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Earnings, Schooling and Economic Reform: Econometric Evidence from Hungary (1986-2004)

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Author Info

  • Campos, Nauro F

    ()
    (Brunel University)

  • Jolliffe, Dean

    ()
    (World Bank)

Abstract

How does the relationship between earnings and schooling change with the introduction of comprehensive economic reform? This paper sheds light on this question using a unique data set and procedure to reduce sample selection bias. Our evidence is from consistently coded, non-retrospective data for about 4 million Hungarian wage earners. We find that returns to skill increased by 75 percent from 1986 to 2004 (that is, during the period stretching from communism to full membership in the European Union). Moreover, our results identify winners and losers from reform. Winners were the college and university educated and those employed in the services sector (which excludes those in public services). Our results show that reform losers were those in construction and agriculture, those who attained only primary or vocational education (who actually experience a decrease in the returns to their education) as well as those younger workers which acquired most of their education after the collapse of communism (that is, after the main reforms were in place).

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2678.

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Length: 28 pages
Date of creation: Mar 2007
Date of revision:
Publication status: published in: World Bank Economic Review, 2007, 21 (3), 509-526
Handle: RePEc:iza:izadps:dp2678

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Keywords: economic reform; transition economies; human capital;

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References

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  1. Nauro F. Campos & Roman Horváth, 2006. "Reform Redux: Measurement, Determinants and Reversals," Working Papers IES, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies 2006/16, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2006.
  2. Jolliffe, Dean & Campos, Nauro F., 2005. "Does market liberalisation reduce gender discrimination? Econometric evidence from Hungary, 1986-1998," Labour Economics, Elsevier, Elsevier, vol. 12(1), pages 1-22, February.
  3. Jennifer Hunt, 1997. "The Transition in East Germany: When is a Ten Point Fall in the Gender Wage Gap Bad News?," NBER Working Papers 6167, National Bureau of Economic Research, Inc.
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Cited by:
  1. Lorenzo Rocco & Giorgio Brunello & Elena Crivellaro, 2011. "Lost in Transition? The returns to education acquired under communism 15 years after the fall of the Berlin Wall," Working Papers, AlmaLaurea Inter-University Consortium 17, AlmaLaurea Inter-University Consortium.
  2. Brainerd, Elizabeth, 2010. "The Demographic Transformation of Post-Socialist Countries," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Working Paper W, World Institute for Development Economic Research (UNU-WIDER).
  3. Elizabeth Brainerd, 2010. "Human Development in Eastern Europe and the CIS Since 1990," Human Development Research Papers (2009 to present) HDRP-2010-16, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).

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