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Economic Crisis and Wage Divergence: Empirical Evidence from Romania

Gheorghe Zaman and Zizi Goschin ()

Prague Economic Papers, 2014, vol. 2014, issue 4, 493-513

Abstract: This paper addresses the question of convergence in real wages across Romanian counties, while putting a spotlight on the recent economic crisis, which has hit hard the entire economy. Following the main methodological trends in the literature, convergence methods were applied using the traditional cross-section approach. The empirical analysis covering a 21-year period provided clear evidence in favour of ß-convergence, but indicated ?-divergence (Galton's fallacy). Wages' dispersion seems to rise during the economic crises and persists in the first stage of recovery as well. This finding provides support to Barro and Sala-i-Martin's theory on the temporary divergence effect induced by economic shocks.

Keywords: economic crisis; sigma and beta convergence; real wage; Romania (search for similar items in EconPapers)
JEL-codes: J31 O47 R15 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.18267/j.pep.495

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