The Influence of Trade with the EU-15 on Wages in the Czech Republic, Hungary, Poland, and Slovakia between 1997 and 2005

Abstract

I use the STAN database of the OECD and different econometric methods to investigate the effects of exports towards the EU-15 on wages in the Visegrad countries (CEEC-4; Czech Republic, Hungary, Poland, and Slovakia). The results do not allow to draw any definite statements about this effect. While the impact of exports towards the EU-15 on wages in the countries investigated is likely to be negative in the short run (1-2 years), it seems to be positive in the medium and long run, at least for Hungary and Poland. Nevertheless, it is clear that the pattern of the CEEC-4 exports towards the EU-15 does not correspond with the predictions of the Heckscher-Ohlin model. Therefore, also the theorems of Stolper and Samuelson (1941) and concerning the equalization of factor prices, which are based on the Heckscher-Ohlin model, do not seem accurate to describe the underlying forces linking trade with factor prices. I argue that missing regional and related inter-sectoral labor mobility might be a potential factor preventing employees from taking advantage of trade liberalization. To substantiate this suspicion, however, analysis of more disaggregated data is necessary.panel data, EU enlargement, trade, wages, factor prices, income distribution, Central and Eastern Europe, Visegrad Countries