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Worker displacement during the transition : experience from Slovenia

Author

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

Abstract

Unusually rich administrative data sets covering both firms and workers enabled the authors to study displacement in Slovenia during 1987-93. They describe displacement trends and the characteristics of displaced workers comparing them to those in North America during a major recession. They analyze the determinants of displacement in the framework of labor turnover, and explore factors associated with postdisplacement wage losses. Their findings were as follows. One, a comparison of displacement in Slovenia in 1990-93 and in North America during the recession of the early 1980s shows striking similarities in the incidence of displacement by gender and industry, as well as reemployment paths. Two, workers try to avoid displacement both by switching to another job and by leaving the labor force. Before becoming displaced, they also take wage cuts. Three, both the probability of displacement and the probability of job quits are negatively correlated with tenure. Fourth, women are no more likely to be displaced than men, and face smaller postdisplacement wage losses. Non-Slovenians are no more likely to be displaced than Slovenians, and face equal wage losses. Five, firm characteristics matter. The smaller and less profitable the firm, the greater the likelihood of both displacement and job-switching. Restructuring subsidies that lower firm layoff costs increase the number of firm- and worker-initiated transitions. Six, about half the displaced workers who find new jobs change occupations and about a third change industry. Seven, only about a third of workers displaced in 1990 had found a job by the end of 1991. Surprisingly, for more than 68 percent of them, wage growth exceeded the median wage growth in the economy (17 percent). Those not reemployed seem to be paying a heavy toll: not only do they stay unemployed much longer, but they face much lower reemployment wages. Eight, as studies of displacement in the United States also show, greater job experience is associated with heavier postdiplacement wage losses. The magnitude of those losses is consistent with findings about U.S. wage losses.

Suggested Citation

  • Orazem, Peter & Vodopivec, Milan & Wu, Ruth, 1995. "Worker displacement during the transition : experience from Slovenia," Policy Research Working Paper Series 1449, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1449
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    References listed on IDEAS

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    Cited by:

    1. Hartmut Lehmann, 2014. "Worker displacement in transition economies and in China," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-20, May.
    2. Yuhao Ge & Hartmut Lehmann, 2013. "The costs of worker displacement in urban labor markets of China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    3. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2013. "The wage and non-wage costs of displacement in boom times: Evidence from Russia," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1184-1201.
    4. repec:wsi:wschap:9789813108448_0004 is not listed on IDEAS
    5. Rama,Martin G., 1997. "Efficient public sector downsizing," Policy Research Working Paper Series 1840, The World Bank.
    6. Y. Ge & H. Lehmann, 2013. "The Costs of Worker Displacement in Urban Labor Markets of China," Working Papers wp876, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Steven J. Matusz & David G. Tarr, 2017. "Adjusting To Trade Policy Reform," World Scientific Book Chapters,in: Trade Policies for Development and Transition, chapter 4, pages 77-114 World Scientific Publishing Co. Pte. Ltd..
    8. Milan Vodopivec & Primoz Dolenc:, 2008. "Live Longer, Work Longer: Making It Happen in the Labor Market," Financial Theory and Practice, Institute of Public Finance, vol. 32(1), pages 65-81.
    9. Lehmann, Hartmut & Pignatti, Norberto & Wadsworth, Jonathan, 2006. "The incidence and cost of job loss in the Ukrainian labor market," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 248-271, June.
    10. repec:eee:jcecon:v:46:y:2018:i:1:p:381-412 is not listed on IDEAS
    11. Darja Boršič & Alenka Kavkler, 2009. "Modeling Unemployment Duration in Slovenia using Cox Regression Models," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(1), pages 145-156, May.
    12. H. Lehmann & A. Muravyev & T. Razzolini & A. Zaiceva, 2011. "The Wage and Non-wage Costs of Displacement: Evidence from Russia," Working Papers wp734, Dipartimento Scienze Economiche, Universita' di Bologna.
    13. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2010. "The Costs of Job Loss in Russia," IZA Discussion Papers 5415, Institute for the Study of Labor (IZA).
    14. Orazem, Peter F. & Vodopivec, Milan, 1997. "Value of human capital in transition to market: Evidence from Slovenia," European Economic Review, Elsevier, vol. 41(3-5), pages 893-903, April.
    15. Darja Borsic & Alenka Kavkler, 2009. "Duration of Regional Unemployment Spells in Slovenia," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 7(2), pages 123-146.
    16. Tyrowicz, Joanna & van der Velde, Lucas, 2018. "Labor reallocation and demographics," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 381-412.
    17. Appelqvist, Jukka, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, VATT Institute for Economic Research.
    18. Sabine Bernabè & Marco Stampini, 2009. "Labour mobility during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 377-409, April.
    19. Kollo'', Janos & Nagy, Gyula, 1996. "Earnings gains and losses from insured unemployment in Hungary," Labour Economics, Elsevier, vol. 3(3), pages 279-298, October.
    20. Sabine Bernab? & Marco Stampini, 2008. "Labour mobility during transition: evidence from Georgia," LICOS Discussion Papers 20608, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    21. Joanna Tyrowicz & Lucas van der Velde, 2014. "Can We Really Explain Worker Flows in Transition Economies?," Working Papers 2014-28, Faculty of Economic Sciences, University of Warsaw.

    More about this item

    Keywords

    Public Health Promotion; Labor Policies; Health Monitoring&Evaluation; Environmental Economics&Policies; Labor Markets; Health Monitoring&Evaluation; Environmental Economics&Policies; Labor Markets; Banks&Banking Reform; Work&Working Conditions;

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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