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Applied Economics Letters Volume 16, 2009 - Issue 5
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Original Articles

A semiparametric approach to examine wage flexibility

Adolfo Maza Department of Economics, University of Cantabria, Av. Los Castros, s/n 39005, Santander, SpainCorrespondence[email protected]
&
Ignacio Moral-Arce Spanish National Statistical Institute, P° Castellana 183, 28071, Madrid, Spain
Pages 515-518 | Published online: 26 Feb 2009
 
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Abstract

This article analyses wage flexibility within the framework of a semiparametric panel data model by using a bi-dimensional nonparametric term in the wage regression. The results point to a high degree of wage rigidity in Spain. However, semiparametric estimation allows us to find an interaction effect involving regional unemployment and productivity when explaining regional wages and, as a result of that, some signs of flexibility in the Spanish labour market.

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