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Worker Displacement During The Transition: Experience From Slovenia

  • Orazem, Peter
  • Vodopivec, Milan
  • Wu, Ruth

The transition to market in Slovenia created labor displacements that were on par or greater than that experienced in North America in the 1980s. A simple theoretical model suggests that factors which raise the probability of layoff should also increase the probability of a quit, predictions that are borne out in data. Probability of both layoffs and quits fell with worker tenure, firm profitability and expected severance costs. Individuals facing a higher probability of displacement accepted slower wage growth than otherwise comparable workers. The incentives to avoid displacement were strongï¾—workers that actually were displaced faced a slow process of transiting out of unemployment with only one-third finding reemployment. Correcting for selection, real wage losses for displaced workers are comparable to those reported for displaced workers in North America.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12032.

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Date of creation: 30 Aug 2004
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Publication status: Published in Economics of Transition, April 2005, vol. 13, pp. 311-340
Handle: RePEc:isu:genres:12032
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
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  8. Orazem, Peter F. & Vodopivec, Milan, 1994. "Winners and losers in transition : returns to education, experience, and gender in Slovenia," Policy Research Working Paper Series 1342, The World Bank.
  9. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January.
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  13. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1992. "Earnings losses of displaced workers," Working Paper Series, Macroeconomic Issues 92-28, Federal Reserve Bank of Chicago.
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