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Wage Determination under Communism and in Transition: Evidence from Central Europe

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Author Info

  • Basu, Swati

    ()
    (McGill University)

  • Estrin, Saul

    ()
    (London School of Economics)

  • Svejnar, Jan

    ()
    (Columbia University)

Abstract

Using large firm-level data sets from the Czech Republic, Slovakia, Poland and Hungary, we show that the wage behavior of firms changed considerably as these economies launched their transitions to a market system. We find evidence of worker sharing in their enterprise rents and losses at the end of the communist period in some economies and within a year after the launching of the transition, we find rent sharing in all of them. Using the Czech and Slovak data we show that the state-owned enterprises (SOEs) that existed under communism and survived allow for less worker rent-sharing than other firms. We also test for the presence of a wage curve and with the exception of Slovakia we do not find a significant association between local unemployment and wages. Finally, we do not find significant effects of firm ownership on wages.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1276.

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Length: 22 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1276

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Keywords: wages; rent-sharing; transition economies;

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  1. Orley Ashenfelter & James N. Brown, 1985. "Testing the Efficiency of Employment Contracts," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 573, Princeton University, Department of Economics, Industrial Relations Section..
  2. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, Econometric Society, vol. 54(5), pages 1055-78, September.
  3. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
  4. Dobbelaere, Sabien, 2004. "Ownership, firm size and rent sharing in Bulgaria," Labour Economics, Elsevier, Elsevier, vol. 11(2), pages 165-189, April.
  5. 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.
  6. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 38, William Davidson Institute at the University of Michigan.
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Cited by:
  1. Bernd Görzig & Martin Gornig & Axel Werwatz, 2006. "Firm Specific Wage Spread in Germany - Decomposition of regional differences in inter firm wage dispersion," SFB 649 Discussion Papers SFB649DP2006-045, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  2. Maxim Bouev, 2005. "State Regulations, Job Search and Wage Bargaining: A Study in the Economics of the Informal Sector," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp764, William Davidson Institute at the University of Michigan.
  3. Ales Berk, 2006. "Determinants of Leverage in Slovenian Blue-Chip Firms and Stock Performance Following Substantial Debt Increases," Post-Communist Economies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 18(4), pages 479-494.

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