nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2012‒08‒23
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. GINI DP 36: Material deprivation, economic stress and reference groups in Europe: An analysis of EU-SILC 2009 By Christopher Whelan; Bertrand Maitre
  2. The Incidence of the European Union Emissions Trading System and the Role of Revenue Recycling: Empirical Evidence from Combined Industry- and Household-Level Data By Martin Beznoska; Johanna Cludius; Viktor Steiner
  3. GINI DP 40: Multidimensional Poverty Measurement in Europe: An Application of the Adjusted Headcount Approach By Christopher Whelan; Brian Nolan; Bertrand Maitre
  4. The Crisis Sensitivity of European Countries and Regions: Stylized Facts and Spatial Heterogeneity By Stefan P.T. Groot; Jan L. Mohlmann; Harry Garretsen; Henri L.F. de Groot
  5. How large is the magnitude of fixed-mobile call substitution? Empirical evidence from 16 Europen countries By Barth, Anne-Kathrin; Heimeshoff, Ulrich
  6. Evaluating the possible impact of pension reforms on future living standards in Europe By Aaron George Grech
  7. GINI DP 37: Understanding Material Deprivation in Europe: A Multilevel Analysis By Christopher Whelan; Bertrand Maitre
  8. Surveying Romanian Migrants in Italy Before and After the EU Accession: Migration Plans, Labour Market Features and Social Inclusion By Isilda Mara
  9. A Satisfaction-Driven Poverty Indicator: A Bustle Around the Poverty Line By Andos Juhász
  10. Offshoring, Domestic Outsourcing, and Productivity: Evidence for a Number of European Countries By Tillmann Schwörer
  11. Danish Farmers and Investors: An analysis of reasons and motivations for increasing cross-border agricultural activities in Central and Eastern European countries By Luljeta Hajderllari; Kostas Karantininis; Ole Bonnichsen
  12. Implementation of the acquis communautaire in EU candidate countries: A reappraisal By Jano, Dorian
  13. Do labour mobility and networks foster geographical knowledge diffusion? The case of European regions By Ernest Miguele; Rosina Moreno
  14. Decomposing household wealth portfolios across countries: An age-old question? By SIERMINSKA Eva; DOORLEY Karina
  15. The Impact of the Economic Crisis on Innovation: Evidence from Europe By Daniele Archibugi; Andrea Filippetti; Marion Frenz
  16. How are firms’ wages and prices linked: survey evidence in Europe By Martine Druant; Silvia Fabiani; Gábor Kézdi; Ana Lamo; Fernando Martins; Roberto Sabbatini
  17. Somewhere over the Rainbow: Sexual Orientation Discrimination in Germany By Stephan Humpert
  18. Cross-Border and Foreign-Affiliate Sales of Services: Evidence from German Micro-Data By Markus Kelle; Jörn Kleinert; Horst Raff; Farid Toubal
  19. Lost in Transition? – Minimum Wage Effects on German Construction Workers By Ronald Bachmann; Marion König; Sandra Schaffner
  20. Wage setting in Hungary: evidence from a firm survey By Gábor Kézdi; István Kónya

  1. By: Christopher Whelan (Newman Building, School of Sociology); Bertrand Maitre (The Economic and Social Research Institute)
    Abstract: In this paper we take advantage of the recent availability of data from the special module on material deprivation in the 2009 European Union Statistics on Income and Living Conditions (EU-SILC) to develop a more comprehensive understanding of the relationship between material deprivation and economic stress. In particular, we focus on the moderating role played by cross-national differences in levels of income and income inequality such that the consequences of material deprivation for subjective economic stress are conditional on the value of macro-economic attributes. In an analysis focused on households clustered within countries, these questions can be most appropriately addressed by a multilevel analysis that allows us to explore the manner in which material deprivation measured at the household level interacts with national attributes in infl uencing household levels of economic stress. Evidence for such moderation is provided by a signifi cant statistical interaction between deprivation and country attributes. In this paper we undertake such an analysis and consider the implications of our findings for competing perspectives on the nature of reference groups in Europe.
