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Job Growth in Early Transition: Comparing Two Paths

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  • Stepan Jurajda
  • Katherine Terrell

Abstract

Small start-up firms are the engine of job creation in early transition and yet little is known about the characteristics of this new sector. We seek to identify patterns of job growth in this sector in terms of niches left from central planning and ask about differences in job creation across two different transition economies: Estonia, which experienced rapid destruction of pre-existing firms, and the Czech Republic, which reduced the old sector gradually. We find job growth within industries to be quantitatively more important than job growth due to across-industry reallocation. Furthermore, the industrial composition of start-ups is strikingly similar in the two countries. We offer convergence to "western" industry firm-size distributions as an explanation. We also find regularities in wage evolution across new and old firms, including small differences in job quality across the two transition paths.

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Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp201.

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Date of creation: Nov 2002
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Handle: RePEc:cer:papers:wp201

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  1. Jurajda, Stepan & Terrell, Katherine, 2002. "What Drives the Speed of Job Reallocation During Episodes of Massive Adjustment?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3218, C.E.P.R. Discussion Papers.
  2. Lubomir Lizal & Jan Svejnar, 2000. "Financial Conditions and Investment during the Transition: Evidence from Czech Firms," CERGE-EI Working Papers, The Center for Economic Research and Graduate Education - Economic Institute, Prague wp153, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  3. Castanheira, Micael & Roland, Gérard, 1996. "The Optimal Speed of Transition: A General Equilibrium Analysis," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1442, C.E.P.R. Discussion Papers.
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  14. Andrzej Bratkowski & Irena Grosfeld & Jacek Rostowski, 2000. "Investment and Finance in "de novo" private firms: Empirical Results from the Czech Republic, Hungary and Poland," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 8(1), pages 101-116, March.
  15. Steve J. Davis & John Haltiwanger, 1991. "Gross job creation, gross job destruction and employment reallocation," Working Paper Series, Macroeconomic Issues, Federal Reserve Bank of Chicago 91-5, Federal Reserve Bank of Chicago.
  16. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, Elsevier, vol. 7(5), pages 575-601, September.
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