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RESEARCH PAPER
The Relationship Between Wage Differentiation and Productivity in Polish Regions
1
Wydział Ekonomiczno-Socjologiczny, Uniwersytet Łódzki, Polska
Submission date: 2021-11-25
Final revision date: 2022-06-26
Acceptance date: 2022-09-21
Publication date: 2022-12-30
GNPJE 2022;312(4):60-73
KEYWORDS
JEL CLASSIFICATION CODES
ABSTRACT
The article attempts to determine the optimal wage differentiation in Poland’s
16 regions from 1999 to 2015. In our study, optimality is a maximum level of
total factor productivity. Wage differentiation was measured by the Gini coefficient.
Two hypotheses were tested and confirmed: (1) the relationship between
wage differentiation and TFP is described by the parabolic function with a maximum;
(2) parabolic functions differ from each other, with different optimal differentiations
for each region. In this article, we try to answer the question of how
the optimal wage differentiation should be estimated. Is it better to group regions
with a hypothetically similar optimal wage differentiation? Or is it better to use
a standardised variable approach? We conclude that it is better to use a standardised
variable. It seems that this finding has a universal significance. It will make it possible to resolve disputes about whether the relationship between the differentiation
of wages (or income) and the level or dynamics of economic efficiency
is negative or positive. It will also help explain why many studies do not confirm
the link between wage (income) differentiation and economic efficiency. In our
opinion, the contradictory, and sometimes inconsistent, results are due to the use
of an overly simplified model – one that omits the two confirmed hypotheses.
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