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Ethnic Wage Gap And Political Break-Ups: Estonia During Political And Economic Transition

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Author Info
Kristjan-Olari Leping
Ott Toomet

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Abstract

We analyse the ethnic wage gap in Estonia, a former Soviet republic and current EU member, which hosts a substantial Russianspeaking minority. The analysis covers a lengthy period from the final years of the Soviet Union until the first years of EU membership. We document the rise of a substantial wage gap among males in favour of the Estonian-speaking population. This result is robust with respect to controls for language skills, education, industry and occupation. The main factors causing the unexplained wage gap include different ethnicity-specific returns to education and working in the capital city. The gap for young and established workers is of equal size.We argue that the most plausible explanations are establishmentlevel segregation, possibly related to sorting and screening discrimination. Unobserved human capital, related to the segregated school system, may also play a certain role.

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Publisher Info
Paper provided by Faculty of Economics and Business Administration, University of Tartu (Estonia) in its series University of Tartu - Faculty of Economics and Business Administration Working Paper Series with number 53.

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Length: 56 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:mtk:febawb:53

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Related research
Keywords: wage decomposition; ethnicity; Estonia; former Soviet Union;

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Find related papers by JEL classification:
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health, Education, Welfare, and Poverty

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References listed on IDEAS
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. Milan Vodopivec & Peter F. Orazem, 2000. "Male-female differences in labor market outcomes during the early transition to market: The cases of Estonia and Slovenia," Journal of Population Economics, Springer, vol. 13(2), pages 283-303. [Downloadable!] (restricted)
    Other versions:
  2. Amelie Constant & Martin Kahanec & Klaus F. Zimmermann, 2006. "The Russian-Ukrainian Earnings Divide," IZA Discussion Papers 2330, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1996. "Searching for the Effect of Immigration on the Labor Market," NBER Working Papers 5454, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Dan Black & Amelia Haviland & Seth Sanders & Lowell Taylor, 2006. "Why Do Minority Men Earn Less? A Study of Wage Differentials among the Highly Educated," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 300-313, 04. [Downloadable!] (restricted)
  5. Sattinger, Michael, 1996. "Search and discrimination," Labour Economics, Elsevier, vol. 3(2), pages 143-167, September. [Downloadable!] (restricted)
  6. Kugler, Adriana D., 2003. "Employee referrals and efficiency wages," Labour Economics, Elsevier, vol. 10(5), pages 531-556, October. [Downloadable!] (restricted)
  7. Dolton, P J & Vignoles, A, 2002. "The Return on Post-compulsory School Mathematics Study," Economica, London School of Economics and Political Science, vol. 69(273), pages 113-41, February. [Downloadable!] (restricted)
  8. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier. [Downloadable!] (restricted)
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  9. Christian Dustmann & Francesca Fabbri, 2003. "Language proficiency and labour market performance of immigrants in the UK," Economic Journal, Royal Economic Society, vol. 113(489), pages 695-717, 07. [Downloadable!] (restricted)
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  10. Cornell, Bradford & Welch, Ivo, 1996. "Culture, Information, and Screening Discrimination," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 542-71, June. [Downloadable!] (restricted)
  11. Murray Leibbrandt & James Levinsohn & Justin McCrary, 2005. "Incomes in South Africa since the fall of Apartheid," Working Papers 536, Research Seminar in International Economics, University of Michigan. [Downloadable!]
    Other versions:
  12. Kenneth A. Kriz & Jaanika Meriküll & Alari Paulus & Karsten Staehr, 2007. "Why Do Individuals Evade Payroll And Income Taxation In Estonia?," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 49, Faculty of Economics and Business Administration, University of Tartu (Estonia). [Downloadable!]
  13. Charles Kroncke & Kenneth Smith, 1999. "The wage effects of ethnicity in Estonia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 179-199, March. [Downloadable!] (restricted)
  14. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June. [Downloadable!]
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  15. P. A. Riach & J. Rich, 2002. "Field Experiments of Discrimination in the Market Place," Economic Journal, Royal Economic Society, vol. 112(483), pages 480-518, November. [Downloadable!] (restricted)
  16. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October. [Downloadable!] (restricted)
    Other versions:
  17. Sumon Kumar Bhaumik & Ira N. Gang & Myeong-Su Yun, 2006. "Ethnic Conflict and Economic Disparity: Serbians and Albanians in Kosovo," Departmental Working Papers 200636, Rutgers University, Department of Economics. [Downloadable!]
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  18. Allanson, Paul & Atkins, Jonathan P & Hinks, Timothy, 2002. "No End to the Racial Wage Hierarchy in South Africa?," Review of Development Economics, Blackwell Publishing, vol. 6(3), pages 442-59, October. [Downloadable!] (restricted)
  19. Jurajda, Stepan, 2003. "Gender wage gap and segregation in enterprises and the public sector in late transition countries," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 199-222, June. [Downloadable!] (restricted)
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Cited by:
(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. Kahanec, Martin & Zaiceva, Anzelika, 2008. "Labor Market Outcomes of Immigrants and Non-Citizens in the EU: An East-West Comparison," IZA Discussion Papers 3420, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Karsten Staehr, 2008. "Estimates of employment and welfare effects of personal labour income taxation in a flat-tax country : The case of Estonia," Bank of Estonia Working Papers 2008-03, Bank of Estonia, revised 30 Oct 2008. [Downloadable!]
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