Gender Pay Gap in Poland

In this paper we examine the gender pay gap in Poland over 1987–1996, i.e., shortly before and during the transition to market economy. The principle source of data used throughout the paper is the Household Budget Survey conducted by the Polish Central Statistical Office. The study documents three major results. First, the transition to market economy in Poland favored women substantially in terms of relative earnings differentials. The gender pay gap decreased by 10.2 log% points and the position of mean female in male wage distribution went up by 9.9 percentiles over 1987–1996. By 1995, the values of these measures reached the level observed in industrial economies such as the U.K., Austria, Italy or Australia. Second, rising relative skills of women and rising returns to skills explain about half of the fall in the gender pay gap over 1987–1996. Third, the pay gap did not follow a smooth adjustment process. 1989, the year of the first democratic parliamentary elections, which resulted in forming the first non-communist government, saw the most spectacular change, although actual market reforms began one year after. The changes in the early phase of the transition were mostly driven by sudden shifts in relative wages and employment across industries. Afterwards, the pay gap measures stabilized, partly because rising overall wage inequalities offset the advantages of females due to observed skills.