Market Transformation and the Opportunity Structure for Gender Inequality: A Cohort Analysis Using Linked Employer-Employee Data from Slovenia

Despite considerable scholarly and public interest in the effects of market transition among post-Soviet countries, our knowledge regarding how market reforms have affected gender inequality remains limited. Although many formerly socialist states in Central and Eastern Europe (CEE) had official gender egalitarian policies, gender wage inequality under socialism was large and persistent, and often comparable to levels among developed Western societies (Rosenfeld and Trappe 2002). While scholars feared that women would bear the disproportionate costs of market transition, women’s socioeconomic situation did not drastically worsen after 1989 (van der Lippe and Fodor 1998; Giddens 2002). What has emerged, however, is that gender inequality among formerly CEE countries differs substantially from Western economies. Whereas within-job gender wage inequality among developed societies like the U.S. is negligible relative to sorting between occupations and establishments (Petersen and Morgan 1995), within-job inequality is significant among CEE societies (Krizkova et al. 2010; Sørenson and Trappe 1995).

Particularly structural conditions play a decisive role in gender pay inequality. Petersen and Saporta (2004) contend structural factors determine the “opportunity structure” for gender inequality and discrimination. In the context of market transition, these structural opportunities are likely to vary significantly depending on one’s birth cohort. As societies transition from a centrally planned to a market economy, increasing social inequality (Bandelj and Mahutga 2010), this alters the opportunities and constraints available to an entire society, which we define broadly as the “opportunity structure” to encompass both normative and structural (i.e. supply- and demand-side) factors. Yet these effects depend on individuals’ social or cohort position, providing cohorts a unique character and outlook reflecting their historical experiences (Ryder 1965). Due to the gradual and path dependent nature of transition, the changing opportunity structure of marketization should have a relatively small impact on gender inequality among individuals in middle-aged and older cohorts. By contrast, given their greater exposure to mechanisms of labor market inequality, younger cohorts should be more harmed by transition. Thus, the period in which a woman finishes schooling and enters the labor market may play an important role in shaping her labor market prospects vis-à-vis her male counterpart.

In this paper, we make two primary contributions. First, by adopting a life course approach, we shed new light on how market transformation affects gender inequality in cohort-specific ways. Second, this cohort approach furthers our understanding of the structure of gender inequality in organizations by investigating how market transformation alters the feasibility and success of various forms of gender inequality (i.e. establishment-, occupation-, and job-level inequality) using data from Slovenia. Our analyses therefore also extend Petersen and Saporta’s (2004) notion of the opportunity structure for discrimination, generalizing this idea to the organization of markets more broadly by examining how marketization changes the ways that gender inequality is organized as societies transition.

We use matched longitudinal registry data from Slovenia between the years of 1993 and 2007 restricted to workers in mixed-sex workplace units. These data are particularly unique as they contain information on the entire Slovenian working population and thanks to their large temporal period, which importantly covers the early years of market transition and up to the beginning of the global financial crisis. Unfortunately, these data do not differentiate between regular and overtime pay nor do they include information on the number of hours individuals work. However, overtime and part-time work remain relatively uncommon in Slovenia; we therefore believe this limitation is relatively unproblematic. The dependent variable is thus inequality in total (log) pay.

We assess the impact of transition on gender inequality across cohorts by comparing the female wage penalty (coded as a dummy variable) separately by cohort and year while controlling for experience (measured continuously in years), experience squared, and education (coded according to 14 dummy variable categories). Labor force cohorts are differentiated by 10-year birth intervals spanning individuals born between 1934 and 1983, yielding five cohorts in total. We estimate yearly cohort-specific gender inequality effects at the population level using linear regression. We then apply these same models to examine gender inequality at the firm-, occupation-, and occupation-firm-level using a series of fixed effects for each respective level.

We begin by contextualizing changes in aggregate population-level gender inequality throughout transition. Between the early 1990s and late 2000s, aggregate population gender inequality increased nearly two-and-a-half times, with women earning 11 percent less than men at the beginning of transition and 27 percent less than men by the late 2000s. Much of this rise occurred in the initial years of transformation, though the gender gap also rose steeply in the 2000s. Decomposing these aggregate changes into cohort-specific effects transition accompanied larger and sustained increases in gender inequality the younger the cohort. By comparison, the gender gap remained stable among the two oldest cohorts. Furthermore, aggregate changes in inequality appears rooted in cohort-specific effects. Nearly all of the rise in aggregate population gender inequality in the early years of transition was concentrated among the second-youngest cohort, but also somewhat among the middle-cohort amidst the initial proliferation of newly marketized social arrangements. Similarly, the rise in the aggregate population gender gap in the 2000s appears to have been driven primarily by growing inequality among the youngest cohort. Comparing these effects at the establishment-, occupation-, and job-level we likewise observe pronounced rises in inequality at all levels among the two youngest cohorts and modest growth in the middle cohort. Consequently, market transition accompanied a rise in gender inequality at all three organizational levels for more recent labor force cohorts.

This paper applies a life course, and particularly a cohort-based, approach to shed new light on how market transformation affects gender inequality. Using matched registry data from Slovenia we find profound differences across cohorts, with marketization more strongly increasing gender inequality among individuals in younger compared to older cohorts. Previous transition studies utilizing aggregate measures of gender inequality have therefore neglected important cohort-based differences in inequality. We also find that male-female earnings differentials grew at the firm-, occupation-, and job-level throughout transformation, suggesting economic transition altered the opportunity structure for gender inequality.