Income attainment in Post-Communist societies

The 'velvet' revolutions and the fall of the Berlin Wall resulted in the end of the Communist rule over Central and Eastern Europe (CEE). The transformations that accompanied this turnover provide a unique opportunity to investigate changes in the stratification order during times of institutional change. An important aspect of these transformations is the introduction of market mechanisms in the command economies. In this study the extent to which these market reforms have generated greater inequality and the extent to which effects of income determinants have changed are investigated. This study reports the results from a meta-analysis, which point to three main issues to which the current literature has not yet provided satisfactory answers: (1) To what extent was the market transformation process uniform across transitional countries, having a similar effect on stratification outcomes? (2) What happened to the income advantages of the members of the Communist Party? (3) Did the market transformation process create difficulties for the unemployed, retired, and disabled, in particular? These questions are answered using standardized cross-sectional surveys of the Czech Republic, Hungary, Poland, Russia, and Slovakia. (1) The extent to which trends in the effects of income determinants are similar across post-Communist societies is tested. The results from modified weighted least squares regression analyses show an increasing trend in the effect of years of education on (ln) personal income for all five CEE countries, supporting the MTT. Income effects of years of work experience, self-employment, private sector employment, and gender do not show increasing trends for all five CEE countries, contradicting the MTT. The different trends are related to Stark's typology of privatization strategies. To some extent, the empirical trends in effects of income determinants are consistent with Stark's typology, providing support for the theoretical notion of path dependent transformation processes. (2) Four hypotheses are tested about the changing income advantages of CP members derived from the contradictory Elite Circulation Thesis and the Elite Reproduction Thesis. The results show that CP members earn more than non-CP members do before and during the transformation process. Furthermore, the income advantages of CP members are most persistent in the Czech Republic and Russia while they get smaller in Slovakia and Hungary. Relating these results to Walder's classification of elite opportunity and Stark's typology of privatization strategies suggests that the remaining income advantages of CP members may partly be explained by transformation specific differences between CEE countries. (3) The impact of the market transformation process on the income position of social benefit holders is addressed. The results from several OLS regression models show that social benefit holders with few resources have less income than the employed with few resources. Education, household size, and urban residence have a positive effect on their income. Only limited support is found for the notion that social benefit holders especially experienced hard times during the early years of market transformation. During these years only household size and marital status have a positive effect on their income. Later on in the market transformation process, only urban residence has a positive effect on their income

Income Attainment During Transformation Processes. A Meta-Analysis of the Market Transition Theory.

The changing communist regime in China and the ‘velvet’ revolutions in Central and Eastern Europe (CEE) have provided an opportunity to investigate trends in income attainment during processes of transformation. Nee (1989) formulated the market transition theory, which indicates the main determinants of changing income attainment during the transformation process from a state-regulated, centrally planned economy to a market economy. An extensive literature, with studies testing the predictions derived from this theory on China and CEE, has emerged since this seminal article by Nee. However, there are theoretical and empirical inconsistencies in these studies. This calls for a systematic comparison of the empirical results and evaluation of Nee’s theory. This paper reports a meta-analysis performed on 64 publications to determine to what extent there is consistent empirical evidence for the hypothesized relationship between marketization processes and the changing effect of income determinants. We found that political capital remains important during transformation in urban China, the gender gap in income increases in urban China as well as in CEE, and although human capital and market-related resources are important determinants of income, it is not evident that their importance increases during the transformation process. We find some support in favor of the market transition theory, but it needs revision and elaboration

Losers in market transition: the unemployed, the retired, and the disabled

The market transition debate is almost primarily focused on the ‘winners’ and on what happens to the formerly privileged during the market transformation process in post- Communist societies. This study emphasizes the impact of the market transformation process on the income of those who have few resources and are eligible for social benefits. Are these people the ‘real’ losers of the market transformation process in post-Communist societies? OLS regression models are estimated based on 50 standardized cross-sectional surveys on the Czech Republic, Hungary, Poland, Russia, and Slovakia covering a period from 1991 to 2002. The analyses show that the unemployed have the lowest income and that the income of retirement and disability pensioners is relatively protected, especially during the early transformation years. Education seems to be a helpful resource for the unemployed and pensioners, but not specifically during the turbulent early transformation years. Results on the income effect of urban residence are inconclusive.

Income advantages of communist party members before and during the transformation process

In this study contradictory hypotheses are tested about the changing income advantages of Communist Party (CP) members derived from the Elite Circulation Thesis and the Elite Reproduction Thesis, using cross-sectional datasets from before and during the transformation process. CP members are matched with non-CP members on several important income determinants such as human capital, occupational class, market capital, age, gender, and marital status. Independent-samples t-tests, on differences in mean personal (ln)income reveal that CP members earn more than non-CP members do before and during the transformation process. An ANOVA shows that the income advantages of CP members are most persistent in the Czech Republic and Russia while they get smaller in Slovakia and Hungary. Comparing the four countries suggests that the remaining income advantages of CP members may partly be explained by transformation specific differences between countries