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Wage Gap in an Ethnically Segmented Labor Market: The Role of Cognitive Skills

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  • Svetlana Ridala
  • Ott Toomet

Abstract

We analyzed the ethnic wage gap in Estonia that hosts a large Russian-speaking minority population. We used the Oaxaca-Blinder decomposition to test whether the observed wage gap among the working population is related to commonly unobserved skills. Data from the Estonian Labor Force Survey and the Programme for the International Assessment of Adult Competencies (PIAAC) have been used. We find that the three PIAAC skills combination lowered the estimated unexplained wage differential by approximately 20%. We conclude that the unexplained wage gap is most likely related to entry barriers, combined with low-level segregation and segregated social networks.

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  • Svetlana Ridala & Ott Toomet, 2019. "Wage Gap in an Ethnically Segmented Labor Market: The Role of Cognitive Skills," Eastern European Economics, Taylor & Francis Journals, vol. 57(1), pages 20-30, January.
    • Handle: RePEc:mes:eaeuec:v:57:y:2019:i:1:p:20-30
    DOI: 10.1080/00128775.2018.1524713
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    Cited by:

    1. Wang, Jun & Liao, Chengjuan & Wan, Xuan & Song, Hui, 2021. "Skill Formation, Employment Discrimination, and Wage Inequality: Evidence from the People’s Republic of China," ADBI Working Papers 1283, Asian Development Bank Institute.

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