Are wages equal across sectors of production? : A panel data analysis for tradable and non-tradable goods

Achim Schmillen

The assumption that national labor markets are homogenous across tradable and non-tradable goods is common in multisector (open-economy) macro models and crucial for the prominent Balassa-Samuelson hypothesis. This study tests it with a novel method to distinguish the tradable and non-tradable sectors grounded in economic theory, modern empirical methods and a large and detailed macro data set. 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.

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Year of publication:	2010
Authors:	Schmillen, Achim
Institutions:	Osteuropa-Institut (contributor)
Publisher:	Regensburg : Osteuropa-Institut
Subject:	Lohnstruktur \| Wage structure \| Branche \| Economic sector \| Handelbare Güter \| Tradables \| Nicht-handelbare Güter \| Non-tradables \| Schätzung \| Estimation \| Welt \| World \| Balassa-Samuelson-Effekt \| Balassa-Samuelson effect \| Kritik \| Criticism