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Regional Differences

Matěj Bajgar and Petr Janský show that the relative value of average real wages is significantly affected by the differences in regional price levels. For instance, residents of Prague may seem relatively richer at first sight; however, after taking into account the price level, people living in Prague can afford as much as the inhabitants of other regions.

• Nominal salaries in the private sector may be 43% higher than the national average, but half of that apparent difference is due to the educated and professional composition of the Prague workforce, and the other half is balanced out by higher price levels in Prague. A given worker therefore in real terms earns the same amount as the average equivalent worker in the rest of the country.

• Among the other regions the highest real salaries in the private sector are found in the Central Bohemia region, while the lowest are in the Karlovy Vary and Zlín regions. Moreover, if we account for the educational qualifications and other characteristics of the regions' workers, the highest private sector salaries are in the Central Bohemia, Ústí and Plzeňregions, and the lowest in the Zlín and South Moravia regions.

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