Structural changes and wage inequality in the Bulgarian economy

• Main Authors: Svilena MIHAYLOVA, Silviya BRATOEVA-MANOLEVA
• Format: Article
• Language: English
• Published: Alexandru Ioan Cuza University of Iasi 2018-11-01
• Series: Eastern Journal of European Studies
• Subjects: wage inequality; structural change; deindustrialization
• Online Access: http://ejes.uaic.ro/articles/EJES2018_0902_MIH.pdf

In light of the growing concern about the economic and social costs of high income inequality, the paper analyses wage inequality in Bulgaria in the context of the structural changes taking place in the economy. For this purpose, we first estimate wage inequality in the country over the period 2000-2016 by using the inequality decomposition method proposed by Pyatt, Chen and Fei (1980). Then, we analyse the differences in wages depending on economic activity, region and educational attainment. The results show that wages are the most significant source of income inequality in Bulgaria and that their contribution to overall inequality increases significantly during the analysed period. Furthermore, the growing role of the service sector at the expense of agriculture and industry is associated with increasing wage differences across economic sectors, regions and levels of education, which together shape the magnitude and the dynamics of wage inequality.