Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia

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Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia

Author Info

Fleisher, Belton M. () (Ohio State University)
Sabirianova, Klara (William Davidson Institute and IZA Bonn)
Wang, Xiaojun (University of Hawaii)

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Abstract

We explore the pace of increase in returns to schooling during the transition from planning to market over time across a number of Central and Eastern European countries, Russia, and China. We use metadata from 33 studies of 10 transition economies covering a period from 1975 through 2002. Our empirical model is an attempt to account for crosssection and over-time variation in rates of return as a function of the timing, speed, and volatility of reform processes as well as estimation methods used and sample characteristics. Our principal aim is to investigate the relative strength of two hypotheses: (1) the speed of economic transformation from planning to market represent the relaxation of legal, regulatory, and institutional constraints on wage-setting behavior, leading directly to adjustment returns to schooling to market rates; 2) the rapid increase in returns to schooling during the early reform period reflects the ability of highly-educated individuals to respond to changing opportunities in a disequilibrium situation. We find that both the speed of reforms and the degree of economic disequilibrium as reflected in macroeconomic volatility help to explain cross-country differences in the time paths of the returns to schooling. We report the systematic effects of sample characteristics, estimation methods, and model specifications on estimated returns to schooling.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1182.

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Length: 33 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1182

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Article
- Fleisher, Belton M. & Sabirianova, Klara & Wang, Xiaojun, 2005. "Returns to skills and the speed of reforms: Evidence from Central and Eastern Europe, China, and Russia," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 351-370, June. [Downloadable!] (restricted)
Paper
- Belton M. Fleisher & Klara Sabirianova Peter & Xiaojun Wang, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," William Davidson Institute Working Papers Series 2004-703, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
P2 - Economic Systems - - Socialist Systems and Transition Economies
P3 - Economic Systems - - Socialist Institutions and Their Transitions
P5 - Economic Systems - - Comparative Economic Systems

This paper has been announced in the following NEP Reports:

NEP-ALL-2004-07-04 (All new papers)
NEP-CIS-2004-07-04 (Confederation of Independent States)
NEP-CWA-2004-07-04 (Central & Western Asia)
NEP-LAB-2004-07-04 (Labour Economics)

References listed on IDEAS
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Other versions:
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Other versions:
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Other versions:
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Other versions:
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Other versions:
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