IDEAS home Printed from
   My bibliography  Save this paper

Structural Adjustment and Regional Long Term Unemployment in Poland


  • Hartmut Lehmann
  • John O'Flaherty
  • Patrick P. Walsh


On aspect of transition economics is the fact that large scale inter and intra sector adjustments in employment will have to take place in the transition period to a market economy. The required decline of agriculture and manufacturing and the rise in services induce large inter-sectoral employment adjustment. The restructuring of state and previously state owned firms will induce large intra-sectoral employment adjustment. This process has to be facilitated by a large re-allocation of workers from their initial state. Restructuring of this kind can be expected to create a lot of frictional unemployment, due to congestion in the labour market, and structural unemployment, due to individuals with redundant human capital been separated from pre-transidonal job security. In this paper we write down a structural and frictional model of unemployment resulting from structural adjustment in employment in the spirit of Aghion and Howitt (1998). The relationship between regional development and unemployment rates is not monotonic in Poland. Using Polish county level unemployment register data this papers shows that the dynamics of regional labour demand in Poland have determined unemployment in a systematic way by changing the magnitude and composition of the inflows and the regional probabilities of exit conditional on duration, gender, age, education and previous tenure. Restructuring in employment can be facilitated by the social security system by allowing workers to use unemployment as a temporary pit stop in periods of congestion created by the transition process. Restructuring can also act as a cleansing process that sheds inefficient and redundant human capital from employment with compounds in unemployment creating a long term structural component of unemployment. We show the stage of regional restructuring and development determines the levels and composition of individuals in short term and long term spells. Restructuring induces both larger throughputs and deeper structural. problems in unemployment. In the most advanced regions where congestion is lower unemployment is mainly structural in nature resulting from individuals having undertaken long spells in employment in the planned system .

Suggested Citation

  • Hartmut Lehmann & John O'Flaherty & Patrick P. Walsh, 1997. "Structural Adjustment and Regional Long Term Unemployment in Poland," William Davidson Institute Working Papers Series 158, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:1998-158

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Lubomir Lizal & Jan Svejnar, 1997. "Enterprise Investment During the Transition: Evidence from Czech Panel Data," William Davidson Institute Working Papers Series 60, William Davidson Institute at the University of Michigan.
    2. Stephen Bond & Costas Meghir, 1994. "Dynamic Investment Models and the Firm's Financial Policy," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 197-222.
    3. J Earle & S Estrin & L Leshchenko, 1996. "Ownership Structures," CEP Discussion Papers dp0315, Centre for Economic Performance, LSE.
    4. Meyendorff, Anna & Snyder, Edward A., 1997. "Transactional Structures of Bank Privatizations in Central Europe and Russia," Journal of Comparative Economics, Elsevier, vol. 25(1), pages 5-30, August.
    5. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-1078, September.
    6. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    7. R. Glenn Hubbard, 1998. "Capital-Market Imperfections and Investment," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 193-225, March.
    8. Abel, Andrew B & Blanchard, Olivier J, 1986. "The Present Value of Profits and Cyclical Movements in Investment," Econometrica, Econometric Society, vol. 54(2), pages 249-273, March.
    9. Jorgenson, Dale W, 1971. "Econometric Studies of Investment Behavior: A Survey," Journal of Economic Literature, American Economic Association, vol. 9(4), pages 1111-1147, December.
    10. Aghion, Philippe & Blanchard, Olivier J & Carlin, Wendy, 1994. "The Economics of Enterprise Restructuring in Central and Eastern Europe," CEPR Discussion Papers 1058, C.E.P.R. Discussion Papers.
    11. Terrell, Katherine, 1993. "Technical Change and Factor Bias in Polish Industry (1962-1983)," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 741-747, November.
    12. Prasnikar, Janez, et al, 1994. "Behavior of Participatory Firms in Yugoslavia: Lessons for Transforming Economies," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 728-741, November.
    13. Aghion, Philippe & Blanchard, Olivier & Burgess, Robin, 1994. "The behaviour of state firms in eastern Europe, pre-privatisation," European Economic Review, Elsevier, vol. 38(6), pages 1327-1349, June.
    14. Lubomír Lízal, 1999. "Depreciation rates in a transition economy: evidence from czech panel data," Prague Economic Papers, University of Economics, Prague, vol. 1999(3).
    15. Saul Estrin & Robert E. Moore & Jan Svejnar, 1988. "Market Imperfections, Labor Management, and Earnings Differentials in a Developing Country: Theory and Evidence from Yugoslavia," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 465-478.
    16. Terrell, Katherine, 1992. "Productivity of western and domestic capital in polish industry," Journal of Comparative Economics, Elsevier, vol. 16(3), pages 494-514, September.
    17. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    18. Blanchard, O. & Aghion, P., 1996. "On insider privatization," European Economic Review, Elsevier, vol. 40(3-5), pages 759-766, April.
    19. Thornton, Judith, 1970. "Value-Added and Factor Productivity in Soviet Industry," American Economic Review, American Economic Association, vol. 60(5), pages 863-871, December.
    20. Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 169-215.
    21. Burda, Michael C, 1992. "Unemployment, Labour Market Institutions and Structural Change in Eastern Europe," CEPR Discussion Papers 746, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. H Ingham & M Ingham & J Herbst, 2008. "Why do Local Unemployment Rates in Poland Vary so Much?," Working Papers 594943, Lancaster University Management School, Economics Department.
    2. J Herbst & H Ingham & M Ingham, 2005. "Local unemployment in Poland," Working Papers 566803, Lancaster University Management School, Economics Department.

    More about this item

    JEL classification:

    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wdi:papers:1998-158. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (WDI). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.