A Panel VAR Granger Causality Analysis of Wages and Labour Productivity: Evidence from Czech Regions

Umut Unal and Robin Maialeh ()
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Robin Maialeh: RILSA

Chapter Chapter 2 in Navigating Europe’s Socio-Economic Crisis, 2023, pp 13-29 from Springer

Abstract: Abstract The main objective of this chapter is to conduct a thorough analysis of the causal relationship between real wages and labour productivity within the regional context of the Czech Republic. An extended panel dataset covering the period 2000 to 2021 was employed to perform a comprehensive investigation into this relationship. We applied the panel vector autoregression (VAR) Granger causality test, which is widely recognised as being an effective methodology for such investigations, in the research. The test was conducted using the generalised method of moments (GMM) methodology, which is known for its ability to handle various econometric challenges and address issues such as endogeneity. The results revealed the reciprocal relationship between real wages and labour productivity across the various regions of the Czech Republic. This finding suggests that changes in real wages potentially impact labour productivity, while shifts in labour productivity also potentially influence real wages. The interdependence between these key economic indicators has significant implications for both policymakers and stakeholders.

Keywords: Real wages; Labour productivity; Regional economics; Causal relationships; Panel vector autoregression (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-44873-7_2

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DOI: 10.1007/978-3-031-44873-7_2

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