Convergence in the Labour Market: Evidence from the Czech Republic

Umut Unal and Robin Maialeh ()
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Robin Maialeh: Research Institute for Labour and Social Affairs (RILSA)

Chapter Chapter 3 in Navigating Europe’s Socio-Economic Crisis, 2023, pp 31-47 from Springer

Abstract: Abstract The main objective of this chapter is to analyse and investigate labour productivity and real wages convergence patterns across the fourteen regions of the Czech Republic with reference to the period 2000 to 2021 applying the clustering algorithm developed by Phillips and Sul (Transition modelling and econometric convergence tests. Econometrica, 75(6), 1771−1855, 2007). The algorithm enables the modelling of selected variables in a non-linear manner, thus allowing for the incorporation of heterogeneity and transitional dynamics at the regional level. Our findings indicated no conclusive evidence in support of the presence of overall convergence across the examined regions. Rather, we found evidence of two (three) convergence clubs for labour productivity (wages) along with one distinct non-convergence group for each variable. The results thus serve to highlight the diverse and nuanced dynamics that underlie labour productivity and real wages in the Czech Republic. It is clear that the country’s regions experience varying convergence and non-convergence patterns, which suggests the existence of several distinct factors and influences that impact the economic performance and wage levels in each region. Obtaining a comprehensive understanding of these convergence patterns will allow policymakers and researchers to devise targeted strategies aimed at addressing regional disparities and fostering economic growth and an equitable wage distribution across the Czech Republic.

Keywords: Real wages; Labour productivity; Regional disparities; Convergence patterns; Clustering algorithms (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_3

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DOI: 10.1007/978-3-031-44873-7_3

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