Between-Sector Wage Differences and Inequaolity in the Bulgarian Economy: The Role of Foreign-Owned Firms

The paper explores between-sector wage differences and inequality in Bulgaria in the period 2008-2021, distinguishing between foreign-owned and domestic non-financial enterprises. To estimate between-sector wage inequality for all non- financial enterprises, as well as separately for the two types of firms, the between-group component of the Theil index is used. This approach allows to establish whether foreign affiliates stay behind the evolution of overall between-sector wage inequality, as well as to isolate the contribution of each sector to this trend. The results show that between- sector wage inequality among foreign-owned firms is greater compared to local firms. However, while between-sector wage inequality among foreign firms’ employees tends to fluctuate over time, there is an overall upward trend in the case of domestic firms.