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© 1995 International Bank for Reconstruction and Development / The World Bank

research-article

Winners and Losers in Transition: Returns to Education, Experience, and Gender in Slovenia

Peter F. Orazem and Milan Vodopivec

Peter F. Orazem is in the Department of Economics at Iowa State University, and Milan Vodopivec is in the Policy Research Department at the World Bank. The authors are grateful to the Statistical Office, the Pension and Invalid Fund, and the Employment Office of Slovenia for providing the data used in this analysis; to Debabrata Das and Ruth Wu for careful research assistance; and to seminar participants at the World Bank and three anonymous referees for useful comments.

This article, using an unusually rich data set on Slovenian workers over the 1987–91 period, explores changes in the structure of wages and employment produced by transition to a market economy. Employment and real wages fell dramatically over the period, but the losses were borne disproportionately by the least skilled. Across all sectors of the economy, relative wages and employment rose for the most-educated workers. Women gained in comparison with men, primarily because women occupied sectors less adversely affected by the transition. Pension policies, which encouraged retirement, are shown to have drastically reduced employment of experienced workers and helped contribute to rising returns to skill. Increases in returns to education and experience contributed to rising wage inequality, but the variance of wages increased for workers with identical skills as well.


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