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Firms and wage inequality in Central and Eastern Europe

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  • Magda, Iga
  • Gromadzki, Jan
  • Moriconi, Simone

Abstract

We use large linked employer-employee data to analyze wage inequality patterns in Central and Eastern European (CEE) countries between 2002 and 2014. We show that, unlike in many other advanced economies, wage inequality levels have decreased in almost all CEE countries. These reductions in wage inequality resulted from disproportionately large increases in wages at the bottom of the wage distribution, and from decreases in between-firm wage inequality. We further find that the declines in wage inequality were driven by large wage structure effects that compensated for changes in the composition of workers.

Suggested Citation

  • Magda, Iga & Gromadzki, Jan & Moriconi, Simone, 2021. "Firms and wage inequality in Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 499-552.
  • Handle: RePEc:eee:jcecon:v:49:y:2021:i:2:p:499-552
    DOI: 10.1016/j.jce.2020.08.002
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    16. Michal Brzezinski & Katarzyna Salach, 2022. "Determinants of inequality in transition countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 496-496, June.
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    More about this item

    Keywords

    Wages; Wage inequality; RIF Regression; Quantile decomposition; Linked employer-employee data;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General

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