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Self-Selection and Earnings During Volatile Transition

  • Dimova, Ralitza


    (University of Manchester)

  • Gang, Ira N.


    (Rutgers University)

Using Bulgarian Integrated Household Surveys for 1995, 1997 and 2001 this paper explores determinants of labor force status – not working, public sector employment, private sector employment and self-employment – and earnings for each of the three employment sectors. We find that while skilled labor’s pattern of reallocation into the public sector remains roughly the same over time, the inflow of highly educated laborers into the private sector and selfemployment increases. These changes coincide with the erosion of the returns to observed skills in the private sector and self-employment, while the public sector continues to reward all types of education at higher than the elementary level.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1158.

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Length: 25 pages
Date of creation: May 2004
Date of revision:
Publication status: published in: Journal of Comparative Economics, 2007, 35 (3), 612-629
Handle: RePEc:iza:izadps:dp1158
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  1. Aghion, P. & Blanchard, O.J., 1993. "On the Speed of Transition in Central Europe," Working papers 93-8, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Jennifer Hunt, 1997. "The Transition in East Germany: When is a Ten Point Fall in the Gender Wage Gap Bad News?," Discussion Papers of DIW Berlin 156, DIW Berlin, German Institute for Economic Research.
  3. Catherine Y. Co & Ira N. Gang & Myeong-Su Yun, 2005. "Self-Employment and Wage Earning in Hungary," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 150-165, 05.
  4. Robert S. Chase, 1998. "Markets for communist human capital: Returns to education and experience in the Czech republic and Slovakia," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(3), pages 401-423, April.
  5. Ira N. Gang & Robert C. Stuart, 1997. "What Difference Does a Country Make? Earnings by Soviets in the Soviet Union and in the United States," Departmental Working Papers 199606, Rutgers University, Department of Economics.
  6. Falaris, Evangelos M., 2004. "Private and public sector wages in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 56-72, March.
  7. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  8. Jolliffe, Dean, 2002. "The Gender Wage Gap in Bulgaria: A Semiparametric Estimation of Discrimination," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 276-295, June.
  9. Tito Boeri & Katherine Terrell, 2001. "Institutional Determinants of Labor Reallocation in Transition," William Davidson Institute Working Papers Series 384, William Davidson Institute at the University of Michigan.
  10. Edward J. Bird & Johannes Schwarze & Gert Wagner, 1994. "Wage effects of the move toward free markets in East Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(3), pages 390-400, April.
  11. Robert S. Chase, 1998. "Markets for Communist Human Capital: Returns to Education and Experience in the Czech Republic and Slovakia," ILR Review, Cornell University, ILR School, vol. 51(3), pages 401-423, April.
  12. I Beleva & Richard Jackman & M Nenova-Amar, 1995. "The Labour Market in Bulgaria," CEP Discussion Papers dp0268, Centre for Economic Performance, LSE.
  13. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
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