    Date: 2012–07
  2. By: Martin Beznoska; Johanna Cludius; Viktor Steiner
    Abstract: We calculate the expected incidence of the European Union Emissions Trading System (EU-ETS) using industry and household-level data. By combining data on direct CO2 emissions by production sector from the German Environmental Account with the German Input-Output Accounts, we calculate the CO2 intensity of each sector covered by the EU-ETS. We focus on the impact of price increases in the electricity sector, both directly in the form of higher electricity bills for consumers and indirectly through products that use electricity as an input to production. Taking into account behavioral effects derived from an estimated consumer-demand system, we provide incidence calculations on the basis of the German Income and Expenditure Survey for the year 2008 data updated to 2013. We confirm the ex-ante expected regressive effect, which is, however, both rather small in magnitude and can be offset and even more than offset by revenue recycling, in particular the reduction of social security contributions on labor income.
    Keywords: European Union Emissions Trading System, tax incidence, revenue recycling, Almost Ideal Demand System
    JEL: D12 H23 Q52
    Date: 2012
  3. By: Christopher Whelan (Newman Building, School of Sociology); Brian Nolan (School of Applied Social Science, University College Dublin); Bertrand Maitre (The Economic and Social Research Institute)
    Abstract: As awareness of the limitations of relying solely on income to measure poverty and social exclusion has become more widespread, attention has been increasingly focused on multi-dimensional approaches. To date efforts to measure multidimensional poverty and social exclusion in rich countries have been predominantly ad hoc and have relied on data that are far from ideal. Here we apply the approach recently developed by Alkire and Foster, characterized by a range of desirable axiomatic properties but mostly discussed so far in a development context, to European countries, exploiting the potential of harmonized microdata on deprivation newly available for the European Union. The analysis seeks to overcome the limitations of the union and intersection approaches that have characterized many earlier studies. Multidimensional poverty is characterized and decomposed in terms of the contribution of different deprivation dimensions, and an account of cross-national and socio-economic variation in risk levels is presented that is in line with theoretical expectations. Multilevel analysis of multi-dimensional poverty provides the basis for assessment of the role of macro and micro characteristics and their interaction in relation to levels and patterns of multidimensional poverty and social exclusion. Key words: Poverty Measurement; Multidimensional poverty; Deprivation; Social exclusion; EU poverty target.
    Date: 2012–07
  4. By: Stefan P.T. Groot (VU University Amsterdam); Jan L. Mohlmann (VU University Amsterdam); Harry Garretsen (University of Groningen); Henri L.F. de Groot (VU University Amsterdam)
    Abstract: This paper investigates the impact of the recent global recession on European countries and regions. We first present several stylized facts as to the heterogeneous impact of the global recession on individual European countries and regions. We then offer an investigation of three main classes of explanations for spatial heterogeneity in the severity of the crisis. The first is the extent to which countries are integrated in the global economy via financial and trade linkages. A second class of potential explanations is found in differences in the institutional framework of countries. A third possible cause why some countries and notably also regions are more affected than others is differences in their sectoral composition. We show that especially variation in the sectoral composition contributes to the variation in the effects of the current crisis, both at the country level and at the detailed regional level across the EU.
    Keywords: recession; austerity; Europe; spatial heterogeneity
    JEL: E02 E32 E63 F44 O52 R11
    Date: 2011–04–21
  5. By: Barth, Anne-Kathrin; Heimeshoff, Ulrich
    Abstract: This paper investigates the degree of fixed-mobile call substitution (FMCS). We use quarterly data from 2004 to mid 2010 on 16 mainly Western European countries. By applying dynamic panel data techniques, we are able to estimate short- and long-run elasticities. The own-price and cross-price elasticities found give strong empirical evidence for substitutional effects towards mobile services. In particular, the estimated cross-price elasticities of the mobile price on the fixed line call demand are relatively large compared to other studies. --
    Keywords: Dynamic Panel Model,Fix-Mobile Substitution,Telecommunication Markets
    Date: 2012
  6. By: Aaron George Grech
    Abstract: Successive reforms enacted since the 1990s have dramatically changed Europe's pensions landscape. This paper tries to assess the impact of recent reforms on the ability of systems to alleviate poverty and maintain living standards, using estimates of pension wealth for a number of hypothetical cases. By focusing on all prospective pension transfers rather than just those at the point of retirement, this approach can provide additional insights on the efficacy of pension systems in the light of increasing longevity. Our estimates indicate that while reforms have decreased generosity significantly, in most countries poverty alleviation remains strong. However, moves to link benefits to contributions have made some systems less progressive, raising adequacy concerns for certain groups. In particular, unless the labour market outcomes of women and of lower-income individuals change substantially over the coming decades, state pension transfers will prove inadequate, particularly in Eastern European countries. Similarly while the generosity of minimum pensions appears to have either been safeguarded by pension reforms, or improved in some cases, these transfers generally remain inadequate to maintain individuals above the 60% relative poverty threshold throughout retirement. Our simulations suggest that the gradual negative impact of price indexation on the relative adequacy of state pensions is becoming even more substantial in view of the lengthening of the time spent in receipt of retirement benefits. The consumption smoothing function of state pensions has declined noticeably, strengthening the need for longer careers and additional private saving. When pressed, policymakers, particularly in Western Europe, seem to have been more willing to sacrifice the income smoothing function of pensions rather than its poverty alleviation function. Policymakers in some counties, notably Germany, France and the UK, have sought to refocus state pension systems towards generating better outcomes for people in the bottom half of the income distribution, probably with the insight that middle- to high-income individuals are possibly in a better position to accommodate the effect of state pension reforms by increasing their private saving. However in some cases, notably in Eastern Europe, results suggest that policymakers may not have fully considered the full impact of their policies on those on low incomes, on those with incomplete careers and on women.
