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

Tor Eriksson; Mariola Pytlikova; Frederic Michel Patrick Warzynski

doi:10.1111/ecot.12014

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

Tor Eriksson, Mariola Pytlikova, Frederic Michel Patrick Warzynski

Department of Economics and Business Economics

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

5 Citations (Scopus)

Abstract

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 betweenor
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.

Original language	English
Journal	Economics of Transition
Pages (from-to)	357-380
Number of pages	24
ISSN	0967-0750
DOIs	https://doi.org/10.1111/ecot.12014
Publication status	Published - 2013

Access to Document

10.1111/ecot.12014

Cite this

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

abstract = "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 betweenorwithin-firm wage inequality. The key factors driving the observed increase inwage inequality are increased educational sorting and the inflow of foreign firms to the Czech Republic.",

keywords = "Sorting, Wage inequality, Linked employer–employee dataset, firm panel data, Czech Republic",

author = "Tor Eriksson and Mariola Pytlikova and Warzynski, {Frederic Michel Patrick}",

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doi = "10.1111/ecot.12014",

language = "English",

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journal = "Economics of Transition",

issn = "0967-0750",

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Increased Sorting and Wage Inequality in the Czech Republic: New Evidence Using Linked Employer-Employee Dataset. / Eriksson, Tor ; Pytlikova, Mariola; Warzynski, Frederic Michel Patrick.
In: Economics of Transition, 2013, p. 357-380.

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

TY - JOUR

T1 - Increased Sorting and Wage Inequality in the Czech Republic

T2 - New Evidence Using Linked Employer-Employee Dataset

AU - Eriksson, Tor

AU - Pytlikova, Mariola

AU - Warzynski, Frederic Michel Patrick

N1 - Campus adgang til artiklen / Campus access to the article

PY - 2013

Y1 - 2013

N2 - 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 betweenorwithin-firm wage inequality. The key factors driving the observed increase inwage inequality are increased educational sorting and the inflow of foreign firms to the Czech Republic.

AB - 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 betweenorwithin-firm wage inequality. The key factors driving the observed increase inwage inequality are increased educational sorting and the inflow of foreign firms to the Czech Republic.

KW - Sorting

KW - Wage inequality

KW - Linked employer–employee dataset

KW - firm panel data

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DO - 10.1111/ecot.12014

M3 - Journal article

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JO - Economics of Transition

JF - Economics of Transition

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