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High skills pay off: the changing wage structure during economic transition in Poland

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  • Jan Rutkowski

Abstract

Economic transition turns the inherited wage structure upside down. Changes are rapid and dramatic. The Polish example shows that even in the first year of market-oriented reforms, there was a marked increase in earnings inequality, a dramatic rise in the wage premium for white-collar skills, and a significant jump in the returns to education. In contrast, skills acquired under the old system lost their value. It is younger workers who are rewarded with higher wages. The changes are spearheaded by the private sector, where inequalities and the educational premium are higher than in the public sector. Privatization, thus, has its social aspects in that it strengthens the incentive for human capital investment. This paper documents these changes and sets out possible explanations. Copyright 1996 The European Bank for Reconstruction and Development.

Suggested Citation

  • Jan Rutkowski, 1996. "High skills pay off: the changing wage structure during economic transition in Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 89-112, May.
  • Handle: RePEc:bla:etrans:v:4:y:1996:i:1:p:89-112
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    1. repec:fth:prinin:307 is not listed on IDEAS
    2. Alan Krueger & Jorn-Steffen Pischke, 1992. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," Working Papers 686, Princeton University, Department of Economics, Industrial Relations Section..
    3. Alan B. Krueger & Jorn-Steffen Pischke, 1995. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," NBER Chapters,in: Differences and Changes in Wage Structures, pages 405-446 National Bureau of Economic Research, Inc.
    4. Redor,Dominique, 2010. "Wage Inequalities in East and West," Cambridge Books, Cambridge University Press, number 9780521134149, March.
    5. Carlin, Wendy & Soskice, David, 1990. "Macroeconomics and the Wage Bargain: A Modern Approach to Employment, Inflation, and the Exchange Rate," OUP Catalogue, Oxford University Press, number 9780198772446.
    6. Commander, Simon*Coricelli, Fabrizio*Staehr, Kar, 1991. "Wages and employment in the transition to a market economy," Policy Research Working Paper Series 736, The World Bank.
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