Abstract
We study the determinants of wage inequality and its fluctuations in six Central-Eastern European nations using European Union Statistics on Income and Living Conditions microdata from 2010 to 2019. Wage disparity in these countries changed in distinct ways. Inequality in Czechia and Romania is generally steady, has fallen consistently in Poland and Slovakia, and has increased in Bulgaria. Inequality has been steadily reducing in Hungary but has recently increased significantly. Therefore, this paper questions these countries' primary causes of wage inequality changes. In addition to providing a detailed description of inequality trends in these countries, we focus on examining the demographic and micro-level determinants alongside the minimum wage changes. We estimate these effects using RIF regression and RIF decompositions for various inequality measures. The changes in wage inequality in these countries were driven mainly by wage structure effects regardless of the increase or decrease in wage inequality. Changes in the returns to education and returns to permanent employment contracts are crucial in explaining decreased wage inequality. The increases in wage inequality in Hungary and Bulgaria are defined mainly by the changes in the estimated constants instead of micro-level determinants. The changes in the minimum wage explain most of the unknown factors in Bulgaria, and the spillover effects of the minimum wage may explain most of the unknown factors in Hungary. Our results can support the skill-biased technological change hypothesis in the case of Slovakia, Romania, Czechia, and Bulgaria.
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Data availability
Due to Eurostat's confidentiality considerations, the datasets used in this study are not publicly available, although Eurostat permits access to microdata for scientific reasons in accordance with Regulation (EU) No 557/2013 on access to confidential data for scientific purposes.
(https://ec.europa.eu/eurostat/documents/203647/771732/How_to_apply_for_microdata_access.pdf).
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Acknowledgements
This study is based on data from Eurostat, EU Statistics on Income and Living Conditions (2010-2019). The responsibility for all conclusions drawn from the data lies entirely with the authors. The authors thank Eurostat for providing the data and the Faculty of Business and Economics, University of Pecs, for technical assistance. We would like to express our gratitude to the anonymous reviewers for their insightful feedback. Their comments and advice have been immensely valuable in enhancing the quality of this article.
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Open access funding provided by University of Pécs. This study was supported by Project No. TKP2021-NKTA-19. It has been implemented with support from the National Research, Development, and Innovation Fund of Hungary, financed under the TKP2021-NKTA funding scheme.
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Both authors contributed to the conception and design of the study. Galambosné Dr. Tiszberger Mónika was in charge of acquiring EU-SILC data. Byambasuren Dorjnyambuu conducted data cleaning and analysis. The manuscript was written and revised by both authors. The final manuscript was read and approved by all authors. Galambosné Dr. Tiszberger Mónika oversaw the entire study.
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Dorjnyambuu, B., Galambosné Tiszberger, M. The sources and structure of wage inequality changes in the selected Central-Eastern European Countries. J Econ Inequal (2024). https://doi.org/10.1007/s10888-024-09621-0
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DOI: https://doi.org/10.1007/s10888-024-09621-0
Keywords
- Wage inequality
- RIF regression
- RIF decomposition
- Oaxaca-Blinder decomposition
- Central-Eastern Europe
- EU-SILC