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Title:Are Wages in Southern Europe More Flexible? : The Effects of Cohort Size on European Earnings PDF Logo
Authors:Brunello, Giorgio
Lauer, Charlotte
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1299
Abstract:We exploit the cross-country and time variation in the demographics and education structure in 11 European countries to study how cohort size has affected real earnings in Europe. When we pool the data of all countries, we find that cohort size has a negative and statistically significant effect on the earnings of the older cohorts – aged between 35 and 54 – but no statistically significant effect on the earnings of younger cohorts – aged 20 to 34. The negative effect of cohort size on earnings is completely driven by Southern European countries, a result which we relate to institutional differences. While the share of individuals aged 20 to 34 in the population has declined in the EU11 by 10.20 percent between 1991 and 2001, the share of individuals aged 35 and 54 has increased by 9.32 percent. Our estimates suggest that, as a consequence of these significant demographic changes, the real earnings of the younger cohorts have increased on average by a tiny 0.06 percent, while the earnings of the older cohorts have declined by 0.93 percent, a modest variation.
Subjects:cohort size
wages
Europe
JEL:J11
J31
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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