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Firms and Wage Inequality in Central and Eastern Europe

Iga Magda (), Jan Gromadzki and Simone Moriconi ()
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Simone Moriconi: IÉSEG School of Management

No 12214, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Recent studies show that firms are playing an increasingly important role in shaping wage inequality in advanced economies. We contribute to this literature by analysing wage inequality patterns and their firm dimension in Central and Eastern European countries. We use large, linked employer-employee datasets with data from the 2002-2014 period. We find that unlike in many other advanced economies, wage inequality levels have decreased in CEE countries, and particularly in those countries that previously had the highest wage inequality levels. The relative size of the between-firm component varied substantially across countries, and was largest in countries with the highest wage inequality levels. We further estimate the recentered influence function (RIF) regression and the Blinder-Oaxaca decomposition in order to investigate the micro-level determinants of wage inequality. Our findings indicate that the changes in wage inequality levels were mainly attributable to returns to workplace characteristics.

Keywords: wages; wage inequality; RIF regression; linked employer-employee data (search for similar items in EconPapers)
JEL-codes: D22 J31 J40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma, nep-sbm and nep-tra
Date: 2019-03
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