Local and spatial cointegration in the wage curve: A spatial panel analysis for German regions

Arbeitspapier

The wage curve introduced by Blanchflower and Oswald (1990, 1994) postulates a negative correlation between wages and unemployment. Empirical results focus on particular theoretical channels establishing the relationship. Panel models mostly draw on unionized bargaining or the efficiency wage hypothesis. Spatial econometric approaches can be rationalized by monopsonistic competition. However, the approaches either ignore the issue of nonstationarity or treat the data as if it were nonspatial. In this paper, we adopt a global cointegration approach recently proposed by Bienstock and Felsenstein (2010) to account for nonstationarity of regional data. By specifying a spatial error correction model (SpECM), equilibrium adjustments are considered in both space and time. Applying the methodology for West German labour markets, we find strong evidence for the existence of a long-run wage curve with spatial effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: MAGKS Joint Discussion Paper Series in Economics ; No. 02-2016

Classification and Topics

• Classification: Wirtschaft ; Wages, Compensation, and Labor Costs: General ; Mobility, Unemployment, Vacancies, and Immigrant Workers: General ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; General Regional Economics: Econometric and Input-Output Models; Other Models
• Subject: wage curve ; regional labour markets ; spatial panel models ; global cointegration analysis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kosfeld, Reinhold ; Dreger, Christian
• Event: Veröffentlichung
• (who): Philipps-University Marburg, School of Business and Economics
• (where): Marburg
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/129291
• Last update: 10.03.2025, 11:43 AM CET