Returns to the Market: Valuing Human Capital in the Post-Transition Czech and Slovak Republics

Abstract

An employer-based sample of over 660,000 Czech and 260,000 Slovak workers is used to estimate the benefits of education in 1995 to 1997. By 1997 education of all types had become substantially more highly rewarded in both countries than it was either under communism or in the early years of the transition. Education’s value began increasing earlier and reached a higher level in the Czech Republic than in Slovakia. Findings suggest that returns to unmeasured human capital or productive characteristics have also increased. Only eight years after the fall of communism, returns to human capital were on average as large or larger than in comparable, developed market economies.