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Wage Developments in the Central and Eastern European EU Member States

Author

Listed:
  • Vasily Astrov

    (The Vienna Institute for International Economic Studies, wiiw)

  • Mario Holzner

    (The Vienna Institute for International Economic Studies, wiiw)

  • Sebastian Leitner

    (The Vienna Institute for International Economic Studies, wiiw)

  • Isilda Mara

    (The Vienna Institute for International Economic Studies, wiiw)

  • Leon Podkaminer

    (The Vienna Institute for International Economic Studies, wiiw)

  • Armon Rezai
Abstract
Labour markets in the Central and Eastern European member states of the EU (EU-CEE8) have improved significantly since the global economic crisis of 2008-2009. Unemployment rates have declined steadily, primarily due to adverse demographic trends and massive outward migration to the West, which have resulted in a decline in the working-age population. Nevertheless, until recently wage growth in EU-CEE8 was rather restrained, resulting in generally stable wage shares. The so-called ‘Phillips curve’, which represents a negative correlation between unemployment and wage growth, has not held for most of EU CEE8 during this period – unlike, for example, for Austria or Germany. The main reasons for this have been the progressive flexibilisation and liberalisation of the labour markets of EU CEE countries in the years since the economic crisis. In particular, wage negotiation mechanisms have been decentralised and the degree of coverage by collective-bargaining agreements has declined, in some cases dramatically. This has tended to weaken the negotiating position of employees, thereby counteracting the positive effects of the general improvement in the labour market situation. Disclaimer The study was commissioned by the Arbeiterkammer Wien.

Suggested Citation

  • Vasily Astrov & Mario Holzner & Sebastian Leitner & Isilda Mara & Leon Podkaminer & Armon Rezai, 2019. "Wage Developments in the Central and Eastern European EU Member States," wiiw Research Reports 443, The Vienna Institute for International Economic Studies, wiiw.
    • Handle: RePEc:wii:rpaper:rr:443
    as

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    File URL: https://wiiw.ac.at/wage-developments-in-the-central-and-eastern-european-eu-member-states-dlp-5108.pdf
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    References listed on IDEAS

    as
    1. David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages 452-477, November.
    2. Landesmann, Michael A. & Stöllinger, Roman, 2019. "Structural change, trade and global production networks: An ‘appropriate industrial policy’ for peripheral and catching-up economies," Structural Change and Economic Dynamics, Elsevier, vol. 48(C), pages 7-23.
    3. Ioana Alexandra Horodnic & Colin C. Williams, 2021. "Cash wage payments in transition economies: Consequences of envelope wages," IZA World of Labor, Institute of Labor Economics (IZA), pages 280-280, October.
    4. Prachi Mishra, 2014. "Emigration and wages in source countries: a survey of the empirical literature," Chapters, in: Robert E.B. Lucas (ed.), International Handbook on Migration and Economic Development, chapter 9, pages 241-266, Edward Elgar Publishing.
    5. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Vasily Astrov & Stefan Jestl & Michael Landesmann & Sebastian Leitner & Roman Römisch & Robert Stehrer & Hermine Vidovic, 2022. "Bevölkerungs- und Wirtschaftsentwicklung in den mittel- und osteuropäischen Ländern (MOEL)," wiiw Research Reports in German language 21, The Vienna Institute for International Economic Studies, wiiw.
    2. Alfred Stiglbauer, 2020. "EU-Mitgliedschaft, EU-Erweiterung und die Auswirkungen auf den österreichischen Arbeitsmarkt," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/20, pages 75-88.
    3. Grodzicki, Maciej J. & Możdżeń, Michał, 2021. "Central and Eastern European economies in a Goldilocks age: A model of labor market institutional choice," Economic Modelling, Elsevier, vol. 104(C).
    4. Tomasz Geodecki & Richard Grieveson & Doris Hanzl-Weiss & Olga Pindyuk & Oliver Reiter, 2022. "Monthly Report No. 02/2022," wiiw Monthly Reports 2022-02, The Vienna Institute for International Economic Studies, wiiw.
    5. Gereben, Áron & Wruuck, Patricia, 2021. "Towards a new growth model in CESEE: Convergence and competitiveness through smart, green and inclusive investment," EIB Working Papers 2021/01, European Investment Bank (EIB).
    6. Wirkierman, Ariel L. & Ciarli, Tommaso & Savonna, Maria, 2021. "A map of the fractal structure of high-tech dynamics across EU regions," MERIT Working Papers 2021-023, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    wages; wage share; demographic trends; migration; Phillips curve; wage-setting mechanisms;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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