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

Research output: Working paperResearch


  • Wp 09-5

    Final published version, 329 KB, PDF document

  • Department of Economics
  • Center for Corporate Performance (CCP)
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.
Original languageEnglish
Place of publicationAarhus
PublisherAarhus School of Business, Aarhus University, Department of Economics
Number of pages48
ISBN (Print)9788778824226
ISBN (Electronic)9788778824233
Publication statusPublished - 2009

    Research areas

  • Sorting, Wage inequality, Linked employer-employee dataset, Firm panel data, Czech Republic

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