Net earnings trends in the EU countries

Abstract

The purpose of this paper consists in analysing the ante- and post-crisis economic trends of the real net earnings in the EU countries by building several econometric models. A Hierarchical cluster analysis was applied in order to classify the 27 EU countries in two distinct groups, based on a set of labour market indicators. The econometric results were consistent with the economic theory and indicated that GDP growth rate, foreign direct investment, trade openness and remittances have a positive effect on earnings, while unemployment rate’s impact is negative. Several particularities were also noticed when studying the two EU country clusters. Then numerical simulation was used for a short-term prediction of earnings.

Keywords

• net earnings
• GDP growth rate
• panel data model
• European Union
• simulation