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Self-Selection And Wages During Volatile Transition

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Author Info
Ralitza Dimova ()
Ira N. Gang ()

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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.

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Paper provided by Centre for Economic Development and Institutions(CEDI), Brunel University in its series CEDI Discussion Paper Series with number 06-03.

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Length: 41 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:edb:cedidp:06-03

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ellen Rissman, 2003. "Self-employment as an alternative to unemployment," Working Paper Series WP-03-34, Federal Reserve Bank of Chicago. [Downloadable!]
  2. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March. [Downloadable!] (restricted)
  3. Philippe Aghion & Olivier J. 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. [Downloadable!]
    Other versions:
  4. Falaris, Evangelos M., 2004. "Private and public sector wages in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 56-72, March. [Downloadable!] (restricted)
  5. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  6. Edward J. Bird & Johannes Schwarze & Gert Wagner, 1994. "Wage effects of the move toward free markets in East Germany," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(3), pages 390-400, April.
  7. 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. [Downloadable!] (restricted)
  8. Philippe Aghion & Olivier Jean Blanchard, 1994. "On the Speed of Transition Central Europe," NBER Working Papers 4736, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
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  10. François Bourguignon ; Martin Fournier ; Marc Gurgand, 2002. "Selection Bias Correction Based on the Multinomial Logit Model," Working Papers 2002-04, Centre de Recherche en Economie et Statistique. [Downloadable!]
  11. Munich, Daniel & Svejnar, Jan & Terrell, Katherine, 2000. "Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy," IZA Discussion Papers 122, Institute for the Study of Labor (IZA). [Downloadable!]
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  12. 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. [Downloadable!]
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  13. 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. [Downloadable!] (restricted)
  14. Rutkowski, Jan, 2003. "Why is unemployment so high in Bulgaria?," Policy Research Working Paper Series 3017, The World Bank. [Downloadable!]
  15. Dimova, Ralitza & Gang, Ira N. & Landon-Lane, John, 2005. "The Informal Sector During Crisis and Transition," Working Papers RP2005/18, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  16. François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Blackwell Publishing, vol. 21(1), pages 174-205, 02. [Downloadable!] (restricted)
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  17. 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. [Downloadable!] (restricted)
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  18. 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 808-27, August. [Downloadable!] (restricted)
  19. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
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  20. Catherine Y. Co & Ira N. Gang & Myeong-Su Yun, 2005. "Self-Employment and Wage Earning in Hungary," Review of Development Economics, Blackwell Publishing, vol. 9(2), pages 150-165, 05. [Downloadable!] (restricted)
  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 S329-63, January. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dimova, Ralitza & Nordman, Christophe Jalil & Roubaud, François, 2008. "Allocation of Labour in Urban West Africa: Implication for Development Policies," IZA Discussion Papers 3558, Institute for the Study of Labor (IZA). [Downloadable!]
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