    Keywords: Social Security, Public Pensions, Retirement, Poverty, Retirement Policies
    JEL: H55 I38 J26
    Date: 2012–05
  7. By: Christopher Whelan (Newman Building, School of Sociology); Bertrand Maitre (The Economic and Social Research Institute)
    Abstract: In this paper, taking advantage of the inclusion of a special module on material deprivation in EU-SILC 2009, we provide a comparative analysis of patterns of deprivation. Our analysis identifies six relatively distinct dimensions of deprivation with generally satisfactory overall levels of reliability and mean levels of reliability across counties. Multi-level analysis based on 28 European countries reveals systematic variation across countries in the relative importance of with and between country variation. The basic deprivation dimension is the sole dimension to display a graduated pattern of variation a across countries. It also reveals the highest correlations with national and household income, the remaining deprivation dimensions and economic stress. It comes closest to capturing an underlying dimension of generalized deprivation that can provide the basis for a comparative European analysis of exclusion from customary standards of living. A multilevel analysis revealed that a range of household and household reference person socio-economic factors were related to basic deprivation and controlling for contextual differences in such factors allowed us to account for substantial proportions of both within and between country variance. The addition of macro-economic factors relating to average levels of disposable income and income inequality contributed relatively little further in the way of explanatory power. Further analysis revealed the existence of a set of significant interactions between micro socio-economic attributes and country level gross national disposable income per capita. The impact of socio-economic differentiation was significantly greater where average income levels were lower. Or, in other words, the impact of the latter was greater for more disadvantaged socio-economic groups. Our analysis supports the suggestion that an emphasis on the primary role of income inequality to the neglect of differences in absolute levels of income may be misleading in important respects.
    Date: 2012–03
  8. By: Isilda Mara
    Abstract: This report describes the migration patterns of Romanian migrants in Italy before and after the accession of Romania into the European Union (EU). The findings and the main results presented throughout the report were collected by carrying out a survey in three main cities of Italy Milan, Turin and Rome which are recognized as the main destination regions of Romanians who have migrated to Italy since free visa liberalization in May 2004.The report focuses on four broad areas the profile and migration plans of migrants, regional differences and basic characteristics; labour market patterns during the migration experience, including income and remittances; social inclusion of migrants and access to social security and the health system; and, self-assessment of the migration experience and results of moving to Italy. The survey demonstrated that the mobility of migrants during the free visa regime was initially labour supply driven, whereas more recently, it has been labour demand that moved the migrant from his/her country of origin. However, the survey points out that almost half of Romanian migrants in Italy have indefinite migration plans. The remainder of the migrants express a preference for permanent migration, followed by long-term migration, while a preference for short-term migration is the least popular. The accession of Romania to the EU was accompanied by a flow of migrants with a higher preference for permanent and long-term migration, especially among those who arrived immediately after January 2007. Half of the migrants who had defined migration plans indicated that their current migration preferences, compared to the ones they had upon arrival, have shifted towards permanent migration. This is particularly true among women. As concerns remigration, or return to Romania, the survey reveals that migrants who are more likely to return to the country of origin or move to another country are those living in Rome while migrants who prefer to remain permanently are those living in Turin. As for labour market patterns and regional differences, four-fifths of migrants are employed, with the highest share of those working full-time found in Rome, followed by Turin and Milan. Unemployment among Romanian migrants seems to be the highest in Milan and the lowest in Turin. A significant proportion of migrant women have jobs in the categories ‘Sales and services elementary job’, ‘Personal care and related workers’ and ‘Housekeeping and restaurant services’. Men mostly work as ‘Extraction and building trades workers’, ‘Drivers and mobile plant operators’ and ‘Metal, machinery and related trades workers’. A non-negligible share of migrants work without a fixed contract which makes their employment position more vulnerable and open to exploitation. In addition, the survey shows that occupational switches occurred within all categories of occupational skill levels. In particular, there has been a trend towards jobs distinguished as medium and low skilled. Moreover, a comparison between education level and occupational skill level