| dc.description.abstract | Relationship between labour productivity and wages is an important issue not only for economists, but also
for policy makers. In the last decades, we have witnessed that in the EU15 wage growth has been lagging productivity
growth. At the same time in Latvia, also in some other central and eastern European member states, wages increased more
than productivity, rising concerns about disbalance in the economy. However, comparison of wage level and productivity
level in Latvia and respective levels in the EU15 shows that wage level in Latvia is much below the EU15 average value
in absolute terms, but also in relation to productivity level. To understand whether dissimilarities in wage and productivity
development are dangerous for Latvia's economy, it is worth looking at the situation in different economic sectors, as
well as make comparisons with other EU countries.
The aim of the paper is to investigate the dynamics of real labour productivity and real compensation in Latvia in
different economic sectors and compare with the other EU member states. The empirical analysis was conducted with
comparative analysis and panel data regressions for the period from 2000 until 2017. For robustness checks, different
alternative specifications compared.
Our results confirm significant linkage between real labour productivity and real compensation, but not one-to-one,
and the gap persists. The gap between these two variables depends on cyclical conditions, the different economic sector
with their specifics, the Russian sanctions and labour market structure. The finding of the study is a necessary input for
the further microanalysis of the industry which would lead to better policy-making regarding productivity improvements
in Latvia. | en_US |
