Regional wage income differences for fresh graduates in economics

The wage level determines an individual's standard of living and influences his or her happiness and well-being. At the societal level, individual well-being is closely linked to the development of the economy. Wage level is highly dependent on an individual's human capital (accumulated knowledge and skills), but it is also influenced by a number of other factors, such as gender, position, or regional location of the workplace. I conducted my research focusing on the examination of the latter factor. I made hypotheses about the presence, strength, and lasting effect of regional pay disparities by also involving other influencing factor sets. The main question of my research was to what extent does the regional location of the place of work determine the wages of recent graduates in economics and whether there are significant differences between regions. I analyzed the filtered database of the Fresh Graduates 2011-2015 of the Graduate Career Tracking System through the SPSS program. The final sample of fresh economics graduates is 12,429. Based on the results of the One-Way ANOVA, the wage data of the Central Transdanubia and Central Hungary regions differ significantly from each other and from the other regions as well. This suggests that the region of Central Hungary, which includes Budapest and Pest county, has the highest net salaries for fresh graduates included in the analysis. With the creation of OLS linear regression models, it turned out that the regional location alone explains wage differences by 14.4%, and the net wages in each Hungarian region are 17.3-23.0% lower than in the Central Hungary region. Including additional variables, the regional impact was reduced the most by labor market factors (e.g., location, organizational size, position), ceteris paribus, the wages are 11.2-18.2% lower than in the reference category (Central Hungary). The explanatory power of the extended model, where multiple factors exert their effect, including labor market, study-related (e.g., type of education, the form of financing, academic performance, language skills), and socio-demographic variables (e.g., gender, parents' education, the financial situation of the family), became 53%, and the significance of the regional impact remained strong in terms of wage levels. According to this model, still using the region of Central Hungary as the reference category, the net salaries of fresh graduates in economics ceteris paribus are 10.2-17.1% lower in the other regions.