IDEAS home Printed from https://ideas.repec.org/a/icb/wpaper/v5y2019i1220-227.html
   My bibliography  Save this article

Wage Growth Implications in Romania

Author

Listed:
  • Dragos Mihai UNGUREANU

    (Spiru Haret University, Faculty of Economic Sciences, 46 G Fabricii Str., District 6 Bucharest, Romania)

Abstract

Economy-wide real wage growth in Romania has been accelerating since 2015. While wages in Romania are low relative to the rest of the EU and they are expected to continue growing faster than the EU average as the economy catches up, wage growth in excess of productivity gains could lead to losses in competitiveness. Overall, the increase in real compensation per employee was broadly in line with that of labour productivity between 2011 and 2016. Already in 2016, however, real compensation started to race ahead and in 2017 unit labour costs expanded by more than 11%. While Romania's exports have fared well in recent years, the current account deficit has been gradually increasing since 2014 as imports accelerated in line with booming private consumption, itself stimulated by a persistently pro-cyclical fiscal policy. Thus, a deteriorating external competitiveness and export performance due to rising production costs could pose significant macroeconomic risks. Against this background, this paper seeks to investigate the role of public sector wages in leading wage changes in the economy as a whole, which in turn might influence Romania's cost competitiveness.

Suggested Citation

  • Dragos Mihai UNGUREANU, 2019. "Wage Growth Implications in Romania," International Conference on Economic Sciences and Business Administration, Spiru Haret University, vol. 5(1), pages 220-227, November.
    • Handle: RePEc:icb:wpaper:v:5:y:2019:i:1:220-227
    as

    Download full text from publisher

    File URL: http://icesba.eu/RePEc/icb/wpaper/ICESBA2019_25Ungureanu_p220-227.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Camarero, Mariam & D'Adamo, Gaetano & Tamarit, Cecilio, 2014. "Wage leadership models: A country-by-country analysis of the EMU," Economic Modelling, Elsevier, vol. 44(S1), pages 2-11.
    2. Ana Lamo & Javier J. Pérez & Ludger Schuknecht, 2012. "Public or Private Sector Wage Leadership? An International Perspective," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(1), pages 228-244, March.
    3. G. M. Grossman & K. Rogoff (ed.), 1995. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 3, number 3.
    4. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584-584.
    5. Odd Aukrust, 1970. "Prim I: A Model Of The Price And Income Distribution Mechanism Of An Open Economy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 16(1), pages 51-78, March.
    6. Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679.
    7. Kent Friberg, 2007. "Intersectoral wage linkages: the case of Sweden," Empirical Economics, Springer, vol. 32(1), pages 161-184, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gaetano D’Adamo, 2014. "Wage spillovers across sectors in Eastern Europe," Empirical Economics, Springer, vol. 47(2), pages 523-552, September.
    2. Gaetano D'Adamo & Nora Hesse & Julien Hartley & Nicolae Bîea, 2019. "Wage Dynamics in Romania," European Economy - Economic Briefs 044, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. M. Ivanova., 2015. "The Interaction between Public and Private Sector Wages," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
    4. Camarero, Mariam & D'Adamo, Gaetano & Tamarit, Cecilio, 2014. "Wage leadership models: A country-by-country analysis of the EMU," Economic Modelling, Elsevier, vol. 44(S1), pages 2-11.
    5. Antonia López Villavicencio & Josep Lluís Raymond Bara, 2006. "The short and long-run determinants of the real exchange rate in Mexico," Working Papers wpdea0606, Department of Applied Economics at Universitat Autonoma of Barcelona.
    6. Heng, Dyna, 2011. "Capital flows and real exchange rate: does financial development matter?," MPRA Paper 48553, University Library of Munich, Germany, revised May 2012.
    7. Stacie Beck & Cagay Coskuner, 2007. "Tax Effects on the Real Exchange Rate," Review of International Economics, Wiley Blackwell, vol. 15(5), pages 854-868, November.
    8. Robert Kelm, 2017. "The Purchasing Power Parity Puzzle and Imperfect Knowledge: The Case of the Polish Zloty," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 9(1), pages 1-27, March.
    9. Barbara Rossi, 2013. "Exchange Rate Predictability," Journal of Economic Literature, American Economic Association, vol. 51(4), pages 1063-1119, December.
    10. Zhang, Yin & Wan, Guanghua, 2007. "What accounts for China's trade balance dynamics?," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 821-837.
    11. Lee, Minsoo & Nziramasanga, Mudziviri & Ahn, Sung K., 2002. "The real exchange rate: an alternative approach to the PPP puzzle," Journal of Policy Modeling, Elsevier, vol. 24(6), pages 533-538, October.
    12. Caputo, Rodrigo, 2015. "Persistent real misalignments and the role of the exchange rate regime," Economics Letters, Elsevier, vol. 135(C), pages 112-116.
    13. Apte, Prakash & Sercu, Piet & Uppal, Raman, 2004. "The exchange rate and purchasing power parity: extending the theory and tests," Journal of International Money and Finance, Elsevier, vol. 23(4), pages 553-571, June.
    14. Cao, Dan & Evans, Martin & Lua, Wenlan, 2020. "Real Exchange Rate Dynamics Beyond Business Cycles," MPRA Paper 99054, University Library of Munich, Germany, revised 10 Mar 2020.
    15. Olaf Korn & Philipp Koziol, 2011. "The Term Structure Of Currency Hedge Ratios," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 525-557.
    16. Anders Bergvall, 2004. "What Determines Real Exchange Rates? The Nordic Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 315-337, June.
    17. Canzoneri, Matthew B. & Cumby, Robert E. & Diba, Behzad, 1999. "Relative labor productivity and the real exchange rate in the long run: evidence for a panel of OECD countries," Journal of International Economics, Elsevier, vol. 47(2), pages 245-266, April.
    18. Romain Restout, 2008. "Monopolistic Competition and the Dependent Economy Model," EconomiX Working Papers 2008-9, University of Paris Nanterre, EconomiX.
    19. Renu Kohli, 2004. "Real Exchange Rate Stationarity in Managed Floats: Evidence from India," International Finance 0405011, University Library of Munich, Germany.
    20. Irfan Civcir, 2003. "Before the Fall, Was the Turkish Lira Overvalued?," Eastern European Economics, Taylor & Francis Journals, vol. 41(2), pages 69-99, March.

    More about this item

    Keywords

    wage growth; productivity; external competitiveness; private consumption.;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:icb:wpaper:v:5:y:2019:i:1:220-227. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rocsana Bucea-Manea-Tonis (email available below). General contact details of provider: http://icesba.eu .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.