The impact of labour productivity on wages in Bulgaria, 2000-2017

Lyuboslav Kostov

SEER Journal for Labour and Social Affairs in Eastern Europe, 2019, vol. 22, issue 2, 217-224

Abstract: In the post-crisis period, the traditional relationship between labour productivity and wages has been called increasingly into question as a result of recent changes in the labour-capital ratio. There is a growing public debate on this issue, but the available literature within Bulgaria has not, up to now, examined the link directly. This article reports the findings of a new study, specifically from the starting point that labour productivity is not a main factor in the dynamics of average wages in Bulgaria in the period 2000-2017. Through an econometric model, the author concludes that the impact of gross value added in terms of the change in average wages in Bulgaria has diminished as a result of the crisis; and that the dynamics of gross value added per employee do not play a decisive role in explaining the dynamics of average wages. The author points to the significance of this finding for future research, adding also that, at a time again of technological advance, innovation is likely to be one factor which further distorts classical understanding of the interdependence of labour productivity and wages.

Date: 2019
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DOI: 10.5771/1435-2869-2019-2-217

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