Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy
AbstractUnder communism, workers had their wages set according to a centrally-determined wage grid. In this paper we use new micro data on men to estimate returns to human capital under the communist wage grid and during the transition to a market economy. We use data from the Czech Republic because it is a leading transition economy in which the communist grid remained intact until the very end of the communist regime. We demonstrate that for decades the communist wage grid maintained extremely low rate of return on education, but that the return increased dramatically and equally in all ownership categories of firms during the transition. Our estimates also indicate that men's wage-experience profile was concave in both regimes and on average it did not change from the communist to the transition period. However, the de novo private firms display a more concave profile than SOEs and public administration. Contrary to earlier studies, we show that men's inter-industry wage structure changed substantially between 1989 and 1996.
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Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 272.
Date of creation: 01 Oct 1999
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Other versions of this item:
- Daniel Münich & Jan Svejnar & Katherine Terrell, 2005. "Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 100-123, February.
- Münich, Daniel & Svejnar, Jan & Terrell, Katherine, 2000. "Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy," IZA Discussion Papers 122, Institute for the Study of Labor (IZA).
- Münich, Daniel & Svejnar, Jan & Terrell, Katherine, 1999. "Returns to Human Capital Under the Communist Wage Grid and During the Transition to a Market Economy," CEPR Discussion Papers 2332, C.E.P.R. Discussion Papers.
- P2 - Economic Systems - - Socialist Systems and Transition Economies
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J4 - Labor and Demographic Economics - - Particular Labor Markets
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