By using a large panel containing matching employer-employee information, noncompetitive forces are found to dominate wage determination during planning. During early transition the process becomes much more market driven, though a significant role remains for other factors. The preferred specifications are not baseline models restricted to conventional dimensions of human capital, but always include firm-and person-specific fixed effects and other firm and individual attributes. Depending on the particular specification, returns to education at least double during transition and the significance of human capital variables is insensitive to the inclusion of firm effects. However, findings for other variables are sensitive to specifications that do or do not include firm effects as well as person effects.