WAGE CONVERGENCE IN THE EUROPEAN UNION (1995-2005) (Konwergencja plac w Unii Europejskiej (1995-2005))

This paper presents empirical analysis of relative wage convergence in the group of 20 countries of enlarged EU (five New Member States: Czech Republic, Poland, Slovakia, Slovenia, Hungary plus former EU15 economies) within the period 1995-2005. The study is based on recently released sector level data (12 manufacturing sectors) which allows us to analyze the convergence process concerning wages of three distinct groups of workers (high-skilled, medium-skilled and low-skilled). Sigma convergence analysis suggests that the biggest dispersion of wages is typical for salaries paid to low-skilled employees. Estimation results of dynamic panel model obtained with GMM (Generalized Method of Moments) estimator indicate that within the group of 20 EU countries taken into consideration a slow process of wage convergence takes place and its speed does not exceed 5% per year. The lowest speed of wage convergence is characteristic for earnings of workers with the lowest educational level.