Abstract:

This paper estimates explained and unexplained components of wage differentials between formal or informal employment in eight EU transition countries (Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland and Slovakia) utilizing the data of the EU Survey on Income and Living Conditions for the period of 2009-2016 among 445,931 individuals. We apply the Oaxaca and Blinder (1973) model with selection bias correction to decompose the wage gap at the mean of income into explained and unexplained part. The results demonstrate that wage discrimination in informal employment is experienced by both males and females. The hourly wage rate among individuals in informal employment is on average 23.7% lower than among individuals in formal employment. For males, this difference is 24.8% and 23.9% for females. When the model is run without correcting for endogenous selection into informal employment, the ‘unexplained component’ that can be attributed to wage discrimination is estimated at 20% for males and 30% for females. When the model is corrected for employment status selection, the estimated wage discrimination reaches 34% for males and 44% for females. 

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Extended abstract

 

 

Talking Economics is a live-streamed public lecture series with CERGE-EI's faculty and researchers introducing their latest work.

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This event will introduce applied economics research by two CERGE-EI faculty members:

 

Christian Ochsner: Mobilizing History

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Ole Jann: Privacy on the Internet

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Talking Economics is a live-streamed public lecture series with CERGE-EI's faculty and researchers introducing their latest work.

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This event will introduce experimental and development economics research by two CERGE-EI faculty members:

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Andreas Menzel & Martina Miotto: Gender Wage Gaps in Export Manufacturing Sectors: Evidence From Bangladesh

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The originally scheduled presentation by Mariola Pytliková on Air Pollution and Migration was cancelled due to illness.

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Talking Economics is a live-streamed public lecture series with CERGE-EI's faculty and researchers introducing their latest work.

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This event will introduce labor economics research by CERGE-EI senior faculty, and a junior researcher and a Ph.D. student:

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Štěpán Jurajda: Cross-country Comparison of Wage Rates: The McWage Index

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Ekaterina Travova: Performance of Police Officers as an Incentive to Cheat

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Talking Economics is a live-streamed public lecture series with CERGE-EI's faculty and researchers introducing their latest work.

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This event will introduce research in economics of rational inattention by CERGE-EI faculty member and his Ph.D. student, who was recently named the 2019 Young Economist of the Year by the Czech Economic Society:

 

Filip Matějka: Psychology, Politics and Models

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Vladimír Novák: Belief Polarization and Other Consequences of Inattention

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Abstract:

Around the world, some countries rely on exam based placement into public schools whereas some others rely on home address based placement. Recently, Turkey has changed its admission rule from exam based placement to home address based placement. This raised concerns regarding equality of opportunity since high quality public schools are located in rich neighborhoods. To quantify the effect of the reform, we set up a model at which households differ by exogenous income and student ability and public schools differ by exogenous teacher quality. Public schools’ expenditures are financed by income taxation where income tax rate is determined via majority voting. Households can privately supplement public spending. Each teacher determines effort for each student in her classroom. Students and teachers are matched assortatively based on student ability. Achievement depends on ability, teacher effort, and educational spending. We first show existence of a unique majority voting equilibrium and characterize the pivotal voter. After calibrating the parameters of the model, we analyze the reform through a computational experiment. We find that variance of achievement falls by 17.76%, mean achievement falls by 51.15%, households’ total welfare falls by 0.115%, and teachers’ total welfare rises by 18.1%.

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Full text is available from the author upon request.