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The Wage Effects of Schooling under Socialism and in Transition: Evidence from Romania, 1950-2000

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We estimate the impact of schooling on monthly earnings from 1950 to 2000 in Romania. Nearly constant at about 3-4 percent during the socialist period, the coefficient on schooling in a conventional earnings regression rises steadily during the 1990s, reaching 8.5 percent by 2000. Our analysis finds little evidence for either the standard explanations of such an increase in the West (labor supply movements, product demand shifts, technical change) or the transition-specific accounts sometimes offered (wage liberalization, border opening, increased quality of education). But we find some support for institutional and organizational explanations, particularly the high productivity of education in restructuring and entrepreneurial activities in a disequilibrium environment.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number jse20051.

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Handle: RePEc:upj:weupjo:jse20051

Note: Appears in Journal of Comparative Economics 33(2): 300-323
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Keywords: transition economies; job creation; firm-level data;

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Citations

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Cited by:
  1. Giorgio Brunello & Elena Crivellaro & Lorenzo Rocco, 2012. "Lost in transition?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 20(4), pages 637-676, October.
  2. 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 17, AlmaLaurea Inter-University Consortium.
  3. Robert Orlowski & Regina T. Riphahn, 2009. "The East German Wage Structure after Transition," Working Papers 073, Bavarian Graduate Program in Economics (BGPE).
  4. Jarko Fidrmuc & Matus Senaj, 2012. "Human Capital, Consumption, and Housing Wealth in Transition," Working and Discussion Papers WP 2/2012, Research Department, National Bank of Slovakia.
  5. Wyrwich, Michael, 2013. "Can socioeconomic heritage produce a lost generation with regard to entrepreneurship?," Journal of Business Venturing, Elsevier, vol. 28(5), pages 667-682.
  6. Andrén, Daniela, 2012. "Romanians, Hungarians and their wages, in transition, in Romania," Economic Modelling, Elsevier, vol. 29(6), pages 2673-2685.
  7. Li, Hongbin & Liu, Pak Wai & Zhang, Junsen, 2012. "Estimating returns to education using twins in urban China," Journal of Development Economics, Elsevier, vol. 97(2), pages 494-504.
  8. 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).
  9. Andrén, Daniela, 2010. ""In every rank, or great or small, ’Tis industry supports us all": Romanians and ethnic Hungarians, and their wages, in transition," Working Papers 2010:1, Örebro University, School of Business.
  10. Andrén, Daniela & Andrén, Thomas, 2007. "Occupational Gender Composition and Wages in Romania: From Planned Equality to Market Inequality?," IZA Discussion Papers 3152, Institute for the Study of Labor (IZA).
  11. Kevin Denny & Patrick Orla Doyle, 2005. "Returns to basic skills in Central and Eastern Europe - a semi-parametric approach," Working Papers 200507, School Of Economics, University College Dublin.

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