This paper aims to analyze the change in return to schooling in Hungary, via comparing communism and market economy periods. As the philosophy of each system is very different, it causes differences in treatment of factors of production as well. While getting familiar with main literature of this topic, it turns out that there is not consensus about the main driving philosophy of communism in terms of organizing production. There are some contradictory assumptions on rewarding factors of production, especially personal characteristics under planned economy. According to one them, because of egalitarian approach towards workers, wage profiles were compressed and planners set wages on the base of industry and work profile under communism (Campos and Joliffe, (2003)). So personal characteristics like education were not evaluated and that is why after transition to market economy in ex-communist countries return to education should increase.
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