Department of Economics

Wage Differentials and Wage Inequality in Croatia, 1970-2008: Assessing the Labor Market Impact of Economic Transformation

Wage Differentials and Wage Inequality in Croatia, 1970-2008: Assessing the Labor Market Impact of Economic Transformation

by Saul D. Hoffman, Ivo Bićanić, and Oriana Vukoja

ABSTRACT

In this paper, we examine wage inequality and wage differentials in Croatia from 1970 to 2008. We focus especially on changing income inequality related to educational and vocational attainment, changing income inequality within those groups, and how these two components of inequality were affected by the economic transformation from Socialism to capitalism. We find that income inequality between groups was relatively stable, while overall inequality trended upward in the post-transformation period. This finding is consistent with a growing importance of individual rather than group productivity in labor market compensation, a change broadly consistent with the economic transformation of the Croatian labor market.

JEL Codes: J3, P2, P23, E34 
Keywords: Croatia, Economics of Transition, Inequality, Gini coefficient

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