Open Access Open Access  Restricted Access Subscription or Fee Access

Economic Transition and Regional Wages: The Evidence from Poland

Vera A. Adamchik, Thomas J. Hyclak


The paper studies regional wage differences across 16 NUTS-2 regions in Poland during 1994-2007. The analysis is based on data of individual workers from the Polish Labor Force Survey, which includes about 8,000-15,000 full-time workers each year. In the first part of the analysis, the microdata are used to estimate regional wage measures while controlling for differences in observed worker characteristics across regions. Although adjusting for worker heterogeneity reduces regional wage differences, regional disparities still exist. In the second part of the analysis, the relative regional wage measures (in both nominal and real terms) are regressed on a set of regional macro variables. The results show that regional differentials are correlated with historical patterns of agglomeration, market access, regional amenities as well as internal and external migration. Furthermore, higher regional wage differentials are, in part, compensation for a higher regional cost of living.


Regional labor markets; Wage differentials; Economic transition

Full Text:



Ablov A (2015) The firm-level and regional determinants of FDI distribution in Poland: Does sector of economy matter? Economics of the 21st Century 4: 74-98

Adamczyk A, Tokarski T, Wlodarczyk R (2009) Przestrzenne zróznicowanie plac w Polsce [Regional wage differences in Poland]. Gospodarka Narodowa [National Economy] 20: 87-109

Anacka M, Brzozowski J, Grabowska-Lusińska I, Urbańska S (2014) Społeczne skutki poakcesyjnych migracji ludności Polski [Social impacts of the post-accession migration of Poles]. Report of the Committee of Migration Research of the Polish Academy of Sciences, Warsaw

Azzoni C, Servo L (2002) Education, cost of living and regional wage inequality in Brazil. Papers in Regional Science 81: 157-175

Bacolod M, Blum B, Strange W (2009) Skills in the city. Journal of Urban Economics 65: 136-153

Bartel A, Sicherman N (1999) Technological change and wages: An interindustry analysis. Journal of Political Economy 107: 285-325

Bedi A, Cieślik A (2002) Wages and wage growth in Poland: The role of foreign direct investment. Economics of Transition 10: 1-27

Beenstock M, Felsenstein D (2008) Regional heterogeneity, conditional convergence and regional inequality. Regional Studies 42: 475-488

Bijak J, Koryś I. (2006) Statistics or reality? International migration in Poland. Central European Forum for Migration Research (CEFMR) Working Paper No. 3/2006

Bickenbach F, Bode E (2003) Evaluating the Markov property in studies of economic convergence. International Regional Science Review 26: 363-392

Bogumił P (2009) Regional disparities in Poland. ECFIN Country Focus, Vol. 6, Issue 4

Braakmann N, Vogel A (2011) How does economic integration influence employment and wages in borer regions? The case of the EU enlargement 2004 and Germany’s eastern border. Review of World Economy 147: 303-323

Brakman S, Garretsen H, van Marrewijk C (2009) Economic geography within and between European nations: The role of market potential and density across space and time. Journal of Regional Science 49: 777-800

Briant A, Combes P, Lafourcade M (2010) Does the size and shape of geographical units jeopardize economic geography estimations? Journal of Urban Economics 67: 287-302

Brülhart M (2011) The spatial effects of trade openness: A survey. Review of World Economics 147: 59-83

Brülhart M, Koenig P (2006) New Economic Geography meets Comecon: Regional wages and industry location in central Europe. Economics of Transition 14: 245-267

Budnik K (2007) Migration flows and labour market in Poland, National Bank of Poland Working Paper No. 44

Caimcross F (1997) The death of distance. Harvard Business School Press

Carree M, Klomp L (1997) Testing the convergence hypothesis: A comment. Review of Economics and Statistics 79: 683-686

Ciccone A, Hall R (1996) Productivity and the density of economic activity. American Economic Review 86: 54-70

Cieślik A, Rokicki B (2015) European integration and spatial wage structure in Poland. Tijdschrift voor Economische en Sociale Geografie 107: 435-453

Cieślik A, Rokicki B (2016) Individual wages and regional market potential. Economics of Transition 24: 661-682

Ciżkowicz P, Rzońca A, Umiński S (2013) The determinants of regional exports in Poland – Panel Data Analysis. Post-Communist Economies 25: 206-224

Combes P, Gobillon L (2015) The empirics of agglomeration economies. In: Duranton G, J. V. Henderson JV, Strange W (eds) Handbook of Regional and Urban Economics, Vol. 5. Elsevier, Amsterdam, pp 247-348

Combes P, Duranton G, Gobillon L (2008). Spatial wage disparities: Sorting matters! Journal of Urban Economics 63: 723-742

