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Increased Sorting and wage Inequality in the Czech Republic: New Evidence Using Linked Employer-Employee Dataset

Tor Eriksson (), Mariola Pytlikova () and Frédéric Warzynski

No 09-5, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: In this paper, we look at the evolution of firms’ wage structures using a linked employeremployee dataset, which has longitudinal information for firms and covers a large fraction of the Czech labor market during the period 1998-2006. We first look at the evolution of individual wage determination and find evidence of slightly increasing returns to human capital and diminishing gender inequality. We then document sharp increases in both within-firm and between-firm inequality. We investigate various hypotheses to explain these patterns: increased domestic and international competition, an increasingly decentralized wage bargaining, skill biased technological change and a changing educational composition of the workforce. We find some support for that all these factors have contributed to the changes in the Czech wage structure, and that increased sorting is strongly associated with the observed changes in wage inequality.

Keywords: sorting; wage inequality; linked employer-employee dataset; firm panel data; Czech Republic (search for similar items in EconPapers)
JEL-codes: J31 P31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-tra
Date: 2009-02-01
Note: Published as: Eriksson, T., Pytlikova, M. and F. Warzynski (2013): "Increased Sorting and Wage Inequality in the Czech Republic: New Evidence Using Linked Employer-Employee Dataset." Economics of Transition (IF: 0.679), Vol. 21, Issue 2, pp. 357-380. DOI: 10.1111/ecot.12014.
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