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Earnings, Schooling and Economic Reform: Econometric Evidence from Hungary (1986-2004)

Author

Listed:
  • Campos, Nauro F.

    (University College London)

  • Jolliffe, Dean

    (World Bank)

Abstract

How does the relationship between earnings and schooling change with the introduction of comprehensive economic reform? This paper sheds light on this question using a unique data set and procedure to reduce sample selection bias. Our evidence is from consistently coded, non-retrospective data for about 4 million Hungarian wage earners. We find that returns to skill increased by 75 percent from 1986 to 2004 (that is, during the period stretching from communism to full membership in the European Union). Moreover, our results identify winners and losers from reform. Winners were the college and university educated and those employed in the services sector (which excludes those in public services). Our results show that reform losers were those in construction and agriculture, those who attained only primary or vocational education (who actually experience a decrease in the returns to their education) as well as those younger workers which acquired most of their education after the collapse of communism (that is, after the main reforms were in place).

Suggested Citation

  • Campos, Nauro F. & Jolliffe, Dean, 2007. "Earnings, Schooling and Economic Reform: Econometric Evidence from Hungary (1986-2004)," IZA Discussion Papers 2678, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2678
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    References listed on IDEAS

    as
    1. Campos, Nauro F. & Horváth, Roman, 2006. "Reform Redux: Measurement, Determinants and Reversals," IZA Discussion Papers 2093, Institute of Labor Economics (IZA).
    2. Jennifer Hunt, 2002. "The Transition in East Germany: When Is a Ten-Point Fall in the Gender Wage Gap Bad News?," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 148-169, January.
    3. Jolliffe, Dean & Campos, Nauro F., 2005. "Does market liberalisation reduce gender discrimination? Econometric evidence from Hungary, 1986-1998," Labour Economics, Elsevier, vol. 12(1), pages 1-22, February.
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    Cited by:

    1. Jan HANOUSEK & Evžen KOČENDA, 2009. "Public investment and growth in New EU member states: an overview," Departmental Working Papers 2009-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Sang‐Wook (Stanley) Cho & Julián P. Díaz, 2016. "Accounting for Skill Premium Patterns: Evidence from the EU Accession," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 271-299, July.
    3. Brainerd, Elizabeth, 2010. "The Demographic Transformation of Post-Socialist Countries," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    4. Giorgio Brunello & Elena Crivellaro & Lorenzo Rocco, 2012. "Lost in transition?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 20(4), pages 637-676, October.
    5. Carsten Lohmann & Ingo Liefner, 2014. "Spatial Patterns of Private Sector and Public Sector Non-Agricultural Jobs in Rural Northeast Thailand," Regional Studies, Taylor & Francis Journals, vol. 48(4), pages 710-726, April.
    6. Joanna Tyrowicz & Magdalena Smyk, 2019. "Wage Inequality and Structural Change," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(2), pages 503-538, January.
    7. Hongbing Li & Hongbo Cai & Suparna Chakraborty, 2019. "Market Access, Labor Mobility, and the Wage Skill Premium: New Evidence from Chinese Cities," Open Economies Review, Springer, vol. 30(5), pages 947-973, November.
    8. Elizabeth Brainerd, 2010. "The Demographic Transformation of Post-Socialist Countries: Causes, Consequences, and Questions," WIDER Working Paper Series wp-2010-015, World Institute for Development Economic Research (UNU-WIDER).
    9. Elizabeth Brainerd, 2010. "Human Development in Eastern Europe and the CIS Since 1990," Human Development Research Papers (2009 to present) HDRP-2010-16, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    10. Brunello, Giorgio & Crivellaro, Elena & Rocco, Lorenzo, 2010. "Lost in Transition? The Returns to Education Acquired under Communism 15 Years after the Fall of the Berlin Wall," IZA Discussion Papers 5409, Institute of Labor Economics (IZA).
    11. Ana Abras & Alejandro Hoyos & Ambar Narayan & Sailesh Tiwari, 2013. "Inequality of opportunities in the labor market: evidence from life in transition surveys in Europe and Central Asia," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-22, December.

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    More about this item

    Keywords

    economic reform; transition economies; human capital;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General

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