The Russian-Ukrainian Earnings Divide, forthcoming in Economics of Transition, (accepted 2011). (also IZA Discussion Paper 2330, CEPR DP 5904 and DIW Berlin DP 627; 2006)

Ethnic differences are often considered to be powerful sources of diverse economic behavior. In this paper, we investigate whether and how ethnicity affects Ukrainian labor market outcomes. Using micro data from the Ukrainian Longitudinal Monitoring Survey (ULMS) and Oaxaca-Blinder decomposition of earnings, we find a persistent and rising labor market divide between ethnic Russians and Ukrainians throughout Ukraine’s tran­sition era. We establish that language rather than nationality is the key factor behind this ethnic premium favoring Russians. Our findings further document that this premium is larger among males than among females.

Also IZA Discussion Paper 2330, CEPR DP 5904 and DIW Berlin DP 627; 2006