Understanding inter-industry wage structure in the euro area

Veronique Genre (1) , Karsten Kohn (2) , Daphne Momferatou (1)

1 DG-Economics
2 Goethe University Frankfurt

This paper analyses the euro area wage structure and its potential determinants from a sectoral point of view. Merging information from the OECD Structural Analysis database with data from the EU Labour Force Survey, we construct a cross-country panel of 22 industries in eight euro area countries for the period 1991-2002. Descriptive inspection of this data set confirms the existence of a stable inter-industry wage structure which is rather similar across euro area countries and which exhibited fairly small changes over the 1990s. We then apply panel data techniques in order to identify factors explaining inter-industry wage differentials in the euro area. Both workforce characteristics (e.g., human capital variables) and firm-related characteristics (e.g., capital intensity or apparent productivity) contribute significantly. However, considerable wage heterogeneity across sectors remains. Idiosyncratic country and in particular sector specifics implying different socio-cultural and institutional backgrounds, such as the extent of unionisation or the degree of centralisation of collective bargaining, bear a major role. In some sectors, unobservable specifics even overcompensate for the influence of observable determinants.

Mots clés: Social Sciences & Humanities

Veronique Genre, Karsten Kohn, Daphne Momferatou. Understanding inter-industry wage structure in the euro area. Applied Economics, 2011, pp.1. ⟨10.1080/00036846.2010.537637⟩. ⟨hal-00659526⟩