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Ethnic Wage Gap And Political Break-Ups: Estonia During Political And Economic Transition

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  • Kristjan-Olari Leping
  • Ott Toomet

Abstract

We analyse the ethnic wage gap in Estonia, a former Soviet republic and current EU member, which hosts a substantial Russianspeaking minority. The analysis covers a lengthy period from the final years of the Soviet Union until the first years of EU membership. We document the rise of a substantial wage gap among males in favour of the Estonian-speaking population. This result is robust with respect to controls for language skills, education, industry and occupation. The main factors causing the unexplained wage gap include different ethnicity-specific returns to education and working in the capital city. The gap for young and established workers is of equal size.We argue that the most plausible explanations are establishmentlevel segregation, possibly related to sorting and screening discrimination. Unobserved human capital, related to the segregated school system, may also play a certain role.

Suggested Citation

  • Kristjan-Olari Leping & Ott Toomet, 2007. "Ethnic Wage Gap And Political Break-Ups: Estonia During Political And Economic Transition," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 53, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  • Handle: RePEc:mtk:febawb:53
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    References listed on IDEAS

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    Cited by:

    1. Karsten Staehr, 2008. "Estimates of employment and welfare effects of personal labour income taxation in a flat-tax country : The case of Estonia," Bank of Estonia Working Papers 2008-03, Bank of Estonia, revised 30 Oct 2008.
    2. Karsten STAEHR, "undated". "Estimates of Employment and Welfare Effects of Labour Income Taxation in a Country with a Flat: the Case of Estonia," EcoMod2008 23800135, EcoMod.
    3. Martin Kahanec & Anzelika Zaiceva, 2009. "Labor market outcomes of immigrants and non-citizens in the EU: An East-West comparison," International Journal of Manpower, Emerald Group Publishing, vol. 30(1/2), pages 97-115, March.
    4. Artjoms Ivlevs, 2013. "Minorities on the move? Assessing post-enlargement emigration intentions of Latvia’s Russian speaking minority," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(1), pages 33-52, August.
    5. Jaan Masso & K. Espenberg & Anu Masso & I. Mierina & Kaia Philips, 2013. "GINI Country Report: Growing Inequalities and their Impacts in the Baltic States Estonia, Latvia, Lithuania," GINI Country Reports baltics, AIAS, Amsterdam Institute for Advanced Labour Studies.

    More about this item

    Keywords

    wage decomposition; ethnicity; Estonia; former Soviet Union;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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