Lessons and Challenges for CESEE Countries and a Modern Europe
Edited by Ewald Nowotny, Doris Ritzberger-Grünwald and Helene Schuberth
Chapter 9: Labour market hierarchies and the unemployment_wage nexusin CESEE and in the EU
Wage growth has become increasingly detached from real variables such as the unemployment rate or economic growth. In this chapter, it is shown that a consistent factor driving this development can be found in labour market dualities. Concretely, the author demonstrates that labour market dualities _ more precisely, the incidence of temporary contracts in an economy _ dampens wage growth. This is not a novel development. However, the dampening impact of wage growth has considerably increased for any given level of temporary contracts in an economy since the global financial crisis, arguably being linked to an increased fear of social decline triggered by the massiveness of the economic downturn. The major focus of this chapter is on Central, Eastern and Southeastern European (CESEE) economies, although the author shows that the effect also exists within the context of a broader sample of European Union economies.
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