Human Capital, Spatial Mobility, and Lock-in – The Experience of Candidate Countries

Minimum wage increases in Hungary significantly increased labour costs, reduced employment in the small firm sector, and adversely influenced the job retention and job finding probabilities of low-wage workers. Discrimination on ethnic grounds hampers regional labour market adjustment in the candidate countries and may be considered an important element causing regional "lock-in". Returns to education increased dramatically during transition, which caused wage inequality to increase substantially. Furthermore low-skilled workers are the main group with the largest difficulties in adjusting to labour market shocks. The study shows that lacking regional mobility in the candidate countries is an important element in explaining the persistence of regional disparities in the new member states and candidate countries and that the consequences of the selectivity of migration with respect to education may have implications for the sending regions.