However, due to labour mobility, wages in the non-tradable sector might rise as well and as productivity growth in the non-tradable sector is normally lower than in the tradable sector, wage increases in excess of productivity growth would tend to put upward pressures on unit labour costs and ultimately on inflation for some time.
Several studies on the BS effect in the euro area, such as Rabanal (2009), Hofmann and Remsperger (2005) and Katsimi (2004) have found that the effect has been not very relevant during Stage III of EMU. The literature appears to suggest that the BS effect may have been somewhat more relevant during the 1990s.