Centre-periphery in the European Union: Analysis of wages and productivity in the transport equipment sector

Abstract

The Great Recession has highlighted striking inequalities within the European Union, necessitating an approach that permits clear understanding of their nature and scope. To this end, this article relies on the Structuralist centre-periphery (C-P) literature, meanwhile seeking to update the validity of C-P analysis in a context of international fragmentation of production. Following a critical review of the relevant literature, that permits us to connect Structuralist theories with the GVC literature, we propose an analysis of the comparative evolution of productivity and wages, focussing on the transport equipment sector. The empirical analysis shows that convergence between centre and periphery has been higher in productivity than in wages, given that the productivity gains of central economies have been transferred to wages to a greater extent than in peripheral economies. This dynamic has been accentuated since the crisis erupted, as wages in the central and peripheral economies have diverged, fomenting greater polarization.