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Wage Inequality and the Labor Market Impact of Economic Transformation: Croatia, 1970-2008


  • Saul D. Hoffman

    () (Department of Economics,University of Delaware)

  • Ivo Bicanic

    (Department of Economics,University of Zagreb)

  • Oriana Vukoja

    (Department of Economics,University of Zagreb)


In this paper, we examine wage inequality and wage differentials in Croatia from 1970 to 2008 using two long aggregate time series on the distribution of income. We focus especially on changing income inequality related to educational and vocational attainment, changing income inequality within those groups, and how these two components of inequality were affected by the economic transformation from Socialism to capitalism. We find that income inequality between groups rose moderately post-transformation, while overall inequality increased more sharply. This finding is consistent with a growing importance of individual rather than group productivity in labor market compensation, a change broadly consistent with the economic transformation of the Croatian labor market.

Suggested Citation

  • Saul D. Hoffman & Ivo Bicanic & Oriana Vukoja, 2011. "Wage Inequality and the Labor Market Impact of Economic Transformation: Croatia, 1970-2008," Working Papers 11-17, University of Delaware, Department of Economics.
  • Handle: RePEc:dlw:wpaper:11-17.

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    References listed on IDEAS

    1. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July.
    2. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521438827, March.
    3. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    4. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    5. 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.
    6. Andrew Clark, 2000. "The Returns and Implications of Human Capital Investment in a Transition Economy: An Empirical Analysis for Russia 1994-1998," CERT Discussion Papers 0002, Centre for Economic Reform and Transformation, Heriot Watt University.
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    More about this item


    Croatia; Economics of Transition; Inequality; Gini coefficient;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • P2 - Economic Systems - - Socialist Systems and Transition Economies
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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