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Wage flexibility in the new European Union members: How different from the old?

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  • VAN POECK, André
  • VEINER, Maret

Abstract

In this paper we provide new evidence on aggregate labour market flexibility in the four largest new EU member states from Central Europe (CEEC4) and a benchmark of existing EU countries (EU9). This is done trough direct comparison of several labour market institutions from which we derive an institutional summary indicator. Another approach that we follow is the estimation of aggregate wage Phillips curves from which we obtain estimates for the wage responsiveness to unemployment in these countries. The results show that the CEEC4 cannot be regarded as an homogeneous group. The Czech Republic and Hungary are relatively flexible and comparable to the United Kingdom. Poland belongs to a subgroup with France, Germany and Italy, with reduced labour market flexibility. The results are especially problematic for the Slovak Republic where aggregate wages do not respond to unemployment, although labour market institutions are still more supportive to flexibility than in most incumbent EU countries.

Suggested Citation

  • VAN POECK, André & VEINER, Maret, 2007. "Wage flexibility in the new European Union members: How different from the old?," Working Papers 2007016, University of Antwerp, Faculty of Business and Economics.
    • Handle: RePEc:ant:wpaper:2007016
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    References listed on IDEAS

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    5. Ian Babetskii, 2006. "Aggregate Wage Flexibility in Selected New EU Member States," Working Papers 2006/1, Czech National Bank.
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    8. Huitfeldt, Henrik, 2001. "Unemployment, Labour Market Programmes and Wage Determination: Evidence from the Czech and Slovak Republics," Working Paper Series 2001:1, Uppsala University, Department of Economics.
    9. Friedrich Schneider, 2003. "The Development of the Shadow Economies and Shadow Labour Force of 21 OECD and 22 Transition Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(1), pages 17-23, 02.
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    Cited by:

    1. Heinz, Frigyes Ferdinand & Rusinova, Desislava, 2011. "How flexible are real wages in EU countries? A panel investigation," Working Paper Series 1360, European Central Bank.
    2. Vakulenko, E. & Gurvich, E., 2016. "Real Wage Flexibility in Russia: Comparative Analysis," Journal of the New Economic Association, New Economic Association, vol. 31(3), pages 67-92.
    3. El-hadj Bah & Josef C. Brada, 2014. "Labor Markets in the Transition Economies: An Overview," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(1), pages 3-53, June.
    4. Rusinova, Desislava & Lipatov, Vilen & Heinz, Frigyes Ferdinand, 2015. "How flexible are real wages in EU countries? A panel investigation," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 140-154.
    5. Gurvich, Evsey & Vakulenko, Elena, 2017. "Macroeconomic and structural properties of the Russian labor market: A cross-country comparison," Russian Journal of Economics, Elsevier, vol. 3(4), pages 411-424.

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