United in Diversity. Labor Markets in the CEE Countries
United in Diversity. Labor Markets in the CEE Countries

Summary/Abstract: We study supply side factors of the labor market in the Czech Republic, Hungary, Poland and Slovakia. The common economic history of these Central European economies suggests that long-run relationships should have similar patterns. While we find that for the Czech Republic and Hungary there exists a long-run relation of equilibrium unemployment rate to real wages, capital stock and terms of trade, such relationship does not hold for Poland and Slovakia. Instead, labor market trends are better described by the relationship of equilibrium real wages. This finding uncovers structural differences within the Visegrad countries. These differences relate to the extent to which labor supply can adapt to shocks. In practice this would suggest that it was more efficient for Slovakia to conduct supply-oriented policies to stabilize labor market conditions. On the contrary, the more efficient tools for the Czech Republic are wage-oriented policies, connected to the demand side.

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