Exchange Rate Regime and Wage Determination in Central and Eastern Europe

Gunther Schnabl and Christina Ziegler

No 2471, CESifo Working Paper Series from CESifo

Abstract: After the eastern enlargement of the European Union due to increasing labor market integration, wage determination and monetary integration in Central and Eastern Europe have become key issues in European economic policy making. Based on the Scandinavian model of wage adjustment by Lindbeck (1979), we intend to analyze the role of exchange rates in the wage determination process of the Central and Eastern European countries to identify which exchange rate strategy contributes to faster wage convergence in Europe. Panel estimations reveal a robust negative relationship between exchange rates and wage growth. This suggests that workers in countries with fixed exchange rates are likely to benefit from higher wage increases.

Keywords: wage policy; labor markets; exchange rate regime; Central and Eastern Europe (search for similar items in EconPapers)
JEL-codes: C23 F31 J30 O52 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2471

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