The wage effects of ethnicity in Estonia

Using the retrospective (1989-94) Estonian Labour Force Survey (ELFS), we attempt to examine potential wage discrimination based on ethnicity (Estonian and Russian). Using standard wage decomposition methodology, we look at male full-time workers in the years 1989 and 1994. There is no evidence of discrimination against either ethnic group in 1989. However, the available data provide substantial evidence of discrimination against ethnic Russians in 1994. The evidence also suggests that Estonian language ability does not significantly affect wages. Surprisingly, Estonian-born ethnic Russians appear to fare worse than immigrant ethnic Russians in terms of wages.
JEL classification: J71, P23.