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Job Growth in Early Transition: Comparing Two Paths

  • Stepan Jurajda
  • Katherine Terrell

Small start-up firms are the engine of job creation in early transition and yet little is known about the characteristics of this new sector. We seek to identify patterns of job growth in this sector in terms of niches left from central planning and ask about differences in job creation across two different transition economies: Estonia, which experienced rapid destruction of pre-existing firms, and the Czech Republic, which reduced the old sector gradually. We find job growth within industries to be quantitatively more important than job growth due to across-industry reallocation. Furthermore, the industrial composition of start-ups is strikingly similar in the two countries. We offer convergence to "western" industry firm-size distributions as an explanation. We also find regularities in wage evolution across new and old firms, including small differences in job quality across the two transition paths.

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Paper provided by The Center for Economic Research and Graduate Education - Economics Institute, Prague in its series CERGE-EI Working Papers with number wp201.

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Date of creation: Nov 2002
Date of revision:
Handle: RePEc:cer:papers:wp201
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  1. Alfred Stiglbauer & Florian Stahl & Rudolf Winter-Ebmer & Josef Zweimüller, 2003. "Job Creation and Job Destruction in a Regulated Labor Market: The Case of Austria," Empirica, Springer, vol. 30(2), pages 127-148, June.
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  7. Micael Castanheira De Moura & Gérard Roland, 2000. "The optimal speed of transition: a general equilibrium analysis," ULB Institutional Repository 2013/10011, ULB -- Universite Libre de Bruxelles.
  8. Sorm, Vit & Terrell, Katherine, 2000. "Sectoral Restructuring and Labor Mobility: A Comparative Look at the Czech Republic," IZA Discussion Papers 111, Institute for the Study of Labor (IZA).
  9. David J. Cooper & Daniel M. Berkowitz, 1997. "Start-ups and Transition," William Davidson Institute Working Papers Series 84, William Davidson Institute at the University of Michigan.
  10. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
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  12. Bratkowski, A. & Grosfeld, I. & Rostowski, J., 1998. "Investment and Finance in De Novo Private Firms: Empirical Results form the Czech Republic, Hungary and Poland," DELTA Working Papers 98-19, DELTA (Ecole normale supérieure).
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  14. Svejnar, Jan, 1999. "Labor markets in the transitional Central and East European economies," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 42, pages 2809-2857 Elsevier.
  15. Berkowitz, Daniel & DeJong, David N., 2003. "Policy reform and growth in post-Soviet Russia," European Economic Review, Elsevier, vol. 47(2), pages 337-352, April.
  16. Davis, Steven J & Haltiwanger, John C, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 819-63, August.
  17. Andrzej Bratkowski & Irena Grosfeld & Jacek Rostowski, 1999. "Investment and Finance in De Novo Private Firms: Empiracal Results from the Czech Republic, Hungary and Poland," William Davidson Institute Working Papers Series 236, William Davidson Institute at the University of Michigan.
  18. Simon Johnson & John McMillan & Christopher Woodruff, 2000. "Entrepreneurs and the Ordering of Institutional Reform: Poland, Slovakia, Romania, Russia and Ukraine Compared," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 1-36, March.
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