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Employment Fluctuations and Dynamics of the Aggregate Average Wage in Poland 1996-2003

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Author Info

  • Myck, Michal

    ()
    (Centre for Economic Analysis, CenEA)

  • Morawski, Leszek

    ()
    (Warsaw University)

  • Mycielski, Jerzy

    ()
    (Warsaw University)

Abstract

The aggregate average wage is often used as an indicator of economic performance and welfare, and as such often serves as a benchmark for changes in the generosity of public transfers and for wage negotiations. Yet if economies experience a high degree of (nonrandom) fluctuation in employment the composition of the employed population will have a considerable effect on the computed average. In this paper we demonstrate the extent of this problem using data for Poland for the period 1996-2003. During these years employment in Poland fell from 51.2% to 44.2% and most of it occurred between the end of 1998 and the end of 2002. We show that about a quarter of the growth in the average wage during this period could be attributed purely to changes in employment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2456.

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Length: 24 pages
Date of creation: Nov 2006
Date of revision:
Publication status: published in: Economics of Transition, 2007, 15(4), 759-799
Handle: RePEc:iza:izadps:dp2456

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Keywords: transition economies; wage distribution; aggregation; employment dynamics;

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  1. Solon, Gary & Barsky, Robert & Parker, Jonathan A, 1994. "Measuring the Cyclicality of Real Wages: How Important Is Composition Bias?," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 1-25, February.
  2. Richard Blundell & Howard Reed & Thomas M. Stoker, 2003. "Interpreting Aggregate Wage Growth: The Role of Labor Market Participation," American Economic Review, American Economic Association, vol. 93(4), pages 1114-1131, September.
  3. Richard Blundell & Howard Reed & Thomas Stoker, 1999. "Interpreting aggregate wage growth," IFS Working Papers W99/13, Institute for Fiscal Studies.
  4. Heckman, James J & Sedlacek, Guilherme L, 1990. "Self-selection and the Distribution of Hourly Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S329-63, January.
  5. Meghir, Costas & Whitehouse, Edward, 1996. "The Evolution of Wages in the United Kingdom: Evidence from Micro Data," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 1-25, January.
  6. Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 666-89, August.
  7. A Gosling & Stephen Machin, 1995. "The Changing Distribution of Male Wages in the UK," CEP Discussion Papers dp0271, Centre for Economic Performance, LSE.
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Cited by:
  1. Costas Christou, 2013. "The dynamics of wage determination in Romania," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(4), pages 713-729, October.
  2. Paweł Strawiński, 2009. "Ins and Outs of Polish Unemployment," Central European Journal of Economic Modelling and Econometrics, CEJEME, vol. 1(3), pages 243-259, November.

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