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The Productivity–Real Wage Nexus in Emerging European Economies: Evidence from Poland

Pawel Gajewski and Ali Kutan ()

Eastern European Economics, 2021, vol. 59, issue 3, 250-270

Abstract: We investigate the nature of the wage–productivity nexus in Poland, considering the validity of the alternative theories of this relationship in the context of a recent hypothesis pointing to the role of multinational corporations (MNCs) in decoupling productivity from wages. Using spatial and nonspatial dynamic panel models, we find indirect support for this hypothesis. Sectors with the highest presence of MNCs tend to have higher labor productivity but lower wages. Unlike productivity, wages are also subject to stronger spatial spillovers, suggesting that they are sometimes set based on their geographic proximity, rather than on workers’ productivity. The policy implications of the findings are discussed.

Date: 2021
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DOI: 10.1080/00128775.2021.1880271

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Handle: RePEc:mes:eaeuec:v:59:y:2021:i:3:p:250-270