Is there a European wage leader? Wage spillovers in the European Monetary Union

摘要

The introduction of the euro had been accompanied by expectations of increased inflationary pressures due to a de-coordination shock to national wage bargaining systems. Though, if anything systematically happened after the introduction of the euro, wage restraint increased. This paper argues that an interdependency of wage setting under German dominance has emerged in Europe, which fuelled the transmission of mutual wage restraint. We will investigate wage and nominal unit labour cost spillovers in the European Monetary Union (EMU) exploring a panel of 13 manufacturing sectors from 1992 to 2005 and quantify the effects of different countries. Strong interdependencies across EMU member countries with regard to nominal wage growth are found. A leading role accrues to Germany, which is responsible for a cumulative reduction of trans-European wage growth rates of 0.62% by conservative estimates. Remarkably, the influence of Germany is strongest on Southern Europe with regard to wage growth interdependencies. However, the situation is inverted with regard to the development of nominal unit labour costs where the German influence on Southern Europe is substantially weaker than on neighbouring economies.