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Self-Selection And Earnings During Volatile Transition

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  • Ira N. Gang

    ()
    (Rutgers University)

  • Ralitza Dimova

    ()
    (LICOS, Catholic University of Leuven)

Abstract

Using Bulgarian Integrated Household Surveys for 1995, 1997 and 2001 this paper explores determinants of labor force status – not working, public sector employment, private sector employment and self-employment – and earnings for each of the three employment sectors. We find that while skilled labor’s pattern of reallocation into the public sector remains roughly the same over time, the inflow of highly educated laborers into the private sector and self-employment increases. These changes coincide with the erosion of the returns to observed skills in the private sector and self-employment, while the public sector continues to reward all types of education at higher than the elementary level.

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Bibliographic Info

Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200409.

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Length: 20 pages
Date of creation: 18 May 2004
Date of revision:
Handle: RePEc:rut:rutres:200409

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Keywords: employment selection; earnings; Bulgaria;

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References

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  1. 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, Cornell University, ILR School, vol. 47(3), pages 390-400, April.
  2. 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.
  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.
  4. Robert S. Chase, 1998. "Markets for communist human capital: Returns to education and experience in the Czech republic and Slovakia," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(3), pages 401-423, April.
  5. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  6. Dean Jolliffe, 2001. "The Gender Wage Gap in Bulgaria: A Semiparametric Estimation of Discrimination," William Davidson Institute Working Papers Series 401, William Davidson Institute at the University of Michigan.
  7. 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.
  8. 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, 05.
  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.
  10. Falaris, Evangelos M., 2004. "Private and public sector wages in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 56-72, March.
  11. I Beleva & Richard Jackman & M Nenova-Amar, 1995. "The Labour Market in Bulgaria," CEP Discussion Papers dp0268, Centre for Economic Performance, LSE.
  12. 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.
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Citations

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Cited by:
  1. Sumon Kumar Bhaumik & Ira N. Gang & Myeong-Su Yun, 2006. "A Note on Poverty in Kosovo," Departmental Working Papers 200635, Rutgers University, Department of Economics.
  2. Abdulloev, Ilhom & Gang, Ira N. & Landon-Lane, John, 2011. "Migration as a Substitute for Informal Activities: Evidence from Tajikistan," IZA Discussion Papers 6236, Institute for the Study of Labor (IZA).
  3. Penka Kovacheva, 2011. "Human capital and wage inequality during transition: evidence from Bulgaria," Post-Communist Economies, Taylor & Francis Journals, vol. 23(2), pages 237-255.
  4. Bhaumik, Sumon Kumar & Dimova, Ralitza & Nugent, Jeffrey B., 2011. "Off-farm labor supply and labor markets in rapidly changing circumstances: Bulgaria during transition," Economic Systems, Elsevier, vol. 35(3), pages 378-389, September.
  5. Bhaumik, Sumon K. & Dimova, Ralitza & Nugent, Jeffrey B., 2006. "Pulls, Pushes and Entitlement Failures in Labor Markets: Does the State of Development Matter?," IZA Discussion Papers 2258, Institute for the Study of Labor (IZA).
  6. Sumon Bhaumik & Ira Gang & Myeong-Su Yun, 2005. "Ethnic Conflict and Economic Disparity: Serbians & Albanians in Kosovo," William Davidson Institute Working Papers Series wp808, William Davidson Institute at the University of Michigan.
  7. Bhaumik, Sumon K. & Gang, Ira N. & Yun, Myeong-Su, 2005. "Ethnic Conflict and Economic Disparity: Serbians and Albanians in Kosovo," IZA Discussion Papers 1772, Institute for the Study of Labor (IZA).
  8. Dimova, Ralitza & Gang, Ira N. & Landon-Lane, John, 2011. "Revealed Informal Activity," IZA Discussion Papers 5607, Institute for the Study of Labor (IZA).
    • Ralitza Dimova & Ira N. Gang & John Landon-Lane, 2011. "Revealed Informal Activity," Working Papers 296, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).

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