Hidden Bibliographic Details
| Other authors / contributors: | International Monetary Fund, issuing body.
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| ISBN: | 1513508652
9781513508658
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| Notes: | Online resource; title from PDF title page (IMF, viewed Sept. 8, 2020).
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| Summary: | Wage rises have remained stubbornly low in advanced Europe in recent years, but, at the same time, newer EU members are experiencing rapid wage acceleration. This paper investigates the drivers of this wage divergence. Econometric analysis using error correction models suggests that wage growth responds more quickly to changes in unemployment in the newer EU members than in advanced Europe, where wages are more closely related to inflation and inflation expectations in the short run, implying greater inertia in nominal wage rises in advanced Europe. In the years after the global crisis, this inertia contributed to the build up of a real wage overhang relative to sharply slowing labor productivity, which subsequently dragged on nominal wage rises even as unemployment began to decline. Spillovers of subdued wage growth between euro area countries also weighed on wage rises in advanced Europe.
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| Other form: | Print version: Zhang, Yuanyan Sophia. European Wage Dynamics and Spillovers. Washington, D.C. : International Monetary Fund, ©2019 9781498319294
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