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Wage determination and gender discrimination in a transition economy : the case of Romania

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  • Paternostro, Stefano
  • Sahn, David E.

Abstract

The authors analyze wage determination and gender discrimination in Romania using the 1994 Romanian Household survey. They estimate wages for men and women in urban and rural areas using a Heckman selection model. They analyze gender discrimination in offered wages, to address the methodological shortcomings found in the literature. Increasing returns to education and experience are consistently significant for both men and women in urban and rural areas. Returns to education are greater in rural than in urban areas, especially for women. Labor markets are segmented regionally, probably as a result of the country's economic history, especially the spatial allocation of resources under a centrally planned economy. Only with economic liberalization has the specialization of specific regions translated into differences in regional performance and hence local economic differences. They found discrimination against women in both urban and rural labor markets, especially at low levels of education. The observed bias against women in urban areas is comparable to that found in other Western countries--but in the region's rural settings the bias is much greater than in the West. With the adjustment to market forces, as less-skilled workers face increasing difficulties in the region, women's relative wages may be expected to decline further. Discrepancy in pay also directly affects the level of pensions, unemployment benefits, and other means-tested benefits to workers, contributing to pauperization.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2113.

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Date of creation: 31 May 1999
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Handle: RePEc:wbk:wbrwps:2113

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Keywords: Economic Theory&Research; Health Monitoring&Evaluation; Labor Policies; Environmental Economics&Policies; Public Health Promotion; Poverty Assessment; Health Economics&Finance; Banks&Banking Reform; Health Monitoring&Evaluation; Environmental Economics&Policies;

References

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  1. Orazem, Peter F & Vodopivec, Milan, 1995. "Winners and Losers in Transition: Returns to Education, Experience, and Gender in Slovenia," World Bank Economic Review, World Bank Group, World Bank Group, vol. 9(2), pages 201-30, May.
  2. Orazem, Peter & Vodopivec, Milan, 2000. "Male-Female Differences in Labor Market Outcomes During the Early Transition to Market: The Cases of Estonia and Slovenia," Staff General Research Papers, Iowa State University, Department of Economics 1889, Iowa State University, Department of Economics.
  3. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
  4. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521438827.
  5. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  6. Dimitri G. Demekas & Mohsin S. Khan, 1991. "The Romanian Economic Reform Program," IMF Working Papers 91/80, International Monetary Fund.
  7. Earle, John S. & Pauna, Catalin, 1996. "Incidence and duration of unemployment in Romania," European Economic Review, Elsevier, Elsevier, vol. 40(3-5), pages 829-837, April.
  8. Glick, Peter & Sahn, David E, 1997. "Gender and Education Impacts on Employment and Earnings in West Africa: Evidence from Guinea," Economic Development and Cultural Change, University of Chicago Press, vol. 45(4), pages 793-823, July.
  9. 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, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  10. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
  11. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
  12. Simon Appleton, 1996. "The gender wage gap in three African countries," Economics Series Working Papers WPS/1996-07, University of Oxford, Department of Economics.
  13. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  14. Blau, Francine D & Kahn, Lawrence M, 1992. "The Gender Earnings Gap: Learning from International Comparisons," American Economic Review, American Economic Association, American Economic Association, vol. 82(2), pages 533-38, May.
  15. Bardhan, Pranab K, 1979. "Wages and Unemployment in a Poor Agrarian Economy: A Theoretical and Empirical Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(3), pages 479-500, June.
  16. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, Elsevier, vol. 61(1), pages 5-21, March.
  17. Sahn, David E. & Alderman, Harold, 1988. "The effects of human capital on wages, and the determinants of labor supply in a developing country," Journal of Development Economics, Elsevier, Elsevier, vol. 29(2), pages 157-183, September.
  18. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 474-75, June.
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Citations

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Cited by:
  1. Benoit Dostie & David Sahn, 2006. "Labor Market Dynamics in Romania During a Period of Economic Liberalization," Cahiers de recherche 06-17, HEC Montréal, Institut d'économie appliquée, revised Jun 2008.
  2. Dean Jolliffe & Nauro F. Campos, 2004. "Does Market Liberalisation Reduce Gender Discrimination? Econometric Evidence from Hungary, 1986—1998," William Davidson Institute Working Papers Series 2004-678, William Davidson Institute at the University of Michigan.
  3. Adamchik, A. & Bedi, A.S., 2001. "Persistence of the gender pay differential in a transition economy," ISS Working Papers - General Series, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague 19091, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  4. Andrén, Daniela & Andrén, Thomas, 2007. "Occupational gender composition and wages in Romania: from planned equality to market inequality?," Working Papers in Economics, University of Gothenburg, Department of Economics 261, University of Gothenburg, Department of Economics.
  5. Indrani Chakraborty & Achin Chakraborty, 2010. "Female Work Participation and Gender Differential in Earning in West Bengal," Working Papers id:2438, eSocialSciences.
  6. Kathryn Anderson & Richard Pomfret, 2000. "Gender Effects of Transition: The Kyrgyz Republic," School of Economics Working Papers, University of Adelaide, School of Economics 2000-08, University of Adelaide, School of Economics.
  7. Christopher J. Gerry & Byung-Yeon Kim & Carmen A. Li, 2001. "The Gender Wage Gap and Wage Arrears in Russia: Evidence from the RLMS," Economics Discussion Papers, University of Essex, Department of Economics 533, University of Essex, Department of Economics.
  8. 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, Örebro University, School of Business 2010:1, Örebro University, School of Business.

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