IDEAS home Printed from https://ideas.repec.org/a/eee/jcecon/v35y2007i3p612-629.html
   My bibliography  Save this article

Self-selection and wages during volatile transition

Author

Listed:
  • Dimova, Ralitza
  • Gang, Ira N.

Abstract

Using data for 1995, 1997 and 2001 and a sophisticated selectivity correction econometric methodology, this paper explores human capital allocation and returns in four labor market sectors in Bulgaria. Our results indicate that while in the aftermath of structural reform highly productive laborers undertook self-employment, the private sector failed to develop along the high skill and high return fringes of the economy. Our results raise questions about the success of structural reform, and stress the need to adequately account for the impact of self-selection based on both observed and unobserved skills in the assessment of returns to human capital.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Dimova, Ralitza & Gang, Ira N., 2007. "Self-selection and wages during volatile transition," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 612-629, September.
    • Handle: RePEc:eee:jcecon:v:35:y:2007:i:3:p:612-629
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0147-5967(07)00049-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Daniel Münich & Jan Svejnar & Katherine Terrell, 2005. "Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 100-123, February.
    2. Philippe Aghion & Olivier Jean Blanchard, 1994. "On the Speed of Transition in Central Europe," NBER Chapters, in: NBER Macroeconomics Annual 1994, Volume 9, pages 283-330, National Bureau of Economic Research, Inc.
    3. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    4. François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 174-205, February.
    5. Jennifer Hunt, 2002. "The Transition in East Germany: When Is a Ten-Point Fall in the Gender Wage Gap Bad News?," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 148-169, January.
    6. International Monetary Fund, 1999. "Bulgaria: Recent Economic Developments and Statistical Appendix," IMF Staff Country Reports 1999/026, International Monetary Fund.
    7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, March.
    8. Ellen R. Rissman, 2003. "Self-employment as an alternative to unemployment," Working Paper Series WP-03-34, Federal Reserve Bank of Chicago.
    9. Edward J. Bird & Johannes Schwarze & Gert G. Wagner, 1994. "Wage Effects of the Move toward Free Markets in East Germany," ILR Review, Cornell University, ILR School, vol. 47(3), pages 390-400, April.
    10. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
    11. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
    12. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-512, March.
    13. Mason, Andrew & Tapinos, Georges (ed.), 2000. "Sharing the Wealth: Demographic Change and Economic Transfers between Generations," OUP Catalogue, Oxford University Press, number 9780198296201.
    14. Ralitza Dimova & Ira N. Gang & John S. Landon-Lane, 2005. "The Informal Sector During Crisis and Transition," WIDER Working Paper Series RP2005-18, World Institute for Development Economic Research (UNU-WIDER).
    15. Andren, Daniela & Earle, John S. & Sapatoru, Dana, 2005. "The wage effects of schooling under socialism and in transition: Evidence from Romania, 1950-2000," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 300-323, June.
    16. Jones, Derek C. & Ilayperuma Simon, Kosali, 2005. "Wage determination under plan and early transition: Bulgarian evidence using matched employer-employee data," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 227-243, June.
    17. Sumon Kumar Bhaumik & Ralitza Dimova & Jeffrey B. Nugent, 2006. "Pulls, Pushes and Entitlement Failures in Labor Markets: Does the State of Development Matter?," CEDI Discussion Paper Series 06-07, Centre for Economic Development and Institutions(CEDI), Brunel University.
    18. V. Kerry Smith & Mary F. Evans & Hyun Kim & Donald H. Taylor, 2004. "Do the Near-Elderly Value Mortality Risks Differently?," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 423-429, February.
    19. Michael Landesmann & Robert Stehrer, 2002. "Trade Structures, Quality Differentiation and Technical Barriers in CEE-EU Trade," wiiw Research Reports 282, The Vienna Institute for International Economic Studies, wiiw.
    20. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    21. Heckman, James J & Sedlacek, Guilherme L, 1990. "Self-selection and the Distribution of Hourly Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 329-363, January.
