International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Determinants of Earnings Inequality - Case Study for Romania
Larisa Stanila, Maria Denisa Vasilescu, Amalia Cristescu, Madalina Ecaterina Popescu

In this paper we study the main determinants of wage inequality in 2012 in Romania through a Mincer wage equation. An ordered logit model was therefore estimated, based on the following explanatory variables of wage inequalities: gender, age, residence area, education and major sectors of activity. The main results are consistent with the human capital theory and with the findings of Mincer’s followers. As expected, people with more education receive higher earnings, confirming that education pays off. We also found a positive correlation between age and earnings, meaning that with age, it increases the likelihood of a person to earn more. Regarding the gender inequality, our findings indicate that women in Romania are less likely to earn more than men and when it comes to residence area, the individuals in urban areas have higher chances in earning more, as compared to those employed in the rural area.

Full Text: PDF