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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 analyze the internal spatial wage and employment structures of the Czech Republic, Hungary, Poland, Slovenia and Slovakia, using regional data for 1996-2000. A new economic geography model predicts wage gradients and specialization patterns that are smoothly related to 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. Our estimations confirm the ongoing relevance of the Comecon hypothesis: compared to pre-2004 EU members, Central European countries' average wages and service employment were still discretely higher in capital regions. Our results point towards an increase in relative wages and employment shares of Central Europe's provincial regions, favoring particularly those that are proximate to the large markets of incumbent EU members.

Suggested Citation

  • Marius Brülhart & Pamina Koenig, 2005. "New Economic Geography meets Comecon: Regional Wages and Industry Location in Central Europe," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.01, Université de Lausanne, Faculté des HEC, DEEP.
  • Handle: RePEc:lau:crdeep:05.01
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    References listed on IDEAS

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    Cited by:

    1. Brülhart, Marius & Mathys, Nicole A., 2008. "Sectoral agglomeration economies in a panel of European regions," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 348-362, July.
    2. Marius Brülhart & Pamina Koenig, 2006. "New economic geography meets Comecon," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 245-267, April.
    3. Emanuela Marrocu & Raffaele Paci & Stefano Usai, 2013. "Productivity Growth In The Old And New Europe: The Role Of Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 418-442, August.
    4. Gábor Békés & Péter Harasztosi & Balázs Muraközy, 2009. "Firms and Products in International Trade: Data and Patterns for Hungary," CeFiG Working Papers 9, Center for Firms in the Global Economy, revised 12 Oct 2009.
    5. Arne Melchior, 2009. "East-West Integration and the Economic Geography of Europe," CASE Network Studies and Analyses 0379, CASE-Center for Social and Economic Research.
    6. Marius Brülhart, 2011. "The spatial effects of trade openness: a survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(1), pages 59-83, April.
    7. Laura Hering & Sandra Poncet, 2006. "Market Access Impact on Individual Wage: Evidence from China," Working Papers 2006-23, CEPII research center.
    8. d'Artis Kancs, 2011. "Labour migration in the enlarged EU: a new economic geography approach," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 14(2), pages 171-188.
    9. Miren Lafourcade & Elisenda Paluzie, 2008. "European integration, FDI and the geography of French trade," Working Papers halshs-00586834, HAL.
    10. Miren Lafourcade & Elisenda Paluzie Hernandez, 2005. "European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions," Working Papers in Economics 145, Universitat de Barcelona. Espai de Recerca en Economia.
    11. Dusan Paredes, 2012. "Alternative theories for explaining the spatial wage inequality: a multilevel competition among human capital, NEG and amenities," Documentos de Trabajo en Economia y Ciencia Regional 20, Universidad Catolica del Norte, Chile, Department of Economics, revised Apr 2012.

    More about this item

    Keywords

    regional wages; industry location; transition economies; Central Europe; new economic geography;

    JEL classification:

    • P25 - Economic Systems - - Socialist Systems 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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