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The Incidence and Cost of Job Loss in a Transition Economy: Displaced Workers in Estonia, 1989-1999

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  • Jozef Konings
  • Olga Kupets
  • Hartmut Lehmann

Abstract

This paper documents and analyses gross job flows and their determinants in Ukraine using a unique data set of more than 2200 Ukrainian firms operating in both the manufacturing and the non-manufacturing sector for the years 1998-2000. There are several important findings in the paper. Job destruction is dominating job creation in both 1999 and 2000. In connection with other evidence we infer from this that Ukraine is only at the beginning of the restructuring process. The most clear-cut result of our analysis is the strong positive effect of new private firms on net employment growth, a finding established for other transition economies as well. At the same time, we do not find differences in the employment growth of state-owned and privatised firms. Apart from ownership effects we also find, at the firm level, an inverse correlation of size and net employment growth and of size and job reallocation. Finally, we establish that strong foreign trade links force firms to shed labour more aggressively and to engage in more restructuring when trade is directed to and originating from Western economies. This disciplining function is absent when the trade flows are confined to CIS countries.

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Bibliographic Info

Paper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number 0210.

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Date of creation: 2002
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Handle: RePEc:hwe:certdp:0210

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Keywords: job creation; job destruction; Ukraine; private firms; trade;

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References

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  1. John Baldwin & Timothy Dunne & John Haltiwanger, 1998. "A Comparison Of Job Creation And Job Destruction In Canada And The United States," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 347-356, August.
  2. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
  3. Lehmann, Hartmut & Wadsworth, Jonathan, 2000. "Tenures That Shook the World: Worker Turnover in Russia, Poland, and Britain," Journal of Comparative Economics, Elsevier, vol. 28(4), pages 639-664, December.
  4. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
  5. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 477-94, July.
  6. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  7. Gerard A. Pfann, 2001. "Downsizing," Working Papers 0110, Harris School of Public Policy Studies, University of Chicago.
  8. Steve J. Davis & John Haltiwanger, 1991. "Gross job creation, gross job destruction and employment reallocation," Working Paper Series, Macroeconomic Issues 91-5, Federal Reserve Bank of Chicago.
  9. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-77, October.
  10. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-74, August.
  11. Haltiwanger, John C. & Vodopivec, Milan, 2002. "Gross worker and job flows in a transition economy: an analysis of Estonia," Labour Economics, Elsevier, vol. 9(5), pages 601-630, November.
  12. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
  13. Alessandro Acquisti & Hartmut Lehmann, 2000. "Job Creation and Job Destruction in the Russian Federation," Trinity Economics Papers 20001, Trinity College Dublin, Department of Economics.
  14. Swati Basu & Saul Estrin & Jan Svejnar, 1997. "Employment and wage behaviour of industrial enterprises in transition economies: The cases of Poland and Czechoslovakia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(2), pages 271-287, November.
  15. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Upjohn Working Papers and Journal Articles 92-11, W.E. Upjohn Institute for Employment Research.
  16. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
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Cited by:
  1. Jukka Appelqvist, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, Government Institute for Economic Research Finland (VATT).
  2. Hartmut Lehmann & Alexander Muravyev & Tiziano Razzolini & Anzelika Zaiceva, 2011. "The Wage and Non-wage Costs of Displacement: Evidence from Russia," Center for Economic Research (RECent) 060, University of Modena and Reggio E., Dept. of Economics.
  3. A. Christev & O. Kupets & H. Lehmann, 2005. "Trade Liberalization and Employment Effects in Ukraine," Working Papers 552, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2010. "The Costs of Job Loss in Russia," IZA Discussion Papers 5415, Institute for the Study of Labor (IZA).
  5. Kerly Krillo & Jaan Masso, 2010. "The Part-Time/Full-Time Wage Gap In Central And Eastern Europe: The Case Of Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 65, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  6. Hartmut Lehmann & Norberto Pignatti & Jonathan Wadsworth, 2005. "The Incidence and Cost of Job Loss in the Ukrainian Labor Market," Upjohn Working Papers and Journal Articles 05-122, W.E. Upjohn Institute for Employment Research.

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