Are wages equal across sectors of production?

Abstract

"The assumption that national labour markets are homogeneous across tradable and non-tradable goods is common in multisector (open-economy) macro models and crucial for the prominent Balassa-Samuelson hypothesis. To test it, this study introduces a novel, theory-based method of distinguishing the tradable and non-tradable sectors to the Balassa-Samuelson literature and employs modern empirical methods and a large and detailed macro dataset. It finds that both the internal relationship between productivity and wages in the tradable and non-tradable sectors postulated by the Balassa-Samuelson hypothesis and its external transmission mechanism are rejected." (Author's abstract, IAB-Doku) ((en))

Cite article

Schmillen, A. (2013): Are wages equal across sectors of production? A panel data analysis for tradable and non-tradable goods. In: Economics of Transition, Vol. 21, No. 4, p. 655-682. DOI:10.1111/ecot.12025