    22. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    23. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
    24. Fleisher, Belton M., 2005. "Returns to schooling in transition: The Chinese, European, and Russian experiences," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 223-226, June.
    25. Rutkowski, Jan J., 1999. "Labor markets and poverty in Bulgaria," Social Protection Discussion Papers and Notes 20817, The World Bank.
    26. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    27. Falaris, Evangelos M., 2004. "Private and public sector wages in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 56-72, March.
    28. Jeffrey B. Miller & Stefan Petranov, 2000. "The First Wave of Mass Privatization in Bulgaria and its Immediate Aftermath," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 225-250, March.
    29. Catherine Y. Co & Ira N. Gang & Myeong‐Su Yun, 2005. "Self‐Employment and Wage Earning in Hungary," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 150-165, May.
    30. Gang, Ira N. & Stuart, Robert C., 1997. "What difference does a country make? Earnings by Soviets in the Soviet Union and in the United States," The Quarterly Review of Economics and Finance, Elsevier, vol. 37(Supplemen), pages 345-360.
    31. François Bourguignon & Martin Fournier & Marc Gurgand, 2002. "Selection Bias Correction Based on the Multinomial Logit Model," Working Papers 2002-04, Center for Research in Economics and Statistics.
    32. Rutkowski, Jan, 2003. "Why is unemployment so high in Bulgaria?," Policy Research Working Paper Series 3017, The World Bank.
    33. Dobbelaere, Sabien, 2004. "Ownership, firm size and rent sharing in Bulgaria," Labour Economics, Elsevier, vol. 11(2), pages 165-189, April.
    34. Robert S. Chase, 1998. "Markets for Communist Human Capital: Returns to Education and Experience in the Czech Republic and Slovakia," ILR Review, Cornell University, ILR School, vol. 51(3), pages 401-423, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petr Huber & Ulugbek Rahimov, 2014. "Formal and Informal Sector Wage Differences in Transition Economies: Evidence from Tajikistan," MENDELU Working Papers in Business and Economics 2014-48, Mendel University in Brno, Faculty of Business and Economics.
    2. Peter Huber & Ulugbek Rahimov, 2017. "The Self-Selection of Workers to the Formal and Informal in Transition Economies: Evidence from Tajikistan," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 67(2), pages 140-164, April.
    3. Tamar Khitarishvili, 2018. "Gender Pay Gaps in the Former Soviet Union: A Review of the Evidence," Economics Working Paper Archive wp_899, Levy Economics Institute.
    4. Ewa Cukrowska-Torzewska & Anna Lovasz, 2016. "Are children driving the gender wage gap?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(2), pages 259-297, April.
    5. Kassie, Menale & Fisher, Monica & Muricho, Geoffrey & Diiro, Gracious, 2020. "Women’s empowerment boosts the gains in dietary diversity from agricultural technology adoption in rural Kenya," Food Policy, Elsevier, vol. 95(C).
    6. Ma, Xinxin & 馬, 欣欣 & Li, Shi, 2016. "Economic Transition and the Determinants of Self-employment in Urban China: 2007-2013," CEI Working Paper Series 2016-3, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    7. Awal Abdul‐Rahaman & Awudu Abdulai, 2020. "Vertical coordination mechanisms and farm performance amongst smallholder rice farmers in northern Ghana," Agribusiness, John Wiley & Sons, Ltd., vol. 36(2), pages 259-280, April.
    8. Xinxin Ma & Shi Li, 2022. "Self‐employment in Urban China: Entrepreneurship or Disguised Unemployment?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(1), pages 166-195, January.
    9. Xinxin Ma, 2016. "Economic transition and the determinants of self-employment in urban China: 2007–2013," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 14(3), pages 279-307, July.
    10. Ralitza Dimova & Christophe J. Nordman & François Roubaud, 2010. "Allocation of Labor in Urban West Africa: Insights from the Pattern of Labor Supply and Skill Premiums," Review of Development Economics, Wiley Blackwell, vol. 14(1), pages 74-92, February.
    11. Owusu, Victor & Kakraba, Isaac, 2015. "Examining Self-Selection and the Impacts of Integrated Pest Management Adoption on Yield and Gross Margin: Evidence from Ghana," 2015 Conference, August 9-14, 2015, Milan, Italy 212606, International Association of Agricultural Economists.
