Increased sorting and wage inequality in the Czech Republic. Issue 2 (28th February 2013)

• Record Type: Journal Article
• Authors: Eriksson, Tor; Pytliková, Mariola; Warzynski, Frédéric
• Is Part Of: Economics of transition. Volume 21:Issue 2(2013:Apr.)
• Page Start: 357
• Page End: 380
• Publication Date: 2013-02-28
• Subjects: Europe, Eastern -- Economic policy -- Periodicals; Europe, Central -- Economic policy -- Periodicals; Capitalism -- Europe, Eastern -- Periodicals; Capitalism -- Europe, Central -- Periodicals; 338.9405
• DOI: 10.1111/ecot.12014
• Languages: English
• ISSNs: 0967-0750

Abstract

<abstract abstract-type="main" id="ecot12014-abs-0001"> <title>Abstract</title> <p>This paper makes use of a linked employer–employee dataset to examine the evolution of wage inequality in the Czech Republic during 1998–2006. We find evidence of slightly increasing returns to human capital and diminishing gender inequality and document sharp increases in both within‐firm and between‐firm inequality. We investigate several hypotheses to explain these patterns: increased domestic and international competition, decentralized wage bargaining, skill‐biased technological change and a changing educational composition of the workforce. Domestic competition is found to lower within‐firm inequality whereas we find no evidence that increased international trade at the industry level is associated with higher between‐ or within‐firm wage inequality. The key factors driving the observed increase in wage inequality are increased educational sorting and the inflow of foreign firms to the Czech Republic.</p> </abstract>