Privatization and Income Change in the Czech Republic: Tensions in the Lives of Rural and Urban Employed Men1

Abstract

In the Czech Republic, the privatization of property and the emergence of a market economy after the fall of communism created a unique “experiment in nature.” Before 1989, there was virtually no private sector and salary differences between rural and urban workers were relatively small. By the end of 1993, a substantial portion of both the rural and urban labor force had moved into the private sector. Using data from a sample of 443 men who were employed in 1989 and at the beginning of 1994, we found that urban workers who moved to the private sector had obtained larger salary increases and felt less economic pressure than rural workers and those who stayed in the public sector. Economic pressure, in turn, mediated between salary change and subsequent reports of health problems and psychological distress. Respondents also reported that the private sector offered them greater job flexibility. Job flexibility may reduce depressive symptoms by improving the match of workers' skills with the demands of the job, but private sector jobs may also be a source of uncertainty. Tensions associated with increasing rural disadvantage and with moving to the private sector are discussed.