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Monopolistic wages or efficient contracts?

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  • Ralitza Dimova

Abstract

Using a representative sample of medium and large firms, this paper explores the process of employment and wage bill determination in the Bulgarian manufacturing sector. The results suggest that, during 1997-2001, the labour market behaviour of these firms was consistent with weakly efficient contracting and employment elasticity with respect to both sales and wages similar to that of the fastest-reforming Central and Eastern Europe economies. Although a case study using data on sell-off deals by the Privatization Agency suggests that the largest firms selected for cash privatization may have exhibited higher preference for wage enhancement than employment protection, the results do not bring into question the efficient performance of the post-crisis labour market in Bulgaria. Importantly, the study rejects the hypothesis that either persistent government stakes or mass privatization may have led to efficiency deterioration. Copyright (c) The European Bank for Reconstruction and Development, 2006.

Suggested Citation

  • Ralitza Dimova, 2006. "Monopolistic wages or efficient contracts?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 321-347, April.
  • Handle: RePEc:bla:etrans:v:14:y:2006:i:2:p:321-347
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0351.2006.00253.x
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    References listed on IDEAS

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    1. Swati Basu & Saul Estrin & Jan Svejnar, 2005. "Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe," ILR Review, Cornell University, ILR School, vol. 58(3), pages 353-369, April.
    2. Rutkowski, Jan, 2003. "Why is unemployment so high in Bulgaria?," Policy Research Working Paper Series 3017, The World Bank.
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    Cited by:

    1. Sumon Kumar Bhaumik & Ralitza Dimova & Jeffrey B. Nugent, 2006. "Pulls, Pushes and Entitlement Failures in Labor Markets: Does the State of Development Matter?," CEDI Discussion Paper Series 06-07, Centre for Economic Development and Institutions(CEDI), Brunel University.
    2. Gatti, Roberta & Love, Inessa, 2006. "Does access to credit improve productivity ? Evidence from Bulgarian firms," Policy Research Working Paper Series 3921, The World Bank.
    3. Thorsten Upmann & Julia Müller, 2014. "The Structure of Firm-Specific Labour Unions," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(2), pages 336-385, June.
    4. Nicholas Lawson, 2011. "Is Collective Bargaining Pareto Efficient? A Survey of the Literature," Journal of Labor Research, Springer, vol. 32(3), pages 282-304, September.

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