Co-movements between public and private wages in the EU: what factors and with what policy implications?

IZA Journal of European Labor Studies

Table 2 Long-run and short-run relation between manufacturing and government compensations per employee, conditional on the size of the government sector, EU countries 1980–2013

	(1)	(2)	(3)	(4)
	Dynamic long-run relation		Error correction model
	Large government sector	Small government sector	Large government sector	Small government sector
Dependent variable: log of manufacturing compensation per employee, level (long-run relation) and change (ECM)
∆ log government compensations p.e.			0.214***	0.288***
			[4.186]	[8.236]
∆ log productivity in manufacturing			0.193***	0.178***
			[4.037]	[3.411]
∆ unemployment rate			−0.00193**	−0.00137
			[−2.456]	[−1.177]
∆ log consumer price index			0.638***	0.709***
			[9.429]	[17.90]
Log of consumer price index	0.416***	0.938***
	[4.695]	[11.09]
Log of government compensations p.e.	0.679***	0.204***
	[10.65]	[3.706]
Log of productivity in manufacturing	0.172***	0.214***
	[5.724]	[5.181]
Unemployment rate	0.00983***	0.00318
	[5.592]	[1.436]
Lagged error correction term			−0.176**	−0.150**
			[−3.022]	[−2.401]
Constant	−1.018***	−3.082***	0.0128***	0.00308
	[−6.271]	[−11.37]	[4.651]	[0.995]
Observations	193	214	193	214
R ²	0.9	0.991	0.514	0.740
Number of countries	8	9	8	9

Estimation method: dynamic OLS with fixed effects and Newey West standard errors and ECM with standard errors robust with respect to heteroskedasticity and non-independence within country clusters. Sample: EU countries, except AT, BG, CY, DE, EL, HR, LT, LV, MT, RO and SI
Robust t-statistics: ***p < 0.01; **p < 0.05; *p < 0.1