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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

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

  (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
  1. 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
  2. Robust t-statistics: ***p < 0.01; **p < 0.05; *p < 0.1