Age/Earnings Profiles in Transition Economies: The Estonian Case
ABSTRACT This article examines Estonian age/earnings profiles using 1995 and 1997 Estonian Labour Force Survey data. The results indicate that the overall profile for males is quite different from that of an established market economy. However, the shape of the profile depends on whether one works in the private or public sector. Using regression analysis to decompose wages indicates that conventional human capital theory does not adequately explain the considerable difference between profiles in the Estonian public and private sectors. However, human capital theory provides a better explanation of relative wages in 1997 than in 1994—perhaps indicating a continued adjustment to market processes.