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How Flexible are Wages in EU Accession Countries?

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  • Anna Iara
  • Iulia Traistaru

Abstract

The transition to a market economy and increased economic integration have fostered regional disparities in Central and Eastern European countries. This paper investigates whether and to what extent wages could act as an equilibrating mechanism in these countries by adjusting to local market conditions. Using regional data for the 1990s, we estimate static and dynamic wage curve models for Bulgaria, Hungary, Poland and Romania. We find empirical evidence for a wage curve in Bulgaria, Hungary and Poland suggesting that wages could help equilibrate labour markets following labour demand shocks. In the case of Romania, the unemployment elasticity of pay is not significantly different from zero.

Suggested Citation

  • Anna Iara & Iulia Traistaru, 2004. "How Flexible are Wages in EU Accession Countries?," ERSA conference papers ersa04p191, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa04p191
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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