Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy

Daniel Münich, Jan Svejnar and Katherine Terrell

No 122, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Under communism, workers had their wages set according to a centrally-determined wage grid. In this paper we use new micro data on men to estimate returns to human capital under the communist wage grid and during the transition to a market economy. We use data from the Czech Republic because it is a leading transition economy in which the communist grid remained intact until the very end of the communist regime. We demonstrate that for decades the communist wage grid maintained extremely low rate of return on education, but that the return increased dramatically and equally in all ownership categories of firms during the transition. Our estimates also indicate that men’s wage-experience profile was concave in both regimes and on average it did not change from the communist to the transition period. However, the de novo private firms display a more concave profile than SOEs and public administration. Contrary to earlier studies, we show that men’s inter-industry wage structure changed substantially between 1989 and 1996.

Keywords: retrospective data; Communism; labor; human capital; Czech Republic; transition; wages (search for similar items in EconPapers)
JEL-codes: J3 J4 P2 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2000-03
New Economics Papers: this item is included in nep-edu and nep-lab
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Citations: View citations in EconPapers (58)

Published - published in: Review of Economics and Statistics, 2005, 87 (1), 100-123

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Related works:
Journal Article: Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy (2005)
Working Paper: Returns to Human Capital Under the Communist Wage Grid and During the Transition to a Market Economy (1999)
Working Paper: Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy (1999)
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