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Industrial Decline and Labor Reallocation in Romania

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  • John S. Earle

Abstract

This paper employs matched labor force survey data to investigate the magnitude and determinants of the labor market flows associated with the decline of industrial employment in Romania from 1993 to 1995. The data show not only a large decline in aggregate industry employment, but also a decline in each of the disaggregated two-digit sectors. Nonetheless, there are substantial gross flows in both directions, although with significant heterogeneity across sectors. Workers leaving jobs in industry have a variety of different destinations: jobs in other industrial sectors, in agriculture, and in services, as well as unemployment and non-participation in the labor force; the data show all of these paths to be significant. Multinomial logit estimates indicate that the probability of paths is affected by both individual and firm characteristics. Among other results, university and general high school education tend to raise the probability of job-to-job flows, particularly from industrial jobs to other industrial jobs and to service sectors, but not to agriculture. Workers with primary and vocational education have the highest probability of becoming unemployed and the lowest probability of finding new jobs in services (less than a third the probability for those with university education). Compared with workers in state-owned companies, workers from the private sector, especially from enterprises of mixed ownership have a greater probability of exiting their industry, as well as higher probabilities of finding jobs in services. The largest outflows, however, concern workers from industrial cooperatives, most of whom became unemployed. The data present a mixed picture of social dislocation and improved reallocation.

Suggested Citation

  • John S. Earle, 1997. "Industrial Decline and Labor Reallocation in Romania," William Davidson Institute Working Papers Series 118, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:1997-118
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/41204/1/wp118.pdf
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    Cited by:

    1. Sorm, Vit & Terrell, Katherine, 2000. "Sectoral Restructuring and Labor Mobility: A Comparative Look at the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 28(3), pages 431-455, September.
    2. Voicu, Alexandru, 2005. "Employment dynamics in the Romanian labor market. A Markov chain Monte Carlo approach," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 604-639, September.
    3. Ofer Malamud & Cristian Pop-Eleches, 2008. "General Education vs. Vocational Training: Evidence from an Economy in Transition," NBER Working Papers 14155, National Bureau of Economic Research, Inc.
    4. J David Brown & John S Earle & Vladimir Gimpelson & Rostislav Kapeliushnikov & Hartmut Lehmann & Álmos Telegdy & Irina Vantu & Ruxandra Visan & Alexandru Voicu, 2006. "Nonstandard Forms and Measures of Employment and Unemployment in Transition: A Comparative Study of Estonia, Romania, and Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 48(3), pages 435-457, September.
    5. Andren, Daniela & Earle, John S. & Sapatoru, Dana, 2005. "The wage effects of schooling under socialism and in transition: Evidence from Romania, 1950-2000," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 300-323, June.
    6. Klara Z. Sabirianova, 2000. "The Great Human Capital Reallocation: An Empirical Analysis of Occupational Mobility in Transitional Russia," William Davidson Institute Working Papers Series 309, William Davidson Institute at the University of Michigan.
    7. Brown, J. David & Earle, John S., 2002. "Gross Job Flows in Russian Industry Before and After Reforms: Has Destruction Become More Creative?," Journal of Comparative Economics, Elsevier, vol. 30(1), pages 96-133, March.
    8. Mal'tseva Inna, 2005. "Gender differences in occupational mobility and segregation at the labor market: The case of Russian economy," EERC Working Paper Series 05-11e, EERC Research Network, Russia and CIS.
    9. J David Brown & John S Earle, 2006. "Job Reallocation and Productivity Growth in the Ukrainian Transition," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 48(2), pages 229-251, June.
    10. 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.

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