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Worker-Firm Matching and Unemployment in Transition to a Market Economy: (Why) Were the Czechs More Successful than Others?

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  • Daniel Munich
  • Jan Svejnar
  • Katherine Terrell

Abstract

Using panel district level data from the Czech and Slovak Republic in the 1990s, we find that the exceptionally low unemployment rate in the Czech Republic as compared to Slovakia and the other CEE economies has been brought about principally by the following phenomena in the Czech Republic: (1) a rapid increase in vacancies along with unemployment, resulting in a relatively balanced unemployment-vacancy situation at the aggregate as well as district level, (2) a major part played by vacancies and the newly unemployed in the outflow from unemployment, (3) a matching process with strongly increasing returns to scale throughout (rather than only in parts of) the transition period, and (4) ability to keep the long term unemployed at relatively low levels. Since until 1996 the Czech economy registered overall economic growth that was similar to that of the neighboring high unemployment economies (e.g., Hungary, Poland and Slovakia), the interesting question, to be addressed in future research, is whether the Czech Republic's favorable vacancy situation, coupled with its strong matching process, was brought about by a relatively high level of initial economic activity (better initial conditions) or a relatively delayed restructuring of firms.

Suggested Citation

  • Daniel Munich & Jan Svejnar & Katherine Terrell, 1998. "Worker-Firm Matching and Unemployment in Transition to a Market Economy: (Why) Were the Czechs More Successful than Others?," William Davidson Institute Working Papers Series 107, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:1998-107
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    Cited by:

    1. Aki Kangasharju & Jaakko Pehkonen & Sari Pekkala, 2003. "Matching in thin labour markets: panel data evidence from Finland, 1991-2002," ERSA conference papers ersa03p208, European Regional Science Association.
    2. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    3. Tito Boeri, 1999. "Transition with Labour Supply," William Davidson Institute Working Papers Series 274, William Davidson Institute at the University of Michigan.
    4. Elzbieta Antczak & Ewa Galecka-Burdziak & Robert Pater, 2016. "Efficiency in spatially disaggregated labour market matching," KAE Working Papers 2016-010, Warsaw School of Economics, Collegium of Economic Analysis.
    5. Jekaterina Dmitrijeva & Mihails Hazans, 2007. "A Stock–Flow Matching Approach to Evaluation of Public Training Programme in a High Unemployment Environment," LABOUR, CEIS, vol. 21(3), pages 503-540, September.
    6. Jan Babecky & Kamil Galuscak & Lubomir Lizal, 2011. "Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis," Working Papers 2011/15, Czech National Bank.
    7. Kosfeld Reinhold, 2007. "Regional Spillovers and Spatial Heterogeneity in Matching Workers and Employers in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(3), pages 236-253, June.
    8. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
    9. Joanna Tyrowicz & Tomasz Jeruzalski, 2013. "(In)Efficiency of matching: the case of a post-transition economy," Economic Change and Restructuring, Springer, vol. 46(2), pages 255-275, May.
    10. Kamil Galuscak & Daniel Munich, 2005. "Structural and Cyclical Unemployment: What Can We Derive from the Matching Function?," Working Papers 2005/02, Czech National Bank.
    11. Kenjiro Hori, 2005. "Job Matching with Multiple-Hiring Firms and Heterogeneous Workers: A Microfoundation," Birkbeck Working Papers in Economics and Finance 0514, Birkbeck, Department of Economics, Mathematics & Statistics.
    12. Martin Guzi, 2014. "An Empirical Analysis of Welfare Dependence in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(5), pages 407-431, November.
    13. Aki Kangasharju & Jaakko Pehkonen & Sari Pekkala, 2005. "Returns to scale in a matching model: evidence from disaggregated panel data," Applied Economics, Taylor & Francis Journals, vol. 37(1), pages 115-118.
    14. Kamil Galušèák & Daniel Münich, 2007. "Structural and Cyclical Unemployment: What Can Be Derived from the Matching Function? (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(3-4), pages 102-125, June.
    15. Jekaterina Dmitrijeva, 2008. "Matching and Labour Market Efficiency across Space and through EU accession: Evidence from Latvia, Estonia and Slovenia," Documents de recherche 08-05, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    16. Joanna Tyrowicz & Piotr Wojcik, 2010. "Active Labour Market Policies and Unemployment Convergence in Transition," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 2(1), pages 46-72, January.
    17. Gerard Rpland, 2001. "The Political Economy of Transition," William Davidson Institute Working Papers Series 413, William Davidson Institute at the University of Michigan.

    More about this item

    JEL classification:

    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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