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Wage share and economic growth: evidence from Eastern Europe

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  • Dan Lupu
  • Dumitru-Nicușor Cărăusu
  • Mihaela Ifrim

Abstract

In this article, we explore the causal relationship between wage share and economic growth for 11 Eastern European countries. The methodology used was wavelet coherency for the period between 1995Q1 and 2020Q4. Our results reveal that economic growth acts as the leading role for wage share increase for most Eastern European countries, and only for certain periods, wages can determine economic growth. Furthermore, we find that GDP increases cause wages to increase at different frequencies; there is a positive correlation between GDP growth and wage growth; the effects of wage-led growth policies were weak and only on short periods. Our estimations cast a high degree of uncertainty on the effectiveness of wage increase policies promoted by some national authorities to achieve economic growth.

Suggested Citation

  • Dan Lupu & Dumitru-Nicușor Cărăusu & Mihaela Ifrim, 2023. "Wage share and economic growth: evidence from Eastern Europe," Applied Economics Letters, Taylor & Francis Journals, vol. 30(6), pages 772-779, March.
    • Handle: RePEc:taf:apeclt:v:30:y:2023:i:6:p:772-779
    DOI: 10.1080/13504851.2021.2018398
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    Cited by:

    1. Dominik Kaczmarski, 2024. "Wage- or Profit-Led Regime? The Case of Poland," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 5-18.
    2. João Alcobia & Ricardo Barradas, 2023. "Functional Income Distribution And Secular Stagnation In Europe: An Analysis Of The Post-Keynesian Growth Drivers," Working Papers REM 2023/0283, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

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