shows that highly skilled migrants, especially men, are employed in jobs below their level of educational achievement. A concern often expressed is that migrants who have access to health and social security services are more encouraged to enter or stay in a country. However, the survey rejected this hypothesis and suggests that neither receiving social security benefits nor the availability of accessing healthcare drives migrants’ decision to enter and remain in the destination country. Access to healthcare, however, appears to have some potential effect on migration plans. We find that the longer migrants plan to stay in the country, the higher the percentage of them who have access to a general practitioner/doctor and the higher the number of them whose migration decision is affected by access to such services. Accordingly, it emerges that the length of stay in the destination country matters and it confirms that there is a correlation between the duration of stay and the effect on migration plans attributed to access to social security and health services, even though such cases represent less than one-fifth of migrants. Self-assessment of the migration experience and outcomes from moving to Italy demonstrated that overall most of Romanian migrants are happy with their migration experience in Italy. The self-assessment indicated ‘making more money’, ‘finding a better job’ and ‘learning a new language’ as the main positive outcomes from the migration experience. In contrast, ‘insecurity about the future’, ‘discrimination’, ‘negative impact on family relationships’ and ‘doing work under the level of qualification’ are listed among the main negative outcomes.
    Keywords: data collection, migration, regions, employment, earnings, health, education, welfare, Romanian migrants
    JEL: C8 I J11 J21 J24 J31 J6 R Y Z
    Date: 2012–07
  9. By: Andos Juhász
    Abstract: Poverty line definitions in use often lack a solid scientific foundation. This paper proposes to exploit data on income satisfaction to construct an evidence-based poverty line. The poverty line is identified by using its assumed unique property to explain income dissatisfaction best among all dichotomizations of income. To this end, several model settings are considered including linear and nonlinear approaches both exploiting panel information. Applying the method to data from the German Socio-Economic Panel yields a temporally stable poverty line similar to the definition provided by the Statistical Office of the European Commission. Using data from the European Community Household Panel, we present further evidence for satisfaction-based poverty lines across Europe and investigate their cross-country differences. The appropriateness of focusing on discrete poverty lines is also investigated.
    Keywords: Household income, poverty line, income satisfaction
    JEL: D31 I32
    Date: 2012
  10. By: Tillmann Schwörer
    Abstract: The economic effects of offshoring have been subject to extensive empirical analysis in the past, but many studies have not accurately distinguished between offshoring, domestic outsourcing, and the substitution of domestic by foreign suppliers. In this study I provide stylized facts on offshoring in Europe between 1995 and 2008 taking into account this distinction. I show that service inputs have been offshored and domestically outsourced, whereas material inputs have been either offshored or moved from domestic to foreign suppliers. The strong overall decline in the share of internal production evokes the question whether this has led to productivity gains within firms. I address this question by combining industry-level data on offshoring and domestic outsourcing with a firm panel. I find that offshoring of non-core activities has led to productivity gains whereas offshoring of core activities and domestic outsourcing have had no such effects. The estimated productivity gains are in particular driven by offshoring to low-wage countries and by the gains of multinational firms
    Keywords: offshoring, domestic outsourcing, productivity
    JEL: F23 D24 L24 L60
    Date: 2012–07
  11. By: Luljeta Hajderllari (Institute of Food and Resource Economics, University of Copenhagen); Kostas Karantininis (Institute of Food and Resource Economics, University of Copenhagen); Ole Bonnichsen (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: The purpose of this paper is to provide some evidence on the push and pull factors that motivate farmers to expand across their home countries’ borders. The focus is on Danish expansion farmers and investor farmers setting up activities in Central and Eastern European countries like Slovakia, Poland, Romania and Latvia. Data from 44 mail surveys was analysed to explore the push and pull factors that contribute to farmers’ level of activities outside their home country. The responses given in the mail survey are analysed using two analytical methods of frequency analysis and an ordered probit model. The results indicate that the important factors for Danish farmers to extend overseas are price and availability of land, institutional governance, network and image with regard to farming. These findings generally support the literature regarding reasons for farmers to increase their cross-border activities, except that we do not find a significant influence from the availability of cheap labour in the host countries.
