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Investment Wages and Ownership During the Transition to a Market Economy: Evidence from Slovenian Firms

  • Janez Prasnikar
  • Jan Svejnar

Given the concern about restructuring and the role of insiders during the transition, we analyse the determinants of (and trade-off between) investment and wages in Slovenian firms. We find that investment behaviour is more consistent with the imperfect capital market (internal funds) hypothesis than with the neoclassical or accelerator models. Firms also display a trade-off between investment and wages, and workers share in firms’ surplus and appropriate funds that are supposed to be used for depreciation investment. Most findings are consistent with the principal theoretical models of restructuring. The models, however, underestimate the power of (elite) managers to restrain worker demands and overestimate this power on the part of external owners.

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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 144.

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Length: pages
Date of creation: 01 Nov 1998
Date of revision:
Handle: RePEc:wdi:papers:1998-144
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