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Wage development study published

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Published on Monday July 31 2017

The Centre for Research in Economics and Management (CREA) has carried out a study for the Luxembourg Economy Ministry analysing the impact of sectoral interactions on wage development, comparing salaries in Luxembourg, Belgium, France and Germany.

The main concern of the study was to determine the effect one particular sector of employment can have on overall wage development. Commissioned by the Ministry’s competitiveness observatory, the study focuses on the interaction and dynamic between public and private sector salaries.

The results showed that in Belgium, Germany and Luxembourg there is no leading sector impacting wage development, so-called “wage leadership”. Instead, strong reciprocal interactions both in the short and long term were detected between various sectors. An exception to this trend was France, where these interactions were very limited or non-existent.

With the financial services sector an important employer in Luxembourg, this was taken into special consideration. However, even adding this third pillar to the public-private analysis did not reveal a dominant sector in Luxembourg wage development.

The study therefore appears to debunk claims that the public or the financial services sector alone act as stimulus based on their higher salaries. This opens up new perspectives for economic policy, showing that instead of focusing on wage development in one sector it is necessary to consolidate salaries in different areas.

The econometric study was carried out by Prof. Arnaud Bourgain and Prof. Henri Sneessens of the Faculty of Law, Economics and Finance’s Centre for Research in Economics and Management, in collaboration with Fatemeh Shadman and Kirti Mehta from MeSh Analytics, Brussels. The full document is available for download online.