    Keywords: Denmark; Danish farmer; agriculture; cross-border; Central Eastern Europe
    JEL: C51 D22 F23 Q12 Q17
    Date: 2012–07
  12. By: Jano, Dorian
    Abstract: This article replicates and extends the Hille and Knill (2006) study on the implementation of the acquis communautaire in EU candidate countries. We use a different methodological approach, i.e. the fuzzy set qualitative comparative analysis (fsQCA), and extend the analysis by incorporating EU-level factors (the intensity of EU conditionality). The fsQCA analysis shows that the bureaucratic effectiveness is systematically related to candidate countries' alignment performance whereas there is no systematic relationship between alignment performance, political constraints, financial capacities, government membership support and/or the absence of intensity of EU conditionality. --
    Keywords: acquis communautaire,EU candidate countries,Central and Eastern Europe,enlargement,Europeanization,fuzzy set qualitative comparative analysis,implementation,policy change
    Date: 2012
  13. By: Ernest Miguele (Economics and Statistics Division, WIPO; AQR-IREA, University of Barcelona.); Rosina Moreno (AQR-IREA, University of Barcelona)
    Abstract: The goal of this paper is twofold: first, we aim to assess the role played by inventors’ cross-regional mobility and networks of collaboration in fostering knowledge diffusion across regions and subsequent innovation. Second, we intend to evaluate the feasibility of using mobility and networks information to build cross-regional interaction matrices to be used within the spatial econometrics toolbox. To do so, we depart from a knowledge production function where regional innovation intensity is a function not only of the own regional innovation inputs but also external accessible R&D gained through interregional interactions. Differently from much of the previous literature, cross-section gravity models of mobility and networks are estimated to use the fitted values to build our ‘spatial’ weights matrices, which characterize the intensity of knowledge interactions across a panel of 269 regions covering most European countries over 6 years.
    Keywords: inventors’ spatial mobility, co-patenting, gravity models, weights matrix, knowledge production function.
    JEL: C8 J61 O31 O33 R0
    Date: 2012–07
  14. By: SIERMINSKA Eva; DOORLEY Karina
    Abstract: Using harmonized wealth data and a novel decomposition approach, we show that cohort effects exist in the income pro?les of asset and debt portfolios for a sample of European countries and the U.S. We ?nd that observable characteristics explain a sizable portion of the wealth participation gap for the young in particular. Similar patterns are observed for most countries for the level of wealth held, conditional on participation. The bottom of the wealth distribution in the European countries (particularly Spain and Luxembourg) is, however, characterized by large unexplained differences to the U.S. distribution, possibly pointing to the existence of important safety nets, which shape wealth holdings in these countries. In accordance with past literature, we ?nd that institutions and other unobservables play a larger role for mature households (50 and over). We will also discuss the potential effect of the crisis on these results.
    Keywords: household portfolios; decomposition; wealth
    Date: 2012–07
  15. By: Daniele Archibugi (Department of Management, Birkbeck College University of London); Andrea Filippetti (Institute for the Study of Regionalism, Federalism and Self-Government); Marion Frenz (Department of Management, Birkbeck College University of London)
    Abstract: Building on the Schumpeterian hypotheses of creative destruction and technological accumulation, the paper compares drivers of innovation investment before, during and following on from the onset of the recent economic crisis through the analysis of a fresh survey of European firms.
