Wage Determination and Gender Discrimination in a Transition Economy: The Case of Romania

Abstract:     
Romania's labor code stipulates equal pay for equal work. In reality gender discrimination is found in both urban and rural labor markets. While the observed bias in urban areas is comparable with that found in other Western countries, in rural settings gender discrimination is much greater than in the West.

Paternostro and Sahn analyze wage determination and gender discrimination in Romania using the 1994 Romanian Household Survey. They estimate wages for men and women in urban and rural areas using a Heckman selection model. They analyze gender discrimination in offered wages, to address the methodological shortcomings found in the literature.

Increasing returns to education and experience are consistently significant for both men and women in urban and rural areas. Returns to education are greater in rural than in urban areas, especially for women.
Labor markets are segmented regionally, probably as a result of the country's economic history, especially the spatial allocation of resources under a centrally planned economy. Only with economic liberalization has the specialization of specific regions translated into differences in regional performance and hence local economic differences.
They found discrimination against women in both urban and rural labor markets, especially at low levels of education. The observed bias against women in urban areas is comparable to that found in other Western countries - but in the region`s rural settings the bias is much greater than in the West. With the adjustment to market forces, as less-skilled workers face increasing difficulties in the region, women's relative wages may be expected to decline further.

Discrepancy in pay also directly affects the level of pensions, unemployment benefits, and other means-tested benefits to workers, contributing to pauperization.

This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to study changes in welfare and inequality during the transition. The authors may be contacted at [e-mail] or [e-mail].

Number of Pages in PDF File: 31

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