The name is absent



CESifo Working Paper No. 1916

Aggregate Wage Flexibility
in Selected New
EU Member States

Abstract

A fixed exchange rate regime eliminates one degree of freedom in absorbing macroeconomic
shocks. Therefore, there is a call for higher labor market flexibility in countries which are
members of the monetary union or those which intend to join the monetary union. Focusing
on the cross-country analysis of labor markets in the enlarged European Union over 1995-
2004, this paper aims to assess empirically the role of aggregate wages as a correction
mechanism for dealing with economic disturbances. We apply classical time series/panel,
Bayesian, and cointegration techniques to determine the extent to which aggregate wages can
accommodate shocks in the economy.

JEL Code: E24, E52, C22, C33, P20.

Keywords: ERM-II, euro adoption, labor market, wage flexibility.

Ian Babetskii

External Economic Relations Division
Czech National Bank

Na prikope 28, 115 03 Praha-1

Czech Republic

[email protected]

December 2007

The author is grateful to Nicoletta Batini, Vladislav Flek, Kamil Galuscak, Thomas Helbling,
Mathilde Maurel, Luc Moers, Daniel Munich, Pape N’Diaye, Miroslav Singer, Emil Stavrev,
Iulia Traistaru-Siedschlag, and seminar participants at CESifo Area Meeting, EALE,
Euroframe, the CNB and the IMF for discussion and helpful comments. An earlier version of
this paper was published as the
Czech National Bank Working Paper, No. 1/2006. This work
was supported by Czech National Bank Research Project No. E2/2005. Some parts of the
paper were prepared when the author was the IMF-GDN visiting scholar in the International
Monetary Fund Research Department during February-March 2005. Support from the Global
Development Network program is acknowledged. This paper represents the author’s own
views and should not be construed as representing those of the Czech National Bank or the
International Monetary Fund. However, all errors and omissions remain entirely the
responsibility of the author.



More intriguing information

1. A Unified Model For Developmental Robotics
2. Strategic Policy Options to Improve Irrigation Water Allocation Efficiency: Analysis on Egypt and Morocco
3. Comparison of Optimal Control Solutions in a Labor Market Model
4. Menarchial Age of Secondary School Girls in Urban and Rural Areas of Rivers State, Nigeria
5. Fiscal Policy Rules in Practice
6. The name is absent
7. Public-private sector pay differentials in a devolved Scotland
8. Wounds and reinscriptions: schools, sexualities and performative subjects
9. Income Growth and Mobility of Rural Households in Kenya: Role of Education and Historical Patterns in Poverty Reduction
10. Innovation in commercialization of pelagic fish: the example of "Srdela Snack" Franchise
11. APPLICATIONS OF DUALITY THEORY TO AGRICULTURE
12. The WTO and the Cartagena Protocol: International Policy Coordination or Conflict?
13. The name is absent
14. Qualifying Recital: Lisa Carol Hardaway, flute
15. FUTURE TRADE RESEARCH AREAS THAT MATTER TO DEVELOPING COUNTRY POLICYMAKERS
16. Regional specialisation in a transition country - Hungary
17. AGRICULTURAL PRODUCERS' WILLINGNESS TO PAY FOR REAL-TIME MESOSCALE WEATHER INFORMATION
18. DEVELOPING COLLABORATION IN RURAL POLICY: LESSONS FROM A STATE RURAL DEVELOPMENT COUNCIL
19. THE WELFARE EFFECTS OF CONSUMING A CANCER PREVENTION DIET
20. The name is absent