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Employment determination in enterprises under communism and in transition: Evidence from Central Europe

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  • Swati Basu
  • Saul Estrin
  • Jan Svejnar

Abstract

The authors present a comparative analysis of employment determination in four transition economies as they moved from central planning to a market economy in the early 1990s. They use firm-level panel data sets from the Czech Republic, Hungary, Poland, and Slovakia to estimate dynamic employment equations for the period immediately before and after the start of transition. For the most part, firms appear to have been quick to adjust employment to wage levels, and there is little evidence of labor hoarding. There were important cross-country variations in the determinants of employment during the reform process, however. Hungarian and Polish firms started the transition already substantially reformed, and became even more responsive to market signals as transition proceeded. In contrast, firms in the Czech and Slovak Republics started in the completely unresponsive mode characteristic of central planning, but rapidly caught up with their counterparts in Hungary and Poland. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 58 (2005)
Issue (Month): 3 (April)
Pages: 353-369

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Handle: RePEc:ilr:articl:v:58:y:2005:i:3:p:353-369

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  1. Brown, James N & Ashenfelter, Orley, 1986. "Testing the Efficiency of Employment Contracts," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages S40-S87, June.
  2. Quandt, Richard E & Rosen, Harvey S, 1989. "Endogenous Output in an Aggregate Model of the Labor Market," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 394-400, August.
  3. Daniel S. Hamermesh, 1987. "The Demand for Labor in the Long Run," NBER Working Papers 1297, National Bureau of Economic Research, Inc.
  4. Nickell, S.J., 1987. "Dynamic models of labour demand," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 9, pages 473-522 Elsevier.
  5. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages S3-S39, June.
  6. Ham, John C & Svejnar, Jan & Terrell, Katherine, 1998. "Unemployment and the Social Safety Net during Transitions to a Market Economy: Evidence from the Czech and Slovak Republics," American Economic Review, American Economic Association, American Economic Association, vol. 88(5), pages 1117-42, December.
  7. Svejnar, Jan, 1982. "On the theory of a participatory firm," Journal of Economic Theory, Elsevier, Elsevier, vol. 27(2), pages 313-330, August.
  8. János Kornai, 1994. "Highway and Byways: Studies on Reform and Postcommunist Transition," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262111985, December.
  9. Lubomir Lizal & Miroslav Singer & Jan Svejnar, 2001. "Enterprise Breakups And Performance During The Transition From Plan To Market," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 92-99, February.
  10. Dani Rodrik, 1992. "Foreign Trade in Eastern Europe's Transition: Early Results," NBER Working Papers 4064, National Bureau of Economic Research, Inc.
  11. Prasnikar, Janez, et al, 1994. "Behavior of Participatory Firms in Yugoslavia: Lessons for Transforming Economies," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 728-41, November.
  12. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 896-908, December.
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Cited by:
  1. Münich, Daniel & Svejnar, Jan, 2007. "Unemployment in East and West Europe," IZA Discussion Papers 2798, Institute for the Study of Labor (IZA).
  2. Monteiro, Natália Pimenta & Portela, Miguel & Straume, Odd Rune, 2010. "Firm Ownership and Rent Sharing," IZA Discussion Papers 4909, Institute for the Study of Labor (IZA).
  3. Fathi Fakhfakh & Virginie Perotin & Monica Gago, 2012. "Productivity, Capital, and Labor in Labor-Managed and Conventional Firms in France," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 65(4), pages 847-879, October.
  4. Pierella Paci & Erwin R. Tiongson & Mateusz Walewski & Jacek Liwinski & Maria M. Stoilkova, 2007. "Internal Labor Mobility in Central Europe and the Baltic Region," World Bank Publications, The World Bank, number 6598, August.

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