IMF Working Papers

From the perspective of market economies, central planning produced distinct distortions in the wage structures of socialist countries. This paper examines the extent to which wage structures have adjusted to remove such distortions during the economic transition using micro-data from the Czech Republic. There is strong evidence that Czech wage structures are moving toward patterns in market economies, and the change is led by developments in the private sector and retarded by the sluggish response in state enterprises. At the same time, the establishment of collective bargaining does not appear to be introducing countervailing distortions into Czech wage structures.