    12. Atamanov, Aziz & Berg, Marrit van den, 2011. "International migration and local employment: analysis of self-selection and earnings in Tajikistan," MERIT Working Papers 2011-047, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Otieno, Jackson & Muchapondwa, Edwin & Ntuli, Herbert, 2023. "The odds of South African agriculture using wildlife ranching to adapt to climate change," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 18(1), May.
    14. Dimova, Ralitza & Nordman, Christophe Jalil & Roubaud, François, 2008. "Allocation of Labour in Urban West Africa: Implication for Development Policies," IZA Discussion Papers 3558, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ira N. Gang & Ralitza Dimova, 2004. "Self-Selection And Earnings During Volatile Transition," Departmental Working Papers 200409, Rutgers University, Department of Economics.
    2. Guataqui, Juan Carlos & García Suaza, Andrés Felipe & Rodríguez, Mauricio, 2009. "Estimaciones de los determinantes de los ingresos laborales en Colombia con consideraciones diferenciales para asalariados y cuenta propia," Documentos de Trabajo 5756, Universidad del Rosario.
    3. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
    4. Dimova, Ralitza & Nordman, Christophe Jalil & Roubaud, François, 2008. "Allocation of Labour in Urban West Africa: Implication for Development Policies," IZA Discussion Papers 3558, Institute of Labor Economics (IZA).
    5. Gema Álvarez & Carlos Gradín & Mª Soledad Otero, 2013. "Self-Employment: Transition And Earnings Differential," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 21(2), pages 61-90, Autumn.
    6. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
    7. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    8. Flabbi, Luca & Paternostro, Stefano & Tiongson, Erwin R., 2008. "Returns to education in the economic transition: A systematic assessment using comparable data," Economics of Education Review, Elsevier, vol. 27(6), pages 724-740, December.
    9. Aleksandra Anić & Gorana Krstić, 2019. "What Lies Behind The Gender Wage Gap In Serbia?," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(223), pages 137-170, October –.
    10. Raquel Carrasco & José Ignacio Garcia-Pérez & Juan Francisco Jimeno, 2020. "Worker Flows and Wage Dynamics: Estimating Wage Growth without Composition Effects," Working Papers 20.13, Universidad Pablo de Olavide, Department of Economics.
    11. Wyrwich, Michael, 2013. "Can socioeconomic heritage produce a lost generation with regard to entrepreneurship?," Journal of Business Venturing, Elsevier, vol. 28(5), pages 667-682.
    12. Ssekabira Ntege & Steven F. Koch, 2008. "Returns to Schooling: Skills Accumulation or Information Revelation?," Working Papers 087, Economic Research Southern Africa.
    13. Altin Vejsiu, 2011. "Incentives to self-employment decision in Sweden," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(4), pages 379-403.
    14. Inmaculada Garc�a Mainar & V�ctor M. Montuenga G�mez, 2004. "Returns to education and to experience within the EU: are there differences between wage earners and the self-employed?," Documentos de Trabajo dt2004-08, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    15. Félix Modrego & Dusan Paredes & Gianni Romaní, 2017. "Individual and place-based drivers of self-employment in Chile," Small Business Economics, Springer, vol. 49(2), pages 469-492, August.
    16. Falaris, Evangelos M., 2004. "Private and public sector wages in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 56-72, March.
    17. Jelena Lausev, 2014. "WHAT HAS 20 YEARS OF PUBLIC–PRIVATE PAY GAP LITERATURE TOLD US? EASTERN EUROPEAN TRANSITIONING vs. DEVELOPED ECONOMIES," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 516-550, July.
    18. Atamanov, Aziz & Berg, Marrit van den, 2011. "International migration and local employment: analysis of self-selection and earnings in Tajikistan," MERIT Working Papers 2011-047, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Kosovka Ognjenović, 2011. "Wage Differences between the Private and the Public Sector in Serbia: Some Evidence from Survey Data," wiiw Balkan Observatory Working Papers 91, The Vienna Institute for International Economic Studies, wiiw.
    20. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jcecon:v:35:y:2007:i:3:p:612-629. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622864 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.