Changes in Ethnic Earnings Differentials in Bulgaria: From Planning to Market

This paper analyzes the changes occurring to the relative earnings of the ethnic Turkish workers in Bulgaria at the start (early 1990s) and in the nal years of transition (early 2000s) compared to pre-transitional levels (mid 1980s). The ethnic earnings gap increased immediately after the change of the regime but was similar in size at the start and in the nal years of transition. However, changes in the ethnic earnings differentials are different for men and women. In the case of men, the ethnic gap steadily increases during transition, while for women it rises at the start of the transition but declines in the nal years. The analysis identies different sources of the changes in the gap such as changes in the labor market characteristics (group-specic factors) and changes in the wage structure. The evidence presented in the paper shows that Turkish men in transition experienced a decline in their relative earnings mainly due to the widening of the wage structure which worked against them. Turkish working women improved their relative standing compared to their Bulgarian counterparts in terms of observed and mainly unobserved characteristics. These changes were only partially due to a selection in labor force participation