Production Networks and Varieties of Institutional Change: Earnings Inequality in Post-Socialism Revisited.

During this talk, we synthesize three common themes in the post-socialist development literature—Globalization, Privatization and Europeanization—to motivate a reexamination of earnings inequality during post-socialist transition. First, we argue the integration of transition countries into globalized production networks (GPNs) increases inequality independently of foreign direct investment (FDI). Second we argue that EU integration hastened the transition away from Soviet era labor market practices among acceding transition countries, and that this should exacerbate the impacts of private markets and world-economic integration on inequality. We then present the resutls of an analyses of earnings inequality among 18 transition countries from 1990 to 2009, which suggest that both globalization and privatization increase inequality, but have stronger effects in EU member transition countries. Using a counterfactual analysis, we also show that, holding observed levels of private market expansion and world economic integration constant, inequality would have increased less dramatically in the absence of EU integration.