Bank Of Greece Sa · ATHEX:TELL
Bank Of Greece Sa — Labour Economics Conference: The Greek Labour Market in the ongoing Crisis, 2012
36 slides from Bank Of Greece Sa's conference presentation, Nov 27, 2012
Slide 1: Unemployment and wage adjustments in the Greek labour market
Motivation Objectives Empirical strategy Results Summary . Unemployment and wage adjustments in the Greek labour market: evidence from the pre and post 2009 periods . Daouli J., M. Demoussis, N. Giannakopoulos and I. Laliotis Department of Economics University of Patras Labour Economics Conference T
Slide 2: Outline
Motivation Objectives Empirical strategy Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting system 2. Objectives Searching for the “wage curve” in the Greek labour market The impact of Labour Law Reforms on bar
Slide 3: Outline
Motivation Objectives Two distinct periods of unemployment rates in Greece Empirical strategy Institutional restructuring of the wage setting system Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting system 2.
Slide 4: GDP and Unemployment growth rates, 2001q1-2012q2
GDP Growth (2005=100) −.1 −.05 0 .05 .1 2001−2000 Q1 2001−2000 Q2 2001−2000 Q3 2001−2000 Q4 2002−2001 Q1 2002−2001 Q2 2002−2001 Q3 2002−2001 Q4 2003−2002 Q1 2003−2002 Q2 2003−2002 Q3 2003−2002 Q4 2004−2003 Q1 2004−2003 Q2 2004−2003 Q3 2004−2003 Q4 2005−2004 Q1 Source: Hellenic Statistical Authority
Slide 5: What is the short-run response of wages to local labor market shocks?
Motivation Objectives Two distinct periods of unemployment rates in Greece Empirical strategy Institutional restructuring of the wage setting system Results Summary What is the short-run response of wages to local labor . market shocks? What do we know? Blanchflower & Oswald (1994) introduced the co
Slide 6: Decomposing regional unemployment rates
Motivation Objectives Two distinct periods of unemployment rates in Greece Empirical strategy Institutional restructuring of the wage setting system Results Summary . . Decomposing regional unemployment rates Table 1 : Summary statistics of permanent and transitory unemployment rates by region (NUTS
Slide 7: Decomposing regional unemployment rates
Motivation Objectives Two distinct periods of unemployment rates in Greece Empirical strategy Institutional restructuring of the wage setting system Results Summary . Decomposing regional unemployment rates 2001q1-2008q4 Permanent regional unemployment differences do exist The transitory component o
Slide 8: Outline
Motivation Objectives Two distinct periods of unemployment rates in Greece Empirical strategy Institutional restructuring of the wage setting system Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting system 2.
Slide 9: Labour Laws and wage adjustments
Motivation Objectives Two distinct periods of unemployment rates in Greece Empirical strategy Institutional restructuring of the wage setting system Results Summary . Labour Laws and wage adjustments What do we know? Law 1876/1990 Did not promote wage adjustments. This system of labour relations fos
Slide 10: Why do Labour Laws matter?
Motivation Objectives Two distinct periods of unemployment rates in Greece Empirical strategy Institutional restructuring of the wage setting system Results Summary Why do Labour Laws matter? . . . . the specifics of the bargaining regime affect the slope of the wage curve Case 1. Wage curve exists
Slide 11: Outline
Motivation Objectives Searching for the “wage curve” in the Greek labour market Empirical strategy The impact of Labour Law Reforms on bargained wage outcomes Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting
Slide 12: Outline
Motivation Objectives Searching for the “wage curve” in the Greek labour market Empirical strategy The impact of Labour Law Reforms on bargained wage outcomes Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting
Slide 13: Outline
Motivation Objectives Data Empirical strategy Empirical methods Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting system 2. Objectives Searching for the “wage curve” in the Greek labour market The impact of La
Slide 14: Quarterly Labour Force Survey: QLFS
Motivation Objectives Data Empirical strategy Empirical methods Results Summary . Quarterly Labour Force Survey: QLFS Periods: 2003q1 − 2008q1 and 2009q1 − 2012q1 The QLFS refers to individuals above 15 years old: around 68,000 individuals and 13,000 salary workers per quarter Use the EL.STAT defini
Slide 15: Structure of Earnings Survey: SES
Motivation Objectives Data Empirical strategy Empirical methods Results Summary . Structure of Earnings Survey: SES Years: 2002 and 2006 Cross-sectional matched employer-employee datasets Workers in firms with more than 10 employees in sectors C-K of the NACE Rev. 1.1 nomenclature Individual charact
Slide 16: Administrative data on collective agreements: ADM
Motivation Objectives Data Empirical strategy Empirical methods Results Summary . Administrative data on collective agreements: ADM Official contracts of the collective bargaining agreements at the firm level (Ministry of Labour, Social Security and Welfare) All signed agreements in the period 2010-
Slide 17: Outline
Motivation Objectives Data Empirical strategy Empirical methods Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting system 2. Objectives Searching for the “wage curve” in the Greek labour market The impact of La
Slide 18: Estimating the slope of the wage curve
Motivation Objectives Data Empirical strategy Empirical methods Results Summary . Estimating the slope of the wage curve Worker-level estimates Pooled ln wirt = α + β ln Urt + γXirt + ϵirt (1) Longitudinal ln wirt = α + β ln Urt + γXirt + νi + ϵirt (2) Firm-level estimates Pooled ln w jrt = α + βln
Slide 19: Outline
