Markets for Communist Human Capital: Returns to Education and Experience in the Czech Republic and Slovakia

Abstract

This research examines differences in earnings structure between Communist and post-Communist Czech Republic and Slovakia using four sets of similar micro-data. It presents hypotheses about how earnings dispersion, returns to education, and returns to experience will change across regimes and tests those hypotheses using earnings equations. From fairly low levels during Communism, e.g., 2.4 percent for Czech men in 1984, the return to education increased quite dramatically during transition, e.g., to 5.2 percent for Czech men in 1993. Returns to experience fell. Though women have higher returns to education in general, returns for men increased more across regime change. Those with academic secondary education experienced a particularly large earnings increase. In the Czech Republic, where transition occurred more rapidly and deeply, earnings structure changes appear larger than in Slovakia.