Is There a Signalling Role for Public Wages? Evidence for the Euro Area Based on Macro Data

33 Pages Posted: 13 Jan 2010

See all articles by Javier J. Pérez

Javier J. Pérez

Banco de España - Research Department

Antonio Jesus Sanchez Fuentes

Universidad Complutense de Madrid (UCM); Universidad Complutense de Madrid (UCM) - Institute of International Studies (ICEI)

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Date Written: January 12, 2010

Abstract

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).

Keywords: government wages, private sector wages, signalling, causality, mixed frequency data, casual graph

JEL Classification: C32, C53, J30, J51, E62, E63, H50, H6

Suggested Citation

Perez, Javier J. and Sanchez Fuentes, Antonio Jesus, Is There a Signalling Role for Public Wages? Evidence for the Euro Area Based on Macro Data (January 12, 2010). Banco de Espana Working Paper No. 0934, Available at SSRN: https://ssrn.com/abstract=1535264 or http://dx.doi.org/10.2139/ssrn.1535264

Javier J. Perez (Contact Author)

Banco de España - Research Department ( email )

Alcala 50
28014 Madrid
Spain

HOME PAGE: http://www.bde.es/investigador/staff/95.htm

Antonio Jesus Sanchez Fuentes

Universidad Complutense de Madrid (UCM) ( email )

Madrid, 28040
Spain

Universidad Complutense de Madrid (UCM) - Institute of International Studies (ICEI) ( email )

Collado Villalba, Madrid, 28400
United States

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