How has the transition to a market economy affected the relationship between wages and productivity across different types of workers and firms? This paper examines this question using unusually rich matched employer-employee data from Slovenia over the 1992-2001 period. The findings include strong evidence that 1.) state-owned firms overpaid their employees at the onset of transition, a finding consistent with theoretical predictions on self-managed firms, 2.) older workers have become relatively less productive, indicating a difficulty in acquiring the skills demanded in a market economy, 3.) the relative wages of workers across demographic characteristics such as gender, age and education generally reflect their relative marginal productivity differentials.
Vodopivec, Matija, "Wage and Productivity Differentials across Privatized, State-Owned and De Novo Firms: Matched Employer-Employee Evidence from Slovenia " (2005). Award Winning Economics Papers. Paper 2.
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