DP5904 The Russian-Ukrainian Earnings Divide

Author(s): Amelie Constant, Martin Kahanec, Klaus F Zimmermann
Publication Date: October 2006
Keyword(s): discrimination, earnings differences, ethnic premium, ethnicity, transitional labour markets
JEL(s): J15, J70, J82
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=5904

Ethnic differences are often considered to be powerful sources of diverse economic behaviour. In this paper, we investigate whether and how ethnicity affects Ukrainian labour market outcomes. Using micro data from the Ukrainian Longitudinal Monitoring Survey (ULMS) and Oaxaca-Blinder decomposition of earnings, we find a persistent and rising labour market divide between ethnic Russians and Ukrainians throughout Ukraine’s transition era. We establish that language rather than nationality is the key factor behind this ethnic premium favouring Russians. Our findings further document that this premium is larger among males than among females.