Social and Economic Factors Determining the Development of the Regional
Income Distribution in Austria
LEITNER, M. and FISCHER, M.M.
University of Economics and Business Administration, Austria
Key words: Regional Phillips-Curve, Aggregation-Hypothesis, Wage-Leadership-Hypothesis,
Multivariate Regression Model, Cointegration Analysis
This research investigates the influence social and economic variables
have on the development of the regional income distribution in Austria's
nine states. The three main research hypotheses to be tested are:
This research is based on time-series data from 1966-1999 (on a yearly
basis) for the nine Austrian states. This period covers important stages
of the Austrian economic development, including the end of the high-inflation
period in 1974/75 and the joining of the European Union in 1995. The methods
investigating the three main hypotheses include multivariate regression
models and cointegration analyses.
the relationship between unemployment and the rate of change of money wage
rates as expressed in the form of regional Phillips-curves;
the relationship between the dispersion of the regional (i.e., state) unemployment
rates, the aggregated rate of change of money wage rates, and the level
of employment. This relationship will be tested with the Aggregation-Hypothesis;
the relationship between wage rate changes in a 'leading market' with a
heavy demand for labour and 'non-leading markets,' where the pressure in
the labour market is much less severe. The existence of a 'leading market'
results in higher than expected wage increases in the 'non-leading markets'
through a transfer mechanism, triggered by trade union bargaining. The
resulting upward pressure of the transfer mechanism on the wage rate changes
will be stronger with greater regional disparity in unemployment. This
relationship will be tested with the Wage-Leadership-Hypothesis.