Motivation Objectives Empirical strategy Estimation results Results Summary . Outline 1. Motivation Two distinct periods of unemployment rates in Greece Institutional restructuring of the wage setting system 2. Objectives Searching for the “wage curve” in the Greek labour market The impact of Labour
Slide 20: Searching for the "wage curve"
Motivation Objectives Empirical strategy Estimation results Results Summary Searching for the “wage curve" . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Daouli J., M. Demoussis, N. Giannakopoulos and I. Laliotis Wage adjustments in the Greek labo
Slide 21: Pooled cross-sectional estimates, QLFS
Motivation Objectives Empirical strategy Estimation results Results Summary . . Pooled cross-sectional estimates, QLFS Table 2 : The impact of (ln) regional unemployment rates on (ln) pay measures in Greece (Pooled estimates) Dependent variable: Monthly salary Hourly wage Model specifications Nomina
Slide 22: Pooled cross-sectional estimates, QLFS
Motivation Objectives Empirical strategy Estimation results Results Summary . . Pooled cross-sectional estimates, QLFS Table 3 : The impact of (ln) regional unemployment rates on (ln) pay measures in Greece (Pooled estimates) Dependent variable: Monthly salary Hourly wage Model specifications Nomina
Slide 23: Static and dynamic wage curves, QLFS
Motivation Objectives Empirical strategy Estimation results Results Summary . . Static and dynamic wage curves, QLFS Table 4 : Static and dynamic wage curves in Greece (Longitudinal sample, 2007q1-2008q4) Monthly salalry (ln) Hourly wage (ln) Nominal Real Nominal Real Panel A: Static wage curve-OLS
Slide 24: Wage curves and bargaining regimes, SES
Motivation Objectives Empirical strategy Estimation results Results Summary . . Wage curves and bargaining regimes, SES Table 5 : The impact of (ln) regional unemployment rates on (ln) hourly wage rate in Greece (pooled estimates of 2002 and 2006) Dependent variable: Annual pay Monthly salary Hourly
Slide 25: Wage curves and bargaining regimes, SES
Motivation Objectives Empirical strategy Estimation results Results Summary . . Wage curves and bargaining regimes, SES Table 6 : The impact of (ln) regional unemployment rates on (ln) hourly wage rate in Greece (pooled estimates of 2002 and 2006) Dependent variable: Annual pay Monthly salary Hourly
Slide 26: Wage curves and bargaining regimes, SES
Motivation Objectives Empirical strategy Estimation results Results Summary . . Wage curves and bargaining regimes, SES Table 7 : The wage curve under different levels of collective bargaining in Greece (worker level, pooled estimates, 2002 and 2006) Dependent variable: Annual pay(ln) Monthly salary
Slide 27: Longitudinal estimates, QLFS: Cell-based
Motivation Objectives Empirical strategy Estimation results Results Summary Longitudinal estimates, QLFS . . Cell-based Table 8 : The effect of (ln) regional unemployment rates on mean (ln) pay rates, region-year-quarter means, 2003q1 − 2008q4 Dependent variable: (Residual) Hourly wage (Residual) Mo
Slide 28: Longitudinal estimates, QLFS: Cell-based
Motivation Objectives Empirical strategy Estimation results Results Summary Longitudinal estimates, QLFS . . Cell-based Table 9 : The effect of (ln) regional unemployment rates on mean (ln) pay rates, region-year-quarter means, 2009q1 − 2012q1 Dependent variable: (Residual) Hourly wage (Residual) Mo
Slide 29: The impact of Law 4024/2011
Motivation Objectives Empirical strategy Estimation results Results Summary The impact of Law 4024/2011 . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Daouli J., M. Demoussis, N. Giannakopoulos and I. Laliotis Wage adjustments in the Greek labour
Slide 30: Decentralized wage outcomes and Labour Laws
Motivation Objectives Empirical strategy Estimation results Results Summary . . Decentralized wage outcomes and Labour Laws Table 10 : Number of firm-level agreements by Labour Law and direction of the bargained wage change (2009m6 − 2012m8) Law Applicable period ∆w < 0 ∆w = 0 ∆w > 0 Sum Law 1876/19
Slide 31: Decentralized wage outcomes and Labour Laws
Motivation Objectives Empirical strategy Estimation results Results Summary . Decentralized wage outcomes and Labour Laws Table 11 : Summary statistics of wage changes under different Laws of firm-level contracting (2009m6 − 2012m8) Year Law 1876/1990 Law 3899/2010 Law 4024/2011 Mean Min Max Mean Mi
Slide 32: Decentralized wage outcomes and Labour Laws
Motivation Objectives Empirical strategy Estimation results Results Summary . . Decentralized wage outcomes and Labour Laws Table 12 : The impact of the Law 4024/2011 on the probability of downward wage adjustment regarding contractual wages under firm-level contracting (2009m6-2012m8) Independent v
Slide 33: The effect of Law 4024/2011
Motivation Objectives Empirical strategy Estimation results Results Summary . The effect of Law 4024/2011 Regression-based evidence The unconditional effect of the Law is 0.741, which implies that if a contract is signed under the provisions of L.4024/2011 (compared to L.1876/1990 and L.3899/2010) t
Slide 34: Take-away message 1
Motivation Objectives Empirical strategy Results Summary . Take-away message 1 The pre-crisis Greek labour market (2003-2008) appears to be insensitive to contemporaneous local labour market conditions (shocks). Similar irresponsiveness was observed in the Nordic labour markets during the 90s. The w
Slide 35: Take-away message 2
Motivation Objectives Empirical strategy Results Summary . Take-away message 2 During the crisis (2009-to date) The dramatic jump in the growth of the unemployment rate, observed in 2009q1, signaled in an emphatic way the need to reform the existing labour Law. New legislation was introduced 6 quart
Slide 36: Thank You!
Motivation Objectives Empirical strategy Results Summary Thank You! . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Daouli J., M. Demoussis, N. Giannakopoulos and I. Laliotis Wage adjustments in the Greek labour market