Does Market Liberalization Reduce Gender Discrimination? Econometric Evidence from Hungary, 1986-98

An alleged achievement of socialism was gender equality in the labour market. Has its collapse shattered this accomplishment? The theoretical literature and attendant empirical evidence are inconclusive. Using data for 2.9 million wage earners in Hungary we find that the male/female difference in log wages declined from 0.31 to 0.19 between 1986 and 1998 and that this is largely explained by a matching decline in ‘Oaxaca's discrimination,’ suggesting extraordinary improvement of women’s relative situation. Further, we find that variation over time in the wage gaps is associated with public and large firms having progressively smaller gaps than their counterparts.