Combes P, Duranton G, Gobillon L, Roux S (2010) Estimating agglomeration economies with history, geology, and worker effects. In: Glaeser E (ed) The Economics of Agglomeration. National Bureau of Economic Research, Cambridge, pp. 15-65

Czyż T, Hauke J (2011) Evolution of regional disparities in Poland. Quaestiones Geographicae 30: 35-48

Damijan J, Kostevc C (2011) Trade liberalisation and economic geography in CEE countries: The role of FDI in the adjustment pattern of regional wages. Post-Communist Economies 23: 163-189

D'Costa S, Overman H (2014) The urban wage growth premium: Sorting or learning? Regional Science and Urban Economics 48: 168-179

De La Roca, J., and Puga, D. (2016). Learning by working in big cities. Unpublished manuscript

Domański B (2003) Industrial change and foreign direct investment in the post-socialist economy: The case of Poland. European Urban and Regional Studies 10: 99-118

Duffy F, Walsh P (2000) A regional analysis of wage determination in Poland. LICOS Centre for Transition Economics Discussion Paper No. 87/2000

Duffy F, Walsh P (2002) Individual pay and outside options: Evidence from the Polish Labour Force Survey. Centre for Economic Reform and Transformation Discussion Paper No. 2002/01

Dumond J, Hirsch B, Macpherson D (1999) Wage differentials across labor markets and workers: Does cost of living matter? Economic Inquiry 37: 577-598

Dustmann C, Görlach J-S (2015) The economics of temporary migrations. Discussion Paper Series CPD 03/15, Centre for Research and Analysis of Migration, University College London

Dustmann C, Frattini T, Rosso A (2015) The effect of emigration from Poland on Polish wages. The Scandinavian Journal of Economics 117: 522-564

Eeckhout J, Pinheiro R, Schmidheiny K (2014) Spatial sorting. Journal of Political Economy 122: 554-620

Egger H, Egger P (2002) How international outsourcing drives up Eastern European wages. Weltwirtschaftliches Archiv 138: 83-96

Egger P, Huber P, Pfaffermayr M (2005) A note on export openness and regional wage disparity in Central and Eastern Europe. Annals of Regional Science 39: 63-71

Fally T, Paillacar R, Terra C (2010) Economic geography and wages in Brazil: Evidence from micro-data. Journal of Development Economics 91: 155-168

Fidrmuc J (2004) Migration and regional adjustment to asymmetric shocks in transition economies. Journal of Comparative Economics 32: 230-247

Fihel A, Kaczmarczyk P (2013) Migracja a polski rynek pracy [Migration and the Polish labor market]. In: Kiełkowska M (ed.) Rynek pracy wobec zmian demograficznych [Labor market and demographic change]. Instytut Obywatelski, Warsaw, pp 114-158

Friedman T (2005) The world is flat: A brief history of the globalized world in the twenty-first century. Penguin, UK

Ghatak S, Mulhern A, Watson J (2008) Inter-regional migration in transition economies: The case of Poland. Review of Development Economics 12: 209-222

Glaeser E (2008) Cities, agglomeration, and spatial equilibrium. Oxford University Press, Oxford

Glaeser E, Gottlieb D (2009) The wealth of cities: Agglomeration economies and spatial equilibrium in the United States. Journal of Economic Literature 47: 983-1028

Góra M, Sztanderska U (1998) Regional differences in labour market adjustment in Poland: Earnings, unemployment flows and rates. Ifo-Institut für Wirtschaftsforschung Diskussionsbeiträge No. 48

Groot S, De Groot H, Smit M (2014) Regional wage differences in the Netherlands: Micro evidence on agglomeration externalities. Journal of Regional Science 54: 503-523

Hagemejer J, Kolasa M (2008) Internationalization and economic performance of enterprises: Evidence from firm-level data. The National Bank of Poland Working Paper No. 51

Haisken-DeNew J, Schmidt C (1997) Inter-industry and inter-region differentials: Mechanics and interpretation. Review of Economics and Statistics 79: 516-521

Hanson G (2005) Market potential, increasing returns and geographic concentration. Journal of International Economics 67: 1-24

Hanson G (2007) Emigration, labor supply and earnings in Mexico. In: Borjas G (ed) Mexican immigration to the United States. University of Chicago Press, Chicago, pp 289-328

Jurajda S, Terrell K (2009) Regional unemployment and human capital in transition economies. Economics of Transition 17: 241-274

Kaczmarczyk P (2012) Labour market impacts of post-accession migration from Poland. In: Free movement of workers and labour market adjustment: Recent Experiences from OECD Countries and the European Union. OECD, Paris, pp 173-190

Kaczmarczyk P, Okólski M (2008) Demographic and labour-market impacts of migration on Poland. Oxford Review of Economic Policy 24: 599-624

