Abstract
Economic integration can be defined as the expansion of markets from the national to the regional or to the world level. Therefore, two channels of market integration can be determined: regional integration, for instance, within the EU, and globalization. The purpose of this paper is to investigate the impact of the economic integration process on differences in income among and within Central and Eastern European countries (CEECs). The hypotheses on 1) the economic integration relevance and 2) the mechanisms through economic integration affecting income inequality are tested with data on 10 CEECs (Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovakia, Slovenia, Romania) for the 2000-2006 period. An unbalanced panel induces to estimate Random-effects regressions and fixed-effects regressions. The results show that globalization contributed significantly to income inequality among CEECs as well as to the upward trend in income inequality within the societies of these countries, while regional integration with and within the EU did not explain considerably the changes in income distribution over the study period.
Highlights
The deepening of market integration of the Central and Eastern European Countries (CEECs) during the period 2000-2006 proceeded through two channels: regional integration within the EU and globalization
The purpose of this paper is to investigate the impact of the economic integration process on in income inequality among and within the CEECs
The research addresses the following questions: 1) could European integration or globalization be a significant factor that has contributed to changes in income inequality between and within the CEECs? 2) if so, how have these two channels of market integration affected income inequality? What mechanisms have been important? Are the effects on the welfare state or the pressures of international wage and employment competition involved? These hypotheses are tested with data on 10 CEECs (Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovakia, Slovenia, Romania) for the 2000-2006 period
Summary
Economic integration can be defined as the expansion of markets from the national to the regional or to the world level. Two channels of market integration can be determined: regional integration, for instance, within the EU, and globalization. The purpose of this paper is to investigate the impact of the economic integration process on differences in income among and within Central and Eastern European countries (CEECs). The hypotheses on 1) the economic integration relevance and 2) the mechanisms through economic integration affecting income inequality are tested with data on 10 CEECs (Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovakia, Slovenia, Romania) for the 2000-2006 period. The results show that globalization contributed significantly to income inequality among CEECs as well as to the upward trend in income inequality within the societies of these countries, while regional integration with and within the EU did not explain considerably the changes in income distribution over the study period
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