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The Impact of Structural Reforms on Employment Growth and Labour Productivity: Evidence from Bulgaria and Romania

  • Ralitza Dimova

Using firm-level data from Bulgaria and Romania, this paper addresses a lacuna in the transition literature, namely, the link of firm-level employment turnover with firm-level growth in labour productivity. The results suggest that while net job creation at the firm level was affected by privatization in Bulgaria, privatization in Romania did not have any effect on firm-level employment growth. Further, Olley-Pakes (1996) decomposition indicates that in Bulgaria, over time, resources moved from less productive firms to more productive firms in almost all industries, but that in Romania such a phenomenon was observed in less than half of the industries. At the same time, the Grilliches-Regev (1995) decomposition indicates that in both these countries mobility of labour across firms, i.e., the process of job creation and job destruction at the firm level, contributed more to productivity changes than did other firm-level characteristics and industry-level factors affecting productivity. Finally, we find that the rate of employment changes in Bulgarian firms has a significant impact on the country's firm-level productivity changes. Regressions using Romania data, however, do not provide any support for this observation.

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Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 13203.

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Length: 38 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:lic:licosd:13203
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  13. Faggio, Giulia & Konings, Jozef, 1999. "Gross Job Flows and Firm Growth in Transition Countries: Evidence Using Firm Level Data on Five Countries," CEPR Discussion Papers 2261, C.E.P.R. Discussion Papers.
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  15. Dewatripont, M & Roland, G, 1992. "Economic Reform and Dynamic Political Constraints," Review of Economic Studies, Wiley Blackwell, vol. 59(4), pages 703-30, October.
  16. Grosfeld, Irena & Tressel, Thierry, 2001. "Competition, Corporate Governance: Substitutes or Complements? Evidence from the Warsaw Stock Exchange," CEPR Discussion Papers 2888, C.E.P.R. Discussion Papers.
  17. Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, vol. 65(1), pages 175-203, January.
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