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Wage Determination under Communism and in Transition: Evidence from Central Europe

  • Basu, Swati

    ()

    (McGill University)

  • Estrin, Saul

    ()

    (London School of Economics)

  • Svejnar, Jan

    ()

    (Columbia University)

Using large firm-level data sets from the Czech Republic, Slovakia, Poland and Hungary, we show that the wage behavior of firms changed considerably as these economies launched their transitions to a market system. We find evidence of worker sharing in their enterprise rents and losses at the end of the communist period in some economies and within a year after the launching of the transition, we find rent sharing in all of them. Using the Czech and Slovak data we show that the state-owned enterprises (SOEs) that existed under communism and survived allow for less worker rent-sharing than other firms. We also test for the presence of a wage curve and with the exception of Slovakia we do not find a significant association between local unemployment and wages. Finally, we do not find significant effects of firm ownership on wages.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1276.

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Length: 22 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1276
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  1. Orley Ashenfelter & James N. Brown, 1985. "Testing the Efficiency of Employment Contracts," Working Papers 573, Princeton University, Department of Economics, Industrial Relations Section..
  2. SVEJNAR, Jan, . "Bargaining power, fear of disagreement, and wage settlements: theory and evidence from U.S. industry," CORE Discussion Papers RP -720, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Blanchard, Olivier & Kremer, Michael R., 1997. "Disorganization," Scholarly Articles 3659691, Harvard University Department of Economics.
  4. ZELLNER, Arnold & KMENTA, Jan & DREZE, Jacques H., . "Specification and estimation of Cobb-Douglas production function models," CORE Discussion Papers RP -12, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Dobbelaere, Sabien, 2004. "Ownership, firm size and rent sharing in Bulgaria," Labour Economics, Elsevier, vol. 11(2), pages 165-189, April.
  6. Prasnikar, Janez, et al, 1994. "Behavior of Participatory Firms in Yugoslavia: Lessons for Transforming Economies," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 728-41, November.
  7. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
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