Is There a Signalling Role for Public Wages? Evidence for the Euro Area Based on Macro Data
Javier J. Perez
Bank of Spain - Research Department
Antonio Jesus Sanchez Fuentes
Universidad Complutense de Madrid (UCM)
January 12, 2010
Banco de Espana Working Paper No. 0934
Do public sector wages exert presures on private sector wages, or has private sector a leadership role in wage setting? This paper tries to isolate the pure signalling effect that one sector might exert on the other by controlling for other determinants os wages (prices, productivity, institutions) for the main euro area economies (Germany, France, Italy and Spain) and the periods 1980-2007 and 1991-2007. It exploits avilable quarterly information not yet used in the literature, and combine different data sources in the framework of mixed frecuencies time series models. The quarterly frequency of our data allows us to check the existence of strong evidence of public wages’ leadership, either in conjunction with bidirectional links from the private sector (Germany and Spain) or pure public wage leadership (France in the sample 1991-2007, Italy for within-the-year linkages).
Number of Pages in PDF File: 33
Keywords: government wages, private sector wages, signalling, causality, mixed frequency data, casual graph
JEL Classification: C32, C53, J30, J51, E62, E63, H50, H6working papers series
Date posted: January 13, 2010
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