In Poland, Hungary and the Czech Republic, wage inflation, which was relatively buoyant before the global financial crisis, after experiencing a sharp slowdown has remained subdued in recent years; this has occurred even though the unemployment rate has fallen below its pre-crisis minimum levels.
The paper seeks to verify whether the Phillips curve can still be considered a valid approximation of the wage determination mechanism in these three countries between 2001-2017.
The empirical evidence confirms that there is a negative relationship between excess labour supply and nominal wage inflation. However, after 2009 there is an attenuation of this relationship, especially in Poland and the Czech Republic. Labour supply composition effects, due in particular to demographic and migratory trends, could help to explain this empirical evidence.
