The Evolution of Regional Real Wage Differentials in Poland
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Publication date: 2013-09-30
GNPJE 2013;266(9):53–67
The paper aims to offer an empirical verification of a hypothesis concerning real wage equalization among Poland’s regions. Unlike most previous studies, which focus on the evolution of nominal wages, the article uses regional purchasing power parity (PPP) deflators to analyze the evolution of real wages. Regional labor market disparities in Poland, including regional wage differentials, have been amply discussed in research papers, the author says. Such an analysis is important, he adds, because regional wage differentials frequently determine migration decisions. Some theoretical models suggest that the outflow of workers from regions with lower wages partially reduces regional disparities in unemployment rates. However, other models show that regional unemployment rate differentials in fact increase as a result of labor force migration, Rokicki says. Most authors focus on the correlation between the growth and the initial level of wages (beta convergence) and on the evolution of the regional dispersion of wages (sigma convergence), according to Rokicki. The results of these analyses imply the existence of a divergence process in recent decades. The author argues, however, that these results may be significantly biased. Rokicki’s own analysis, based on wages adjusted with regional PPP deflators, suggests that the divergence trend reversed in the second half of the previous decade – in favor of a convergence process that has been at work ever since then.