ArticleDe Economist2023
Does Automatic Wage Indexation Destroy Jobs? A Machine Learning Approach.
Article in De Economist, 2023. The graph could read no effect estimate from its abstract, so it casts no vote on the map. Cited by 3 papers.
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Who cites it
3 citing papers in PubMed.
- Does Automatic Wage Indexation Destroy Jobs? A Machine Learning Approach.De Economist · 2023Article
- Local inequalities of the COVID-19 crisis.Regional science and urban economics · 2022Article
- Local mortality estimates during the COVID-19 pandemic in Italy.Journal of population economics · 2021Article
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Authors and funding
3 authors.
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Abstract
This paper analyzes the impact of automatic wage indexation on employment. To boost competitiveness and increase employment, Belgium suspended its automatic wage indexation system in 2015. This resulted in a 2% fall in real wages for all workers. In the absence of a suitable control group, we use machine learning for the counterfactual analysis. We artificially construct the control group for a difference-in-difference analysis based on the pre-treatment evolution of treated firms. We find a positive impact on employment of 1.2%, which corresponds to a labor demand elasticity of - 0.6. This effect is more pronounced for manufacturing firms, where the elasticity reaches - 1. These results show that a suspension of the automatic wage indexation mechanism can be effective in preserving employment.
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