Modelling Wages in Croatia Using a Second Order Polynomial Regression Model

Abstract

As known, wages are a significant factor of the economic activity. They affect personal consumption, the living standard and the GDP. Due to the importance of wages for the national economy the paper aimed to analyse annual average wages in Croatia in the last two decades, namely from 1994 to 2013. For these purposes a second order polynomial regression model is designed. The empirical results have shown that, the chosen model performed well in terms of MAPE and, presented a reasonably good predictability performance. All performed diagnostic statistics showed that the specified models passed all the tests and that they fit the data reasonably well throughout the sample period.