Income attainment in Post-Communist societies

Abstract

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.