Were communists good human capitalists? The case of the Czech Republic

This paper explores the effect of a change in economic system on incentives to invest in human capital by analyzing surveys of the wage structure from before and after the November 1989 revolution in the Czech Republic. Prior to 1989, wage setting and job assignments under central planning provided positive returns to human capital acquisition, but the rates of return were lower than in advanced market economies. Returns to schooling rose rapidly during the transition however. The paper includes posttransition evidence on the changing pattern of returns to human capital investments in the state and private sectors.