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

By Daniel Mnich, Jan Svejnar, Katherine Terrell. Review of Economics and Statistics, 2005

264 citations recorded by the source corpus.

We estimate returns to human capital during communism and the transition using data on 2,284 men in the Czech Republic. We show: (a) extremely low and constant rates of return to education under the communist wage grid and dramatic increases in transition, which do not differ by firm ownership, (b) radical changes in returns to several fields of study and sheepskin effects in both regimes, (c) identical wage experience profile in both regimes, (d) similar 1996 returns to human capital obtained in communism and in transition, and (e) changes in the interindustry wage structure. A decomposition of the variance of wages finds individuals' unobservable effects from communism to persist into transition, but most of the variance is due to unobservable effects introduced in the transition.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/6cc24bc363d8516d977c0ed82614b9d472e52e45

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Citations in the corpus

• Determinants of schooling returns during transition: Evidence from Chinese cities (2005, background): “2 Orazem and Vodopivec (1995), Rutkowski (1996), Chase (1998), Brainerd (1998), Flaganan (1998), Münich et al. (2005), and Jones and Ilayperuma Simon (2005)describe the changes in schooling returns during transition in Bulgaria, Czech Republic, Poland, Russia and Slovenia.”
• Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia (2005, background): “The reviews of the estimated rates of return in CEER countries are provided in numerous studies, including Boeri and Terrell (2002), Brainerd (1998), Munich, Svejnar, and Terrell (1999), and Rutkowski (2001). which the transition economies moved from wage setting under the wage grids toward one…”
• Coping with Change: International Differences in the Returns to Skills (2017, unknown): “…the hypothesis is consistent with the finding that returns to schooling increased when former communist countries transitioned to a market economy (Münich, Svejnar, and Terrell (2005)), but this could also reflect nonmarket returns under the prior managed economy rather than returns to the…”
• General Education versus Vocational Training: Evidence from an Economy in Transition (2010, background): “28 In light of the findings by Munich et al. (2005), we examined whether the cross-sectional findings differed by type of firm ownership.”
• Returns to Education in the Economic Transition: A Systematic Assessment Using Comparable Data (2007, unknown): “…of years of schooling to be more accurate than the one adopted in many other studies (e.g., Flanagan 1998, Vernon 2002, Brainerd 1998), since we use the number reported by the respondents themselves, rather than an imputed value derived from the reported school attainment (see Munich et al 1999).”