ORIGINAL PAPER Unemployment disparities and regional wage flexibility: comparing EU members and EU-accession countries Thiess Buettner Published online: 1 June 2007 Ó Springer Science+Business Media B.V. 2007 Abstract This paper provides empirical evidence on regional labor market flex- ibility in Europe and, in particular, in the EU-accession countries in Central and Eastern Europe. Whereas substantial regional disparities in unemployment are found for pre-accession EU member countries as well as for accession countries, an empirical analysis taking account of spatial effects shows that regional wage flex- ibility is significantly higher for accession countries. Moreover, unemployment disparities are found to be less persistent in the accession countries. Keywords Regional labor market  Wage flexibility  Wage curve  Regional disparities  EU-enlargement  Spatial effects JEL Classification R23  J3 1 Introduction The accession of several countries in Central and Eastern Europe to the EU raises the question as to what extent those countries as well as the EU member states are prepared for economic integration. Based on the experience of EU integration one would expect that the extent and speed of integration will be different across markets. Product markets will probably undergo a quick and deep integration process. Capital markets such as the market for equities will also be candidates for substantial integration although exchange rate risks, information asymmetries, and institutions will tend to prevent unlimited mobility. With regard to the labor markets the experience in the EU suggests that differences in languages, cultural T. Buettner (&) Ifo Institute, Poschingerstrasse 5, 81679 Munich, Germany e-mail: buettner@ifo.de 123 Empirica (2007) 34:287–297 DOI 10.1007/s10663-006-9032-x