The missing link between wages and labour productivity in tourism: evidence from Croatia and Slovenia

Abstract

The present article aims to analyse wage-labour productivity causalities in Croatia and Slovenia using cointegration methods based on monthly time series data of variables for labour productivity and real gross wages in tourism industry during the period December 1999–January 2020. The data vector is integrated by chain indices with the constant base January 2000 ¼ 100. A stochastic trend and shocks are covered in the analysis. Shocks are linked to the European Union accession, and economic crisis following with overwhelmed tourist arrivals. The contribution of the research is two-fold. First, the equations for at most normal distributed variables of labour productivity and real wages in tourism are exposed. Three spatial cointegration relations confirm labour productivity integrity of the regional tourism market. Second, pair-wise causalities indicate one cointegrated vector for labour productivity, which drives real gross wages in tourism sub-industries. These results suggest that for a higher non-seasonal assessment of real gross wage, the labour productivity should rise, i.e. less workers, more robotization or more tourist arrivals with better quality solutions. These findings are at most important to be implemented after the COVID-19 infection crisis with expected restructurings and digital transformation in the tourism industry