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Wage Determination Under Communism and In Transition: Evidence from Central Europe

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Author Info
Swati Basu,
Saul Estrin
Jan Svejnar ()

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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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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 2004-717.

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Length: 20 pages
Date of creation: 01 Aug 2004
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Handle: RePEc:wdi:papers:2004-717

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  2. 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(1996-1), pages 217-314. [Downloadable!]
  3. John Bennett & Saul Estrin & James Maw & Giovanni Urga, . "Privatization Methods and Economic Growth," Economics and Finance Discussion Papers 03-24, Economics and Finance Section, School of Social Sciences, Brunel University. [Downloadable!]
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  4. 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. [Downloadable!] (restricted)
  5. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," William Davidson Institute Working Papers Series 38, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  6. Dobbelaere, Sabien, 2004. "Ownership, firm size and rent sharing in Bulgaria," Labour Economics, Elsevier, vol. 11(2), pages 165-189, April. [Downloadable!] (restricted)
  7. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-78, September. [Downloadable!] (restricted)
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  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. [Downloadable!]
  2. Ales Berk, 2006. "Determinants of Leverage in Slovenian Blue-Chip Firms and Stock Performance Following Substantial Debt Increases," Post-Communist Economies, Taylor and Francis Journals, vol. 18(4), pages 479-494, December. [Downloadable!] (restricted)
  3. 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 wp764, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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