| Abstract [eng] |
This master’s thesis studies wage flexibility. The aim of this thesis is to review the theoretical wage flexibility and its determinants and assess the flexibility in the counties of the EU comparing boom and bust periods. In this study, the problem is to figure out how wages react to the changing economic cycle phases and to determine what factor changes have the biggest impact on wage developments. The first part is dealing with wage flexibility and rigidity concepts and defines what is an inflexible wage.Wage flexibility determinants, reactions to those factors, effects and causes of differing financial flexibility in the EU counties are analyzed. The empirical part of the thesis carries out a consistent wage, unemployment, labor productivity, gross domestic product and trade union density dynamic analysis. Wage response to the economic situation (unemployment rate, labor productivity and gross domestic product growth) is analyzed. When the analysis of wages and other indicators is done, a regression analysis is performed. When this analysis is performed, the European Union member states are divided into two periods, recession and recovery, according to 2004 – 2014 gross domestic product. The application of multiple regression analysis showed that wage flexibility in labor productivity and unemployment varied according to the economic upturn and downturn. The results showed that wage flexibility depends on whether the country is in an economic upturn or downturn. It was found that the increase of the gross domestic product\ labor productivity increases wages and vice versa. This shows that wages are flexible and react to changes. Also it was learned that according to some of the factors, wages become inflexible, they do not react to these factor changes. Decrease in the gross domestic product, wages had not declined or the decline did not match the gross domestic product decline, and on that basis it can be said that wages are inflexible. |
