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A Panel VAR Granger Causality Analysis of Wages and Labour Productivity: Evidence from Czech Regions

In: Navigating Europe’s Socio-Economic Crisis

Author

Listed:
  • Umut Ünal

    (RILSA)

  • Robin Maialeh

    (RILSA)

Abstract

The main objective of this chapter is to conduct a thorough analysis of the causal relationship between real wages and labour productivity within the regional context of the Czech Republic. An extended panel dataset covering the period 2000 to 2021 was employed to perform a comprehensive investigation into this relationship. We applied the panel vector autoregression (VAR) Granger causality test, which is widely recognised as being an effective methodology for such investigations, in the research. The test was conducted using the generalised method of moments (GMM) methodology, which is known for its ability to handle various econometric challenges and address issues such as endogeneity. The results revealed the reciprocal relationship between real wages and labour productivity across the various regions of the Czech Republic. This finding suggests that changes in real wages potentially impact labour productivity, while shifts in labour productivity also potentially influence real wages. The interdependence between these key economic indicators has significant implications for both policymakers and stakeholders.

Suggested Citation

  • Umut Ünal & Robin Maialeh, 2023. "A Panel VAR Granger Causality Analysis of Wages and Labour Productivity: Evidence from Czech Regions," Springer Books, in: Robin Maialeh (ed.), Navigating Europe’s Socio-Economic Crisis, chapter 0, pages 13-29, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-44873-7_2
    DOI: 10.1007/978-3-031-44873-7_2
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