Kolasa M (2008) How does FDI inflow affect productivity of domestic firms? The role of horizontal and vertical spillovers, absorptive capacity and competition. Journal of International Trade and Economic Development 17: 155-173

Korcelli P (2005) The urban system of Poland. Built Environment 31: 133-142

Le Gallo J (2004) Space-time analysis of GDP disparities among European regions: A Markov chains approach. International Regional Science Review 27: 138-163

López-Rodríguez J, Runiewicz-Wardyn M (2014) Changing market potentials, regional growth and income disparities in Poland. Prague Economic Papers 1: 63-83

Maier G, Weiss P (1986) The importance of regional factors in the determination of earnings: The Case of Austria. International Regional Science Review 10: 211-220

Mincer J (1974) Schooling, experience and earnings. National Bureau for Economic Research, New York

Mion G, Naticchioni P (2009) The spatial sorting and matching of skills and firms. Canadian Journal of Economics 42: 683-701

Mishra P (2006) Emigration and wages in source countries: Evidence from Mexico. IMF Working Paper WP/06/86

Niebuhr A (2008) The impact of EU enlargement on European border regions. International Journal of Public Policy 3: 163-186

OECD (2010) OECD Economic Surveys: Poland. OECD, Paris.

Okólski M (2006) Costs and benefits of migration for Central European countries. Warsaw University Centre of Migration Research Working Paper No. 7/65

Onaran O, Stockhammer E (2008) The effect of FDI and foreign trade on wages in the Central and Eastern European countries in the post-transition era: A sectoral analysis for the manufacturing industry. Structural Change and Economic Dynamics 19: 66-80

Oshchepkov A (2015) Compensating wage differentials across Russian regions. In: Mussida C, Pastore F (eds) Geographical labor market imbalances: Recent explanations and cures. Springer, Berlin, pp 65-105

Overman H, Winters A (2011) Trade and economic geography: The impact of EEC accession on the UK. The Manchester School 79: 994-1017

Ozgen C, Nijkamp P, Poot J (2010) The effect of migration on income growth and convergence: Meta-analytic evidence. Papers in Regional Science 89: 537-561

Partridge M (2010) The dueling models: NEG vs. amenity migration in explaining U.S. engines of growth. Papers in Regional Science 89: 513-536

Partridge M, Rickman D, Ali K, Olfert M (2010) Recent spatial growth dynamics in wages and housing costs: Proximity to urban production externalities and consumer amenities. Regional Science and Urban Economics 40: 440-452

Puga D (2010) The magnitude and causes of agglomeration economies. Journal of Regional Science 50: 203-219

Roback J (1982) Wages, rents, and the quality of life. Journal of Political Economy 90: 1257-1278

Roback J (1988) Wages, rents, and amenities: Differences among workers and regions. Economic Inquiry 26: 23-41.

Rogut A. (2007) The wage curve in Poland in 1995-2005. Bank i Kredyt 38: 18-38

Rokicki B (2007) Regional wage convergence in Poland. In: Michałek J, Siwiński W, Socha M (eds) Poland in the European Union: Dynamics and risk of economic convergence. Polish Scientific Publishers PWN, Warsaw

Rokicki B (2015) Regional price indices and real wage equalization in Poland. In: Mussida C, Pastore F (eds) Geographical labor market imbalances: Recent explanations and cures. Springer, Berlin, pp 353-370

Roos M (2005) How important is geography for agglomeration? Journal of Economic Geography 5: 605-620

Rosen S (1979) Wages-based indexes of urban quality of life. In: Mieszkowski P, Straszheim M (eds) Current issues in urban economics. Johns Hopkins University Press, Baltimore, pp 74-104

Shioji E (2001) Composition effect of migration and regional growth in Japan. Journal of the Japanese and International Economies 15: 29-49

Sibley C, Walsh P (2002) Earnings inequality and transition: A regional analysis of Poland. IZA Discussion Paper No. 441

Skuratowicz A (2005) Growing wage inequalities in Poland: Could foreign investment be part of the explanation? ECFIN Country Focus, Vol. 2, Issue 5.

Sonin K (2013) The end of economic transition. Economics of Transition 21: 1-10

Storper M, Scott A (2009) Rethinking human capital, creativity and urban growth. Journal of Economic Geography 9: 147-167

Winters J (2009) Wages and prices: Are workers fully compensated for cost of living differences? Regional Science and Urban Economics 39: 632-643

Zaiceva A (2014) Post-enlargement emigration and new EU members’ labor markets. IZA World of Labor 40: 1-10



  • There are currently no refbacks.

"Transition Studies Review" ISSN online 1614-4015 / ISSN print 1614-4007

All publishing rigths reserved to © Transition Academia Press. Executive editor: Prof. Dr. Giorgio Dominese