Economic crisis and wage divergence: empirical evidence from Romania

This paper addresses the question of convergence in real wages across Romanian counties, while putting a spotlight on the recent economic crisis, which has hit hard the entire economy. Following the main methodological trends in the literature, convergence methods were applied using the traditional...

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Bibliographic Details
Published in:	Public finance review Vol. 23; no. 4; pp. 493 - 513
Main Authors:	Zaman, Gheorghe, Goschin, Zizi
Format:	Journal Article
Language:	English
Published:	01-12-2014
Subjects:	20th century 21st century Barro, Robert J Convergence Economic crisis Galton, Francis Quantitative analysis Romania Sala-i-Martin, Xavier Wage levels
Online Access:	Get full text
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Summary:	This paper addresses the question of convergence in real wages across Romanian counties, while putting a spotlight on the recent economic crisis, which has hit hard the entire economy. Following the main methodological trends in the literature, convergence methods were applied using the traditional cross-section approach. The empirical analysis covering a 21-year period provided clear evidence in favour of ß-convergence, but indicated [sigma]-divergence (Galton's fallacy). Wages' dispersion seems to rise during the economic crises and persists in the first stage of recovery as well. This finding provides support to Barro and Sala-i-Martin's theory on the temporary divergence effect induced by economic shocks. Reprinted by permission of Sage Publications, Inc.
Bibliography:	ObjectType-Article-1 SourceType-Scholarly Journals-1 content type line 23 ObjectType-Feature-2
ISSN:	1091-1421