Rebecca Maria Mari. Menzione Speciale Temi Economici, Premio Jo Cox

di Rebecca Maria Mari.

iMille pubblicheranno fino al 19 gennaio le biografie e riassunti di tesi della vincitrice e delle quattro menzioni speciali del Premio di Laurea Helen Joanne “Jo” Cox per Studi sull’Europa. Oggi e’ la volta di Rebecca Maria Mari, Menzione Speciale per Temi Economici. La tesi di Rebecca studia l’impatto dell’integrazione europea sull’evoluzione dei salari e della produttivita’ nei paesi dell’Europa Centrale ed Orientale. Rebecca analizza l’evoluzione del gap salariale tra settori aperti al commercio internazionale e settori di beni non-commerciabili internazionalmente dopo l’entrata dei Paesi dell’Europa Centrale ed Orientale nell’Unione Europea. La tesi ha spiccate implicazioni di policy, in quanto consente di isolare le origini economiche di tensioni sociali all’interno dei Paesi che sono spesso all’origine della proliferazione dei movimenti populisti antieuropeisti.


Graduated in International Economics with 110/110 magna cum laude at Università Commerciale L. Bocconi (July 2016), Rebecca Maria Mari is now pursuing her postgraduate studies at the London School of Economics with a Master of Science in Finance and Economics. During her undergraduate degree she studied abroad at the US Ivy League university Dartmouth College. She was Head of Markets of Bocconi Students Investment Club (a.y. 2014-2016).

During her studies she focused not only on academics but also on gaining extensive work experience at Bank of America Merrill Lynch, the Central Bank of Poland (Warsaw) and Citigroup (London). After the latter she received an offer to start as a trader in September 2016 but she resigned following her admission to LSE and to the summer 2016 postgraduate internship at Bank of England. In September 2017 she will start working as a macroeconomist in the International Directorate at Bank of England.


Thesis: On wages and productivities in Central and Eastern European countries: an analysis of Tradable and Non-Tradable sectors

Since the fall of the “iron curtain” economies of Central and Eastern European Countries have experienced unprecedented levels of economic growth stimulated by foreign and domestic investments in key sectors and by abundant capital inflows. This has been both cause and effect of the CEEs’ increasing role in international trade, which on its turn promotes convergence and leads to further integration.

Not all the Central and Eastern European countries, however, share the same degree of European integration and openness to trade; this paper therefore aims at analyzing the dynamics of wages and productivities in Central and Eastern European Countries (Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovenia and Slovakia) in both Tradable and Non-Tradable sectors from 1995 to 2015 with particular emphasis on the effect of European integration and openness to trade, which considerably vary between and within these countries over the time period considered.

The paper finally aims at finding empirical evidence of the Balassa-Samuelson effect and of the European integration’s role in it.

The law of one price states that the price difference over a single identical good between two different countries should reflect only transaction costs as any differential would be immediately eliminated by market participants profiting from this arbitrage opportunity. Furthermore, in line with that, the price variance is typically small for entirely Tradable goods while it can become substantial in the case of Non-Tradable ones, like services whose market is strictly regional due to the competitive relevance of their geographical presence.

Thanks to the geographical proximity to the core of the European Union and to the transition from planned economies to free market, the countries of Central and Eastern Europe have shown differences in the degree of market openness both cross-country and across the years. Increasing levels of market openness (driven mostly by barriers removals and increasing European integration) have also possibly led to a gradual convergence of the price of Tradables to the theoretical no-arbitrage level, thus leading to a growing gap between the price level of Tradables and Non-Tradables.

Growing developing countries typically show lower productivities in Tradable sectors than in Non-Tradables but are characterized also by a faster growth in productivity of the former than the latter, which has the function to catch up with more developed economies in the sectors where the productivity differential is wider. This has as a consequence an appreciation of the real exchange rate, also called Balassa-Samuelson effect. In fact when the productivity of tradable sectors increases at a faster pace than that of non-tradable sectors, wages in both sectors increase, but only the price of Non-Tradables increases while that of Tradables remains fixed, as in that case the increase in wage is compensated by the increase in productivity.

From the panel data analysis, wages are observed substantially higher in non-tradable sectors than tradable sectors, especially after the entrance into the European Union to which is associated an increase in wages of non-tradable activities, with respect to tradable activities, respectively of 7% or 8.20% when Manufacturing or Goods-Producing industries are considered as Tradable. The widening gap between non-tradable and tradable wages in the process towards European integration can be understood as a consequence of the Balassa-Samuelson effect, in the fact that an increase in the price of the former with respect to the latter, occurring in a rapidly growing economy, is at the basis of this divergence in wages of non-tradables as well.

Entrance into the European Monetary Union doesn’t instead appear to have a significant effect. Being the EMU membership subordinate to an already existing membership in the EU, it is possible to believe that this is the result of the fact that the Balassa-Samuelson effect touches its highest level with the entrance into the European Union, decreasing then gradually afterwards. This is understandable also on the basis of the different requirements and significance of the two memberships.

Methodology and Policy implications

The conducted investigation has been carried out considering both definitions of Tradable goods presented by the economic literature, namely first according to the Manufacturing classification and then according to the Goods-Producing one which includes Agricultural goods along with Manufacturing ones.

The study begins with a detailed analysis of the evolution of year on year growth rates and the ratio between wages and marginal productivity of labour for both sectors, then it deals with the total variation of wages and value added in the same dichotomy, discussing more in depth the case of outliers with respect to the average CEE countries’ trend.

Finally, a panel data cross-country analysis is run in order to test the significance of European integration for the growth in wages of a particular country.

The panel dataset is constituted by labour market variables for Tradable and Non-Tradable goods  (disaggregated at NACE2 level), Tradable sector relevance, European integration’s measures, openness to trade and variable interactions for ten countries spanning over 21 years (1994-2015).

This evidence not only could serve as a relevant case for countries, having comparable features to those hereby analysed, that decide to undertake the road towards European integration, but it also provides a solid analysis of who are the winners and losers from European integration in the sample countries and by which extent. This important piece of information can help governments make appropriate labour market and social policies; this divergence in fact can spur social tensions and ultimately set the ground for the creation and support of anti-EU parties. – Direttore Raoul Minetti

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