Still Searching for the Wage Curve: Evidence from Germany and Italy
52 Pages Posted: 20 Feb 2007
Date Written: 2007
Abstract
This paper investigates the functioning of regional labour markets in Italy and Germany for different employee groups. In the light of high and persistent differences in unemployment and wage rates between the North and South of Italy and the West and East of Germany, we first derive theoretical hypotheses on group specific correlations between regional unemployment and individual wages. Using micro data on hourly wages properly matched to local unemployment rates, we specify and empirically test different wage equations. On the basis of our results, we find no evidence for the existence of a "wage curve" in Italy. In the case of Germany, results are quite sensitive to the model specification and the employee group considered. In both countries, the reaction of wages to local unemployment varies significantly along the wage distribution, being more sensitive around the median quantiles. We conclude that there is no uniform wage curve and call for a differentiated analysis for various groups, taking into account the respective institutional setting.
Keywords: wage curve, local labour markets, quantile regressions
JEL Classification: J3, J6, R1
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982-1997
-
Wage Formation, Regional Migration and Local Labour Market Tightness
By Fredrik Carlsen, Kåre Johansen, ...
-
The Impact of a Customs Union with the European Union on Internal Migration in Turkey
-
Inequality and Unemployment in Europe: The American Cure
By James K. Galbraith, Pedro Conceicao, ...
-
A Spatial Analysis of Wage Differentials for the Spanish Provinces
By Adolfo Maza and José Villaverde
-
Making Truly Competitive Cities - On the Appropriate Role for Local Government
By Alan Collins
-
By Eddie Gerba, Emmanuel V. Pikoulakis, ...