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Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe

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  • Swati Basu
  • Saul Estrin
  • Jan Svejnar

Abstract

The authors present a comparative analysis of employment determination in four transition economies as they moved from central planning to a market economy in the early 1990s. They use firm-level panel data sets from the Czech Republic, Hungary, Poland, and Slovakia to estimate dynamic employment equations for the period from immediately before to immediately after the start of transition. For the most part, firms appear to have been quick to adjust employment to wage levels, and there is little evidence of labor hoarding. There were important cross-country variations in the determinants of employment during the reform process, however. Hungarian and Polish firms started the transition already substantially reformed, and became even more responsive to market signals as transition proceeded. In contrast, firms in the Czech and Slovak Republics started in the completely unresponsive mode characteristic of central planning, but rapidly caught up with their counterparts in Hungary and Poland.

Suggested Citation

  • 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.
  • Handle: RePEc:sae:ilrrev:v:58:y:2005:i:3:p:353-369
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    References listed on IDEAS

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    Cited by:

    1. Jun Han & Junsen Zhang, 2010. "Wages, participation and unemployment in the economic transition of urban China1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 513-538, July.
    2. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
    3. Beatrice Conradie & Jenifer Piesse & Colin Thirtle & Nick Vink, 2018. "Labour Demand in the Post‐apartheid South African Wine Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 815-832, September.
    4. Vit Storm & Katherine Terrell, 1999. "A Comparitive Look at Labor Mobility in the Czech Republic: Where Have all the Workers Gone?," William Davidson Institute Working Papers Series 140, William Davidson Institute at the University of Michigan.
    5. Natália Monteiro & Miguel Portela & Odd Straume, 2011. "Firm Ownership and Rent Sharing," Journal of Labor Research, Springer, vol. 32(3), pages 210-236, September.
    6. Svejnar, Jan, 2007. "China in Light of the Performance of Central and East European Economies," IZA Discussion Papers 2791, Institute of Labor Economics (IZA).
    7. Pierella Paci & Erwin R. Tiongson & Mateusz Walewski & Jacek Liwinski & Maria M. Stoilkova, 2007. "Internal Labor Mobility in Central Europe and the Baltic Region," World Bank Publications, The World Bank, number 6598, June.
    8. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.
    9. Ralitza Dimova, 2006. "Monopolistic wages or efficient contracts?: What determined the wage–employment bargain in post‐privatization Bulgaria?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 321-347, April.

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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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