Wages distribution in Poland: The roles of privatization and international trade, 1992-96

This paper reports an investigation into the changes in the wage distribution in Poland in the first half of the 1990s. We concentrate on the effects of privatization and international trade. We show that the tendency towards increased dispersion in wages halted between 1992 and 1996, despite a rapid expansion in private-sector work. We also show that, during the same period, private-sector workers typically earned less than their state-sector counterparts on an hourly basis, and this gap widened. However, if one controls for experience, tenure and size of workplace, then there existed a small positive private-sector premium. On the effects of international trade, we find suggestive circumstantial evidence that the increase in trade with Western Europe raised wages and employment in manufacturing.