Application of logit models to describe wages in Poland

Wages seem to be the most important determinants of economic well-being and personal success. Earnings are determined by many factors that might be classified as, economic, institutional, behavioral, and equity considerations or as, personal, market, and environmental features. Wages are set in different ways and influenced by market forces, legislation, and tradition

In 1989 the radical set of reforms started in Poland which were followed by other countries belonging to the former Soviet bloc. The privatization of state owned enterprises and implementation of market mechanisms were the main goals of the reforms introduced in post-communist countries. The transition also involved significant changes in labor market institutions. One of the main principle in centrally planned economies was lack of unemployment. Therefore communist labor market was characterized by excess demand for labor, low productivity, low mobility and occupational choice, and distorted wage structure.

After 20 years of economic transformation the question arises if the situation on labor market in European transition economies is similar to western countries. Therefore the aim of our research is identification of determinants that affect earnings in Poland. The analysis is provided for the years 2001, 2003, 2006 and 2009 applying logit models, that are estimated by Maximum Likelihood method employing individual data from the Polish Labor Force Survey (PLFS). Investigation is provided for selected features such as: gender, occupation, level of education, place of residence, marital status, relationship with the head of the household, age, sector of employment, ownership and size of the enterprise (institution), etc.

Our research shows that there are in wage determinants have been changing in time, and gender is one of the essential feature affecting wages in Poland.