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National and sectoral factors in wage formation in Central and Eastern Europe

Author

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  • Engelbert Stockhammer

    () (Department of Economics, Vienna University of Economics & B.A.)

  • Özlem Onaran

    () (Istanbul Technical University, Turkey, and Department of Economics, Vienna University of Economics & B.A., Austria)

Abstract

The paper investigates the formation of wages in the New Member States in Central and Eastern Europe, in particular the question what the relative role of national and sectoral factors is. While the labor relations in these countries are still in the process of change, some pattern and national differences have emerged. The question is thus to what extent these differences in labor relations are reflected in wage formation. The literature on Western OECD economies is unanimous that coordination of wage bargaining does reduce the wage spread, but disagrees on its effects on unemployment and inflation. The paper analyses wage formation in Slovenia, Slovakia, Hungary, Poland, the Czech Republic and Lithuania by means of a panel analysis for manufacturing sectors. The average wage (in the total economy) serves as a national factor and sectoral productivity serves as a sectoral factor. In variations of the basic estimation equation the role of FDI and openness and of capital intensity and skill are also discussed. The results between countries are compared with the recent index of the coordination of collective bargaining by Visser (2005) and with cross country data on union density.

Suggested Citation

  • Engelbert Stockhammer & Özlem Onaran, 2006. "National and sectoral factors in wage formation in Central and Eastern Europe," Department of Economics Working Papers wuwp100, Vienna University of Economics and Business, Department of Economics.
  • Handle: RePEc:wiw:wiwwuw:wuwp100
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    Cited by:

    1. Goran Vuksic, 2012. "Sectoral wage dynamics and intersectoral linkages in the context of export competitiveness: the case of Croatia," wiiw Balkan Observatory Working Papers 99, The Vienna Institute for International Economic Studies, wiiw.
    2. Barry Eichengreen & Katharina Steiner, 2008. "Is Poland at Risk of a Boom-and-Bust Cycle in the Run-Up to Euro Adoption?," NBER Working Papers 14438, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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