    Date: 2012–04
  16. By: Martine Druant (National Bank of Belgium); Silvia Fabiani (Bank of Italy); Gábor Kézdi (Magyar Nemzeti Bank (central bank of Hungary), Central European University, Institute of Economics of the Hungarian Academy of Sciences); Ana Lamo (European Central Bank); Fernando Martins (Bank of Portugal, ISEG (Technical University of Lisbon), Universidade Lusíada of Lisbon); Roberto Sabbatini (Bank of Italy)
    Abstract: This paper presents new evidence on the patterns of price and wage adjustment in European firms and on the extent of nominal rigidities. It uses a unique dataset collected through a firm-level survey conducted in a broad range of countries and covering various sectors. Several conclusions are drawn from this evidence. Firms adjust wages less frequently than prices: the former tend to remain unchanged for about 15 months on average, the latter for around 10 months. The degree of price rigidity varies substantially across sectors and depends strongly on economic features, such as the intensity of competition, the exposure to foreign markets and the share of labour costs in total cost. Instead, country specificities, mostly related to the labour market institutional setting, are more relevant in characterising the pattern of wage adjustment. The latter exhibits also a substantial degree of time-dependence, as firms tend to concentrate wage changes in a specific month, mostly January in the majority of countries. Wage and price changes feed into each other at the micro level and there is a relationship between wage and price rigidity.
    Keywords: survey, wage rigidity, price rigidity, indexation, institutions, time dependent
    JEL: D21 E30 J31
    Date: 2012
  17. By: Stephan Humpert (Leuphana University Lueneburg, Germany)
    Abstract: This paper observes sexual orientation based differences in German incomes. Gay men and lesbian women sort themselves into different occupations and sectors than their heterosexual counterparts. I find evidence that cohabitating gay men have an income penalty of 9 to 10 percent compared with married men, while lesbian women have a premium of about 10 to 12 percent compared with married women. Lesbians in a registered same-sex union have an income gain of about 16 to 21 percent, while the effect for men is not statistically significant. There is evidence that gay households have 9 to 15 percent higher household income than mixed-sex couples. The results for lesbian household income are not statistically significant.
    Keywords: Wage Discrimination, Labor Supply, Sexual Orientation
    JEL: J31 J16 J22
    Date: 2012–07
  18. By: Markus Kelle (Centro Studi Luca d’Agliano); Jörn Kleinert (Karl-Franzens University of Graz); Horst Raff (Christian Albrechts University of Kiel, Kiel Institute for the World Economy and CESifo); Farid Toubal (University of Angers, Paris School of Economics and CEPII)
    Abstract: We merge German balance-of-payments and foreign-affiliate-trade statistics to obtain data about trade in commercial services at the firm level. We use these data to study export market participation and the choice of export mode: cross-border versus foreign affiliate sales. We find that for firms in our sample productivity is both a statistically significant and economically important determinant of the export participation and export mode choice. We also identify the role of industry- and country-specific determinants.
    Keywords: International Trade, Trade in Services, Supply Modes, Commercial Presence, Foreign Direct Investment, Multinational Enterprises, Firm Heterogeneity
    JEL: F12 F15 L13
    Date: 2012–07–16
  19. By: Ronald Bachmann; Marion König; Sandra Schaffner
    Abstract: Using a linked employer-employee data set on the German construction industry, we analyse the effects of the introduction of minimum wages in this sector on labour market dynamics. In doing so, we focus on accessions and separations, as well as the underlying labour market flows, at the establishment level. The fact that minimum wages in Germany are sector-specific enables us to use other industries as control groups within a difference-in-differences framework. We find that both accessions and separations rise in East Germany as a result of the minimum wage introduction. The evidence on detailed worker flows suggests that this is mainly due to increased recalls. Furthermore, the minimum wage introduction lowered job-to-job transitions in East Germany, which can be explained by a more compressed wage distribution making on-the-job search less worthwhile. No clear effects on labour market dynamics in West Germany arise.
    Keywords: Minimum wage; labour market flows; difference-in-differences; linked employer-employee
    JEL: J23 J38 J42 J63
    Date: 2012–07
  20. By: Gábor Kézdi (Magyar Nemzeti Bank (central bank of Hungary), Central European University, Institute of Economics of the Hungarian Academy of Sciences); István Kónya (Magyar Nemzeti Bank (central bank of Hungary))
    Abstract: This paper presents new evidence on the flexibility of the Hungarian labor market, with special emphasis on wages. The results are based on a new survey on wage setting among Hungarian firms. The survey is part of the Eurosystem Wage Dynamics Network (WDN), and it is a harmonized questionnaire administered in 17 countries in Europe, including almost all Euro Area countries as well as five Central and Eastern European countries. The survey results show that the Hungarian labor market, while institutionally flexible, appears to be surprisingly rigid. The survey evidence points to low turnover and possibly more rigid wages than previously thought.
    Keywords: wage setting, survey, wage dynamics network, Hungary
    JEL: C83 J01 J30
    Date: 2012

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