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Emerging ethnic wage gap: Estonia during political and economic transition

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  • Leping, Kristian-Olari
  • Toomet, Ott

Abstract

We analyse the ethnic wage gap in Estonia, a former Soviet republic and current EU member, which hosts a substantial Russian-speaking minority. The analysis covers a lengthy period from the final years of the Soviet Union until the first years of EU membership. We document the rise of a substantial wage gap among males in favour of the Estonian-speaking population. This result is robust with respect to controls for language skills, education, industry and occupation. The main factors causing the unexplained wage gap include different ethnicity-specific returns to education and working in the capital city. The gap for young and established workers is of equal size. We argue that the most plausible explanations are establishment-level segregation, possibly related to sorting and screening discrimination. Unobserved human capital, related to the segregated school system, may also play a certain role. Journal of Comparative Economics 36 (4) (2008) 599-619.

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  • Leping, Kristian-Olari & Toomet, Ott, 2008. "Emerging ethnic wage gap: Estonia during political and economic transition," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 599-619, December.
  • Handle: RePEc:eee:jcecon:v:36:y:2008:i:4:p:599-619
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    Cited by:

    1. Vassil, Kristjan & Eamets, Raul & Mõtsmees, Pille, 2014. "Socio-demographic Model of Gender Gap in Expected and Actual Wages in Estonia," IZA Discussion Papers 8604, Institute for the Study of Labor (IZA).
    2. Jaanika Merikull & Pille Mõtsmees, 2015. "Do you get what you ask? The gender gap in desired and realised wages," Bank of Estonia Working Papers wp2014-9, Bank of Estonia, revised 20 Jan 2015.
    3. Toomet, Ott & Van Der Leij, Marco & Rolfe, Meredith, 2013. "Social networks and labor market inequality between ethnicities and races," Network Science, Cambridge University Press, vol. 1(03), pages 321-352, December.
    4. Kerly Krillo & Jaan Masso, 2010. "The Part-Time/Full-Time Wage Gap in Central and Eastern Europe: the Case of Estonia," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 2(1).
    5. Zuzana Brixiova, 2009. "Labour Market Flexibility In Estonia: What More Can Be Done?," William Davidson Institute Working Papers Series wp964, William Davidson Institute at the University of Michigan.
    6. Prosper F. Bangwayo-Skeete & Precious Zikhali, 2011. "Social exclusion and labour market outcomes: evidence from Eastern Europe and Central Asia," International Journal of Development Issues, Emerald Group Publishing, vol. 10(3), pages 233-250, September.
    7. Merike Kukk & Karsten Staehr, 2014. "Income underreporting by households with business income: evidence from Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 26(2), pages 257-276, June.
    8. Laur Lilleoja & Willem Saris, 2014. "Testing a New Operationalization of the Basic Values on Estonian- and Russian-speaking Subpopulations in Estonia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 116(1), pages 153-172, March.
    9. Muravyev, Alexander & Talavera, Oleksandr, 2016. "Can state language policies distort students’ demand for education?," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 383-399.
    10. Merike Kukk & Karsten Staehr, 2014. "Identification of Income Underreporting by the Self-Employed: Employment Status or Reported Business Income?," TUT Economic Research Series 8, Department of Finance and Economics, Tallinn University of Technology.
    11. World Bank, 2015. "Promoting Labor Market Participation and Social Inclusion in Europe and Central Asia's Poorest Countries," World Bank Other Operational Studies 22501, The World Bank.
    12. Jaan Masso & Kerly Krillo, 2011. "Mixed Adjustment Forms and Inequality Effects in Estonia, Latvia and Lithuania," Chapters,in: Work Inequalities in the Crisis, chapter 2 Edward Elgar Publishing.
    13. Aristei, David & Perugini, Cristiano, 2012. "Inequality and reforms in transition countries," Economic Systems, Elsevier, vol. 36(1), pages 2-10.
    14. Heili Hein & Aaro Hazak & Kadri Männasoo, 2017. "Who has a better chance of getting higher salaries among creative R&D employees?," TUT Economic Research Series 39, Department of Finance and Economics, Tallinn University of Technology.
    15. Simona Ferraro & Jaanika Merikull & Karsten Staehr, 2016. "Minimum wages and the wage distribution in Estonia," Bank of Estonia Working Papers wp2016-6, Bank of Estonia, revised 19 Aug 2016.
    16. Jaan Masso & Kerly Krillo, 2011. "Labour Markets In The Baltic States During The Crisis 2008-2009: The Effect On Different Labour Market Groups," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 79, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    17. Kenneth Smith, 2011. "Labor force participation in the Soviet and post-Soviet Baltic States," Economic Change and Restructuring, Springer, vol. 44(4), pages 335-355, November.

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