain, Investigaciones Económicas, 33(2), 145-178.
  • Sanroma, E., and Ramos, R. (2005): Further evidence on disaggregated wage curves: the case of Spain, Australian Journal of Labour Economics, Curtin Business School, 8(3), 227-243.
  • Simón, H. (2010): La negociación colectiva y la estructura salarial en España, Papeles de Economía Española, 124, 214-229.