1. Women in Transition: changes in gender wage differentials in Eastern Europe and the Former Soviet Union
Elizabeth Brainerd, Source: Industrial and Labor Relations Review, vol.54, n.1
Political Economy of Transition – 2016/2017
Mariateresa Amatulli
Nadia Saltarelli

2. The Questions: the purpose of the study
Have women borne an equal share of the burden of economic restructuring, or shared an equal measure of the gains from the transition to a market economy? Is the introduction of market reforms in formerly socialist countries a gender neutral policy?

3. The structure of the analysis
1. Labor Market Institutions and Female Labor Market Performance under Socialism 2. The Economic Status of Women under Socialism 3. Market Reforms and Changing Labor Market Institutions in the Early 1990s 4. Data Analysis and Empirical results (from household surveys) 5. Explaining Changes in Relative Wages: The Role of the Wage Structure and Labor Market Institutions 6. Decomposing changes in female/male wage differential Explaining changes in female employment and labor force participation 7. CONCLUSIONS

4. 1. Labor Market Institutions and Female Labor Market Performance under Socialism
Centralized bureau setting wages
Compressed wage scale
Trade union basically irrelevant in wage determination (no bargaining, only channel for ideology transmission)
Unemployment not recognised
Limited mobility of workers: shortages and passport systems
Excess demand for labor due to SOFT BUDGET CONSTRAINT
Low wage growth, high compression of the wage scale toward workers (proportion of managers to workers wage 5:1, 20:1 in USA)
Siccome in realtà si parla delle donne al punto 2, che ne dici se nel titolo eliminiamo «---and labor market performance»
1. Labor Market Institutions and Female Labor Market Performance under Socialism

5. 2. The Economic Status of Women under Socialism
1930s (Russia), 1940s (Eastern Europe): introduction of central planning economy increases by 80% women participation in the labor force
Explicit right given to women: equal pay for equal work (1922 Soviet Labor Code and 1936 Constitution)
Day care center providing for assistance, giving women’s possibility to reallocate time on workplace BUT women charged with the bulk of houseworks (70/80% in general)
Women working to supplement income of the family
Generous maternity benefits (in most countries 3 years per child)
Occupation skewed toward healt, education, retail, trade sectors (also due to more flexible working schedules and part time occupation availability)
2. The Economic Status of Women under Socialism

6. 2. The Economic Status of Women under Socialism
Measuring wage differentials
Female/male wage ratio (in percentage)
Quindi qui spieghi il fatto che quando la wage distribution è ampia c’è maggiore corrispondenza tra salario e produttività, mentre quando la wage distribution è compressa uno con la produttività di un bradipo si trova con salario più alto di quello che gli spetterebbe, giusto?
2. The Economic Status of Women under Socialism

7. B) Median position of women in the male wage distribution
B) Median position of women in the male wage distribution. The indicator reflects both market skills and discrimination, and it’s less sensitive to the expansion or compression of the wage distribution. If wages are intended to represent a measure of skill, men and woman in the same percentile are viewed as comparable workers by employers. Climbing up in a higher ranking, for women, equals to an improvement in their measured and unmeasured skills, as considered useful by employers, and thus, substantially to a decline in gender discrimination.
2. The Economic Status of Women under Socialism

8. 3. Market Reforms and Changing Labor Market Institutions in the Early 1990s
Typical reforms: wage and price liberalization, trade liberalization, privatization of State-Owned Enterprises, tax and legal reforms
Aftermath: substantial declines in GDP and real wages, high inflation and high rates of unemployment (more in Ukraine and Russia)
NEW WAGE SETTING SYSTEM INTRODUCTION:
A) RUSSIA: Introduction of decentralized, plant level wage setting, with informal bargaining and excess wage tax imposed by government; no union influence B) EASTERN EUROPE: collective bargaining, mainly tripartite commissions at national level
C) UKRAINE: formal wage scale still existing, but with weak enforcement
D) BULGARIA: decentralized wage setting system, with enterprise level collective bargaining (failing of agreements on floor al ceiling wages, respectively in 1992/1991)
E) CZECHOSLOVAKIA, POLAND, SLOVENIA: abandoned the excess wage tax in 1991/1992
No Union influence, statistically non relevant
Minimum wage fluctuations (Ukraine and Russia more marked) affecting more women’s salaries than men’s
Io qui sottolineerei meglio la variazione del minimum wage (che resta alto in Eastern Europe e diminuisce moltissimo in Soviet Union e Ukraine), perché ne parla anche nelle conclusioni.
3. Market Reforms and Changing Labor Market Institutions in the Early 1990s

9. 4. The Surveys and the sample
Household surveys comparing situation ex ante and ex post implementation of market reforms
1-2 years span - thus catching the effect of the quickest reforms -
Including agricultural sector and self employed
Eliminating the top and bottom 1% wages
Female/Male Monthly wages unadjusted per hour worked (predictable downward bias) and differences in logarithmic scale
4. Data Analysis and Empirical results

