Co-Movements between Public and Private Wages in the EU: Which Factors Play a Role?

24 Pages Posted: 7 Jun 2016

See all articles by Benedicta Marzinotto

Benedicta Marzinotto

Università degli Studi di Udine - Department of Economics

Alessandro Turrini

European Commission; Centre for Economic Policy Research (CEPR)

Abstract

This paper assesses the relationship between government and manufacturing wages. We find that the long-run relation between the two wages is stronger when the government is a large employer. Manufacturing wages are better aligned with productivity and unemployment when public wages, to which they respond, are set through bargaining. Finally, manufacturing wages react in the same way whether public wages are increased or cut, a relation that seems to hold also under fiscal consolidation provided the public sector is a large employer.

Keywords: government wages, wage-setting, cost competitiveness, fiscal consolidation, cointegration

JEL Classification: C32, E24, E62, H59

Suggested Citation

Marzinotto, Benedicta and Turrini, Alessandro, Co-Movements between Public and Private Wages in the EU: Which Factors Play a Role?. IZA Discussion Paper No. 9964, Available at SSRN: https://ssrn.com/abstract=2790002

Benedicta Marzinotto (Contact Author)

Università degli Studi di Udine - Department of Economics ( email )

Via Tomadini 30
33100 Udine
Italy

Alessandro Turrini

European Commission ( email )

Office BU-10/113
B-1049 Brussels
Belgium
+32 2 299 5072 (Phone)
+32 2 299 3505 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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