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Employment and Wages in Enterprises Under Communism and in Transition: Evidence from Central Europe and Russia

  • Swati Basu
  • Saul Estrin
  • Jan Svejnar

This paper presents a comparative analysis of employment and wage behavior of firms in the Czech Republic, Slovakia, Poland, Hungary and Russia during the late 1980s to the early 1990s. The four main findings are: 1) There is evidence of some (not excessive) labor hoarding before the transition and it disappeared shortly thereafter; 2) The estimated elasticities of demand grew over the transition, starting from zero in Russia, the Czech Republic and Slovakia and from sizeable levels in Hungary and Poland. By the end of the period, the elasticities for the four East European countries were quite similar and those for Russia had not changed significantly; 3) Once other factors are controlled for, there is no significant difference in the employment behavior among firms by ownership or legal status. However, Czech, Slovak and Polish private firms did pay higher wages than state-owned firms immediately after the start of the transition; 4) A closer examination in the Czech Republic of state-owned enterprises (SOEs) and newly established firms indicates that SOEs had lower elasticities of employment and allowed less rent sharing than the newly established firms.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp114.pdf
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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 114.

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Length: pages
Date of creation: 01 May 2000
Date of revision:
Handle: RePEc:wdi:papers:2000-114
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  1. Rodrik, Dani, 1992. "Foreign Trade in Eastern Europe's Transition: Early Results," CEPR Discussion Papers 676, C.E.P.R. Discussion Papers.
  2. Nicholas Barberis & Maxim Boycko & Andrei Shleifer & Natalia Tsukanova, 1995. "How Does Privatization Work? Evidence from the Russian Shops," NBER Working Papers 5136, National Bureau of Economic Research, Inc.
  3. Daniel Munich & Jan Svejnar & Daniel Munich, 1999. "Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy," William Davidson Institute Working Papers Series 272, William Davidson Institute at the University of Michigan.
  4. Lizal, Lubomir & Singer, Miroslav & Svejnar, Jan, 1997. "Enterprise Break-ups and Performance During the Transition," CEPR Discussion Papers 1757, C.E.P.R. Discussion Papers.
  5. Bresson, G & Kramarz, F & Sevestre, P, 1992. "Heterogeneous Labor and the Dynamics of Aggregate Labor Demand: Some Estimations Using Panel Data," Empirical Economics, Springer, vol. 17(1), pages 153-68.
  6. Orley Ashenfelter & James N. Brown, 1985. "Testing the Efficiency of Employment Contracts," Working Papers 573, Princeton University, Department of Economics, Industrial Relations Section..
  7. 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 728-41, November.
  8. Quandt, Richard E & Rosen, Harvey S, 1989. "Endogenous Output in an Aggregate Model of the Labor Market," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 394-400, August.
  9. 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 1055-78, September.
  10. János Kornai, 1994. "Highway and Byways: Studies on Reform and Postcommunist Transition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262111985, June.
  11. Jan Svejnar, 1978. "On the Theory of a Participatory Firm," Working Papers 493, Princeton University, Department of Economics, Industrial Relations Section..
  12. ZELLNER, Arnold & KMENTA, Jan & DREZE, Jacques H., . "Specification and estimation of Cobb-Douglas production function models," CORE Discussion Papers RP -12, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  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.
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