Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia

33 Pages Posted: 7 Jul 2004

See all articles by Belton M. Fleisher

Belton M. Fleisher

Ohio State University (OSU) - Economics; IZA Institute of Labor Economics

Klara Sabirianova Peter

University of North Carolina - Chapel Hill; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Xiaojun Wang

University of Hawaii - Department of Economics

Date Written: June 2004

Abstract

We explore the pace of increase in returns to schooling during the transition from planning to market over time across a number of Central and Eastern European countries, Russia, and China. We use metadata from 33 studies of 10 transition economies covering a period from 1975 through 2002. Our empirical model is an attempt to account for crosssection and over-time variation in rates of return as a function of the timing, speed, and volatility of reform processes as well as estimation methods used and sample characteristics. Our principal aim is to investigate the relative strength of two hypotheses: (1) the speed of economic transformation from planning to market represent the relaxation of legal, regulatory, and institutional constraints on wage-setting behavior, leading directly to adjustment returns to schooling to market rates; 2) the rapid increase in returns to schooling during the early reform period reflects the ability of highly-educated individuals to respond to changing opportunities in a disequilibrium situation. We find that both the speed of reforms and the degree of economic disequilibrium as reflected in macroeconomic volatility help to explain cross-country differences in the time paths of the returns to schooling. We report the systematic effects of sample characteristics, estimation methods, and model specifications on estimated returns to schooling.

Keywords: returns to schooling, skills, speed of reforms, meta-analysis, transition, Central and Eastern Europe, China, Russia

JEL Classification: J31, J24, O15, P2, P3, P5

Suggested Citation

Fleisher, Belton M. and Sabirianova Peter, Klara and Wang, Xiaojun, Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia (June 2004). Available at SSRN: https://ssrn.com/abstract=562448 or http://dx.doi.org/10.2139/ssrn.562448

Belton M. Fleisher (Contact Author)

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States
614-292-6429 (Phone)
614-292-3906 (Fax)

HOME PAGE: http://economics.sbs.ohio-state.edu/Fleisher/

IZA Institute of Labor Economics

Klara Sabirianova Peter

University of North Carolina - Chapel Hill ( email )

Chapel Hill, NC 27599
United States

HOME PAGE: http://www.unc.edu/~kpeter

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Xiaojun Wang

University of Hawaii - Department of Economics ( email )

Honolulu, HI 96822
United States
808-956-7721 (Phone)
808-956-4347 (Fax)

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