Wage convergence before and after EU accession: Theory, empirical experience and possible scenarios

Gacs, J., Hars, A., & Huettl, A. (2001). Wage convergence before and after EU accession: Theory, empirical experience and possible scenarios. Kuelgazdasag XLIV (7-8) 22-60.

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Abstract

The article analyzes the requirement recently formulated by different parties of the accession process: the candidate countries should raise their wage level close to the average of the EU even before they join the union. The authors show that wage convergence, defined this way, has no theoretical underpinnings. According to the experience of less developed EU members that joined the union in the 1970s and 1980s, the so called cohesion countries, even after accession, wage convergence is a protracted process. The Hungarian wage level is currently far behind the EU average, and it is also lower than wages in several Central and East European countries. This lagging behind is, however, one of the sources of the competitiveness of Hungarian products. The article draws up possible convergence scenarios for the Hungarian wages. It turns out that, even with a relatively fast growth of output and expansive wage policies, the convergence to the EU level will be a very long process.

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