Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/207618
Editors: 
Nickel, Christiane
Bobeica, Elena
Koester, Gerrit
Lis, Eliza Magdalena
Porqueddu, Mario
Year of Publication: 
2019
Series/Report no.: 
ECB Occasional Paper 232
Abstract: 
Despite notable improvements in the labour market since 2013, wage growth in the euro area was subdued and substantially overpredicted in 2013-17. This paper summarises the findings of an ESCB expert group on the reasons for low wage growth and provides comparable analyses on wage developments in the euro area as a whole and in individual EU countries. The paper finds that cyclical drivers, as captured by a standard Phillips curve, seem to explain much of the weakness in wage growth during this period, but not all of it. Going beyond the drivers included in standard Phillips curves, other factors are also found to have played a role, such as compositional effects, the possible non-linear reaction of wage growth to cyclical improvements, and structural and institutional factors. In order to increase the robustness of wage forecasts, the paper also proposes ready-to-use tools for cross-checking euro area wage growth forecasts based on wage Phillips curves. These are derived based on a comprehensive real-time forecast evaluation exercise
Subjects: 
Wages
business cycles
structural factors
forecasting
JEL: 
J30
E24
E31
E32
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3873-0
Document Type: 
Research Report

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