Increased Sorting and Wage Inequality in the Czech Republic:  New Evidence Using Linked Employer-Employee Dataset

TY - UNPB

T1 - Increased Sorting and Wage Inequality in the Czech Republic

T2 -  New Evidence Using Linked Employer-Employee Dataset

AU - Eriksson, Tor Viking

AU - Pytlikova, Mariola

AU - Warzynski, Frederic

PY - 2009

Y1 - 2009

N2 - In this paper, we look at the evolution of firms' wage structures using a linked employer-employee dataset, which has longitudinal information for firms and covers a large fraction of the Czech labor market during the period 1998-2006. We first look at the evolution of individual wage determination and find evidence of slightly increasing returns to human capital and diminishing gender inequality. We then document sharp increases in both within-firm and between-firm inequality. We investigate various hypotheses to explain these patterns: increased domestic and international competition, an increasingly decentralized wage bargaining, skill biased technological change and a changing educational composition of the workforce. We find some support for that all these factors have contributed to the changes in the Czech wage structure, and that increased sorting is strongly associated with the observed changes in wage inequality.

AB - In this paper, we look at the evolution of firms' wage structures using a linked employer-employee dataset, which has longitudinal information for firms and covers a large fraction of the Czech labor market during the period 1998-2006. We first look at the evolution of individual wage determination and find evidence of slightly increasing returns to human capital and diminishing gender inequality. We then document sharp increases in both within-firm and between-firm inequality. We investigate various hypotheses to explain these patterns: increased domestic and international competition, an increasingly decentralized wage bargaining, skill biased technological change and a changing educational composition of the workforce. We find some support for that all these factors have contributed to the changes in the Czech wage structure, and that increased sorting is strongly associated with the observed changes in wage inequality.

KW - Sorting

KW - Wage inequality

KW - Linked employer-employee dataset

KW - Firm panel data

KW - Czech Republic

M3 - Working paper

SN - 9788778824226

BT - Increased Sorting and Wage Inequality in the Czech Republic

PB - Aarhus School of Business

CY - Aarhus

ER -