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Human capital and wage inequality during transition: evidence from Bulgaria

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  • Penka Kovacheva

Abstract

This article examines changes in human capital returns and their impact on wage inequality during Bulgaria's transition to a market economy. Using household data spanning the transition period 1995-2003, I find that returns to human capital differ by age. Returns to experience are low as the market economy devalues experience acquired pre-1990. Returns to education also start low but increase over time. This increase is driven by young cohorts receiving higher returns for education acquired post-1990 and middle-aged cohorts receiving higher returns over time. I estimate that these rising returns account for over 77% of the growth in wage inequality.

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  • Penka Kovacheva, 2011. "Human capital and wage inequality during transition: evidence from Bulgaria," Post-Communist Economies, Taylor & Francis Journals, vol. 23(2), pages 237-255.
    • Handle: RePEc:taf:pocoec:v:23:y:2011:i:2:p:237-255
    DOI: 10.1080/14631377.2011.570052
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    2. Horie, Norio & Iwasaki, Ichiro & 岩﨑, 一郎, 2022. "Returns to Education in European Emerging Markets: A Meta-Analytic Review," RRC Working Paper Series 95, Russian Research Center, Institute of Economic Research, Hitotsubashi University.

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