Wage-Price Setting in New EU Member States

Manuela Goretti

No 2008/243, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes wage- and price-setting relations in new EU member countries. Panel estimates indicate a strong and significant relationship between real wages and labor productivity, as well as evidence of wage pass-through to inflation. Terms of trade shocks do not feed through to real wages. Country-specific wage developments, beyond differences in labor productivity growth, are mostly explained by real wage catch-up from different initial levels and different labor market conditions. Qualitative evidence also suggests that public sector wage demonstration effects and institutional factors may play a role in wage determination.

Keywords: WP; pay; real wage; catch-up effect (search for similar items in EconPapers)
Pages: 24
Date: 2008-10-01
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Citations: View citations in EconPapers (16)

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