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The Influence of Trade with the EU-15 on Wages in the Czech Republic, Hungary, Poland, and Slovakia between 1997 and 2005

  • Konstantin Wacker

I use the STAN database of the OECD and different econometric methods to investigate the effects of exports towards the EU-15 on wages in the Visegrad countries (CEEC-4; Czech Republic, Hungary, Poland, and Slovakia). The results do not allow to draw any definite statements about this effect. While the impact of exports towards the EU-15 on wages in the countries investigated is likely to be negative in the short run (1-2 years), it seems to be positive in the medium and long run, at least for Hungary and Poland. Nevertheless, it is clear that the pattern of the CEEC-4 exports towards the EU-15 does not correspond with the predictions of the Heckscher-Ohlin model. Therefore, also the theorems of Stolper and Samuelson (1941) and concerning the equalization of factor prices, which are based on the Heckscher-Ohlin model, do not seem accurate to describe the underlying forces linking trade with factor prices. I argue that missing regional and related inter-sectoral labor mobility might be a potential factor preventing employees from taking advantage of trade liberalization. To substantiate this suspicion, however, analysis of more disaggregated data is necessary.

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Paper provided by FIW in its series FIW Working Paper series with number 047.

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Length: 28
Date of creation: Apr 2010
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Handle: RePEc:wsr:wpaper:y:2010:i:047
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