The effect of labour tightness on wages at the regional level in Central Europe

Lajos Szabó

Journal for Labour Market Research, 2024, vol. 58, issue 1, 1-23

Abstract: Abstract I estimate the effect of tightness on wages in Hungary and Slovakia. The Mortensen Pissarides model predicts a positive relationship but the empirical evidence is scarce. I instrument tightness by the distance of a district from the Austrian border, interacted with a dummy that marks the opening of the Austrian labour market to these countries in 2011. I find a positive effect of tightness on wages, which is in line with the conclusion of the models. If tightness increase by 1 per cent than ceteris paribus wages increase by roughly 0.2 per cent both in Hungary and Slovakia as well.

Keywords: Local labour markets; Labour market tightness; Wage equation (search for similar items in EconPapers)
JEL-codes: J61 J63 J64 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1186/s12651-024-00383-w

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