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New economic geography meets Comecon: Regional wages and industry location in central Europe

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  • Marius Brülhart
  • Pamina Koenig

Abstract

We analyse the internal spatial wage and employment structures of the Czech Republic, Hungary, Poland, Slovakia and Slovenia, using regional data for 1996–2000. A new economic geography model predicts wage gradients and specialization patterns that are smoothly related to the regions’ relative market access. As an alternative, we formulate a ‘Comecon hypothesis’, according to which wages and sectoral location are not systematically related to market access except for discrete concentrations in capital regions. Estimations support both the NEG (new economic geography) prediction and the Comecon hypothesis. However, when we compare internal wage and employment gradients of the five new member states with those of Western European countries, we find that the former are marked by significantly stronger discrete concentrations of wages and service employment in their capital regions, confirming the ongoing relevance of the Comecon hypothesis.

Suggested Citation

  • Marius Brülhart & Pamina Koenig, 2006. "New economic geography meets Comecon: Regional wages and industry location in central Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 245-267, April.
    • Handle: RePEc:bla:etrans:v:14:y:2006:i:2:p:245-267
    DOI: 10.1111/j.1468-0351.2006.00256.x
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    More about this item

    JEL classification:

    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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