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Organized Labor and Restructuring: Coal Mines in the Czech Republic and Romania

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  • Jan Bruha
  • Delia Ionascu
  • Byeongju Jeong

    ()

Abstract

We examine the role of organized labor in the restructuring experience of two coal mining regions in the 1990’s: Ostrava in the Czech Republic and the Jiu Valley region in Romania. Under similar external circumstances, the Ostrava region undertook gradual restructuring from early on whereas in Jiu Valley there was no restructuring until 1997, followed by massive layoffs over two years. We conduct a quantitative exercise that accounts for the mine productivity, the labor market conditions, and the constraints in compensating the laid-off miners. We show that the delay in restructuring in Jiu Valley was inefficient: gradual restructuring with compensation would have benefited both the miners and the government. The proximate reason for the delay was the Jiu Valley miners’ action against restructuring. We interpret their action in part as a behavioral pattern under a perceived threat to their livelihood. This accords with their history of militancy in contrast to Ostravian miners.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp773.pdf
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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp773.

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Length: pages
Date of creation: 01 May 2005
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Handle: RePEc:wdi:papers:2005-773

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Keywords: organized labor; restructuring; coal; transition; welfare;

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  1. Acemoglu, Daron & Robinson, James A, 1999. "Inefficient Redistribution," CEPR Discussion Papers 2122, C.E.P.R. Discussion Papers.
  2. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, December.
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