Is there a signalling role for public wages? Evidence for the euro area based on macro data

Series: Working Papers. 0934.

Author: Javier J. Pérez and A. Jesús Sánchez.

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Is there a signalling role for public wages? Evidence for the euro area based on macro data (805 KB)

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 of 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 mixedfrecuencies
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).