10. 4. The empirical results Mixed evidence:
Eastern Europe: lessening of the gender wage differential.
Russia and Ukraine: relative wages have fallen = higher inequality
4. Data Analysis and Empirical results

11. 5. Explaining Changes in Relative Wages: The Role of the Wage Structure and Labor Market Institutions
The factors that can influence the gender gap can be conceptually divided in two areas:
those relative to changes in the overall wage structure
Those who are gender-specific
4. Data Analysis and Empirical results

12. The widening of the wage structure is generally responsible for the deterioration of female relative wages. BUT It was more dramatic in the Soviet Union and in Ukraine, where it concerned the lower part of the distribution, while in Eastern Europe it affected the upper part and was offset by favourable changes in gender-specific factors.
5. Explaining Changes in Relative Wages: The Role of the Wage Structure and Labor Market Institutions

13. Why has the wage structure widened so much more in Russia and Ukraine?
This difference is due at least partly to: 1. Different labour market istitutions 2. Differing initial levels of macroeconomic disequilibrium 3. Change in returns to labor market skills
5. Explaining Changes in Relative Wages: The Role of the Wage Structure and Labor Market Institutions

14. 7. Decomposing changes in female/male wage differential
Blau and Kahn decomposition tecnicque describes the gender wage gap as the observed differences in the skills of males and females weighted by the return received by man on that skills. The standardized residuals in the regression catch the effect of the residual gender inequality. The decomposition highlights 3 terms affecting gender wage differential.
1. Observed X’s Effect: changes in male/female wage differential resulting from changes in the observed labor market skills (like education and work experience)
2. Observed Prices Effect: the effect exerted by the change in the prices that labor market attaches to observed male skills
3. Gap Effect: contribution of changes in the relative position of women in the male residual wage distribution
+ 4. (Residual) Unobserved Prices: changes in the gender gap attributable to the widening of the distribution of male wage residuals, holding constant the mean female ranking in the male residual distribution
6. Decomposing changes in female/male wage differential

15. 7.Results
NOTE: a positive number represents a factor widening the gender wage differential. Please remember that wages are calculated on a logarithmic scale.
6. Decomposing changes in female/male wage differential

16. Soviet Union/ Ukraine = changes in the wage structure alone account for more than 100% of the decline of female relative wages.
Eastern Europe = the negative effect of the widening of the wage structure was offset by wojen moving up in the residual male wage distribution = discrimination has decreased or women’s unobserved skills have improved relative to men’s.
6. Decomposing changes in female/male wage differential

17. 7. The changes in female employment and labor force participation
Different shifts in the occupational and industrial distribution of employment between men and women
The shifts in the demand for labor in different sectors HAS had an effect on the gender gap differential.
In Russia, the net supply of female workers rose. Consistently, the female relative wages fell, increasing the gender gap differential.
In Hungary and Poland, the net supply of female workers fell. Consistently the female relative wage rose. The magnitude of this effect, however is contained. Data provided by ILO (1998:473-80) show that male and female unemployment rates were roughly equal in Ukraine, Russia, Bulgaria and Slovack Republic; female unemployment rates EXCEEDED male rates in Poland and Czech Republic, and lower than male ones in Hungary and Slovania
6. Explicating the changes in female employment and labor force participation

18. 2. Changes in the labor force participation rates between men and women Low skilled women may drop out of the labor force disproportionally during the transition, which would artificially increase male relative wages. BUT data provided by ILO (1998:473-80) show that male and female unemployment rates were roughly equal in Ukraine, Russia, Bulgaria and Slovack Republic; female unemployment rates EXCEEDED male rates in Poland and Czech Republic, and lower than male ones in Hungary and Slovania 3. Change in labor market discrimination against women. An hypothesis: persistent or declining labor market discrimination is related to the competitiveness of product markets. So, the higher competition faced by Eastern European countries (more open to international trade) may have reduced discrimination against woman consistently with the neoclassical view of discrimination as being costly (Becker 1957). It is true that there is some evidence of a correlation between the gender gap and the extent of liberalization, BUT these simple correlation cannot prove a casual relation.
6. Explicating the changes in female employment and labor force participation

19. 8. CONCLUSIONS
The introduction of market reforms has not been a gender neutral policy and the reforms have had an impact on women, who gained substantially to man in Eastern Europe.
The depression in relative wages due to the increase in inequality (decompression of the wage scale) was offset by the amelioration in gender specific factors
The abolition of queues and rationing, and the increase in the avalaibility of goods freed time for women. Time to devote to working hours.
An increase in the expenses for education and health is a likely consequence of the shifting of the wage scale toward women. The long term effect is the promotion of growth.
6. Explicating the changes in female employment and labor force participation