The Distribution of Wages in Transition Countries

33 Pages Posted: 23 Apr 2001

See all articles by Andrew Newell

Andrew Newell

University of Sussex - School of Social Sciences & Cultural Studies; IZA Institute of Labor Economics

Date Written: March 2001


This paper seeks to document and analyze changes in the distribution of wages and employment in the transition countries since the collapse of communism. Most countries experienced an increase in wage inequality during the initial shock of the transition. Proximate causes of this increase seem to be sectoral shifts in employment and increasing inter-industry wage differentials.

In Eastern Europe, where economic growth has restarted, there have been further increases in income inequality. These changes are arguably the best guide to future trends in the wage distribution. Taking the case of Poland, rising inequality appears to be entirely accounted for by an increased incidence of workless households. This rise in workless households derives from two phenomena: rising participation in post-compulsory education and earlier retirement. Also in Poland, though there is no change in hourly wage inequality, structural change has had clear impacts of the distribution of wages with increased wage premia to education, to growing sectors and geographically advantaged regions in the economy and to senior occupations.

Keywords: Wage Distribution, Inequality, Transition, Structural Change

JEL Classification: J31, P2

Suggested Citation

Newell, Andrew T., The Distribution of Wages in Transition Countries (March 2001). IZA Discussion Paper No. 267. Available at SSRN:

Andrew T. Newell (Contact Author)

University of Sussex - School of Social Sciences & Cultural Studies ( email )

Falmer, Brightonm BN1 9QN
United Kingdom
+44 (0)1273 606755 (Phone)
+44 (0)1273 673563 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

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