The wage curve before and during the Greek economic crisis

Using cross-sectional data from the Labour Force Survey, we investigate whether a wage curve, i.e. a negative relationship between real wages and regional unemployment, could be estimated in the Greek labour market and in the period 1999–2014. Adopting individual static and regional dynamic specific...

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Bibliographic Details
Published in:Empirical economics 2017-02, Vol.52 (1), p.59-77
Main Authors: Daouli, Joan, Demoussis, Michael, Giannakopoulos, Nicholas, Laliotis, Ioannis
Format: Article
Language:English
Subjects:
Collective bargaining
Econometrics
Economic conditions
Economic crisis
Economic models
Economic statistics
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Finance
Insurance
Labor economics
Labor force
Labor market
Labor relations
Legislation
Management
Minimum wage
Public sector
Statistics for Business
Studies
Unemployment
Wages & salaries
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Summary:Using cross-sectional data from the Labour Force Survey, we investigate whether a wage curve, i.e. a negative relationship between real wages and regional unemployment, could be estimated in the Greek labour market and in the period 1999–2014. Adopting individual static and regional dynamic specifications, our results do not support the existence of such a relationship despite the extensive macroeconomic adjustment of real wages after 2009. However, allowing for period-specific heterogeneous slopes, we find that a negative relationship between wages and regional unemployment emerged in the period 2010Q2–2011Q4 which however was short-lived. This relationship appears to be exclusively due to the restructuring of the collective bargaining regime and the reduction in the national minimum wages, both of which were implemented in the private sector.
ISSN:0377-7332
1435-8921
DOI:10.1007/s00181-016-1073-9