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

Abstract

This research examines how the earnings structure in the Czech Republic and Slovakia changed after the collapse of those countries' Communist governments. Tests of four similar micro-data sets show that returns to education rose significantly with the transition to non-Communist governments. For example, returns to education rose from 2.4% to 5.2% for Czech men between 1984 and 1993. Though women had, in general, higher returns to education than men did, returns for men increased more with the regime change. Among both sexes, those with academic secondary education experienced particularly large earnings increases. Returns to experience, on the other hand, fell. Earnings structure changes appear to have been larger in the Czech Republic than in Slovakia, probably because transition occurred more rapidly and deeply in the former.