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Analysis of wage flexibility across the Euro Area: evidence from the process of convergence of the labour income share ratio

By 1 de julio de 2014enero 26th, 2022Investigacion, papers

Artículo de Investigación

Autor(es): Pino, G. & Soto, A.
Journal: Applied Economics
Año: 2014
DOI: /10.1080/00036846.2014.934434

Cómo citar (APA): Pino G & Soto A. (2014). Analysis of wage flexibility across the Euro Area: evidence from the process of convergence of the labour income share ratio. Applied Economics, 46(29), 3572-3580.

Abstract:

 

This article analyses wage flexibility as a factor in the unemployment rate across 12 Euro Area countries. We use extensive evidence pertaining to the countercyclical behaviour of the labour income share ratio to estimate its equilibrium value in the long run. This measure is calculated using a hybrid New Keynesian Phillips curve. Additionally, by using spatial econometrics, we can incorporate into the study the interdependence in the inflation among the countries. As a result, we identify countries that might see an improvement in their employment rates by improving their wage flexibility. We also identify countries with high unemployment that is not a consequence of a lack of wage flexibility.

Keywords: wage flexibility unemploymenthybrid New Keynesian Phillips curvelabour income share ratio

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