Structural Adjustment and Regional Long Term Unemployment in Poland
AbstractOn aspect of transition economics is the fact that large scale inter and intra sector adjustments in employment will have to take place in the transition period to a market economy. The required decline of agriculture and manufacturing and the rise in services induce large inter-sectoral employment adjustment. The restructuring of state and previously state owned firms will induce large intra-sectoral employment adjustment. This process has to be facilitated by a large re-allocation of workers from their initial state. Restructuring of this kind can be expected to create a lot of frictional unemployment, due to congestion in the labour market, and structural unemployment, due to individuals with redundant human capital been separated from pre-transidonal job security. In this paper we write down a structural and frictional model of unemployment resulting from structural adjustment in employment in the spirit of Aghion and Howitt (1998). The relationship between regional development and unemployment rates is not monotonic in Poland. Using Polish county level unemployment register data this papers shows that the dynamics of regional labour demand in Poland have determined unemployment in a systematic way by changing the magnitude and composition of the inflows and the regional probabilities of exit conditional on duration, gender, age, education and previous tenure. Restructuring in employment can be facilitated by the social security system by allowing workers to use unemployment as a temporary pit stop in periods of congestion created by the transition process. Restructuring can also act as a cleansing process that sheds inefficient and redundant human capital from employment with compounds in unemployment creating a long term structural component of unemployment. We show the stage of regional restructuring and development determines the levels and composition of individuals in short term and long term spells. Restructuring induces both larger throughputs and deeper structural. problems in unemployment. In the most advanced regions where congestion is lower unemployment is mainly structural in nature resulting from individuals having undertaken long spells in employment in the planned system .
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Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 158.
Date of creation: 01 Jun 1997
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Other versions of this item:
- Hartmut Lehmann & John O'Flaherty & Patrick P. Walsh, 1997. "Structural Adjustment and Regional Long Term Unemployment in Poland," Economics Policy Papers, Trinity College Dublin, Department of Economics 974, Trinity College Dublin, Department of Economics.
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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- H Ingham & M Ingham & J Herbst, 2008. "Why do Local Unemployment Rates in Poland Vary so Much?," Working Papers 594943, Lancaster University Management School, Economics Department.
- J Herbst & H Ingham & M Ingham, 2005. "Local unemployment in Poland," Working Papers 566803, Lancaster University Management School, Economics Department.
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