European integration and regional wages in Poland
New economic geography (NEG) models posit a positive relationship between market access and relative wages at the regional level. In addition, theory highlights the importance of agglomeration effects and national capitol influences on regional differentials. We examine these hypotheses in a study of wage differentials across the 16 voivodeships, or provinces, in Poland over the period from 2000 to 2007, during which Poland gained membership in the European Union.
Data/Methods
Regional wage differentials relative to the national average wage are determined from restricted least squares estimates of annual Mincerian human capital regressions for men and women, controlling for a long list of potential wage determinants. Market access to Europe is determined by a gravity-type variable with relative attraction measured as the regional per capita GDP as a fraction of the EU average per capita GDP and relative distance by the travel time between the voivodeship and Brussels. Agglomeration effects are captured by population density and an indicator variable for the region containing Warsaw. We include our own estimate of the relative cost of goods and services across regions as a control variable.
Results
Preliminary results reveal a statistically significant and quantitatively important positive relationship between regional relative wages and our gravity variable for access to the EU market. Regions with greater market potential along this dimension enjoy higher relative wage levels for both men and women. Similarly, there is evidence for a statically significant positive effect of population density on regional wage differentials. The capitol region has significantly higher relative wages as well. Our results then provide empirical support for the hypotheses derived from the NEG models and indicate that accession to the EU may have skewed the distribution of wages across the country toward those regional labor markets better situated to benefit from increased trade.
We also have some very preliminary results on the impact of migration and climate amenities on regional labor markets in Poland. International net migration, which increased dramatically during this time period, has a negative effect on relative wages suggesting that regions with greater net outflows of workers to other countries saw a labor supply response in their relative wage level. Thus far we have found mixed effects for net migration between areas within Poland and climate amenity measures in our results.