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

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  • Swati Basu
  • Saul Estrin
  • Jan Svejnar

Abstract

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.

Suggested Citation

  • Swati Basu & Saul Estrin & Jan Svejnar, 2000. "Employment and Wages in Enterprises Under Communism and in Transition: Evidence From Central Europe and Russia," William Davidson Institute Working Papers Series 440, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2000-440
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    References listed on IDEAS

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    1. Daniel Münich & Jan Svejnar & Katherine Terrell, 2005. "Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 100-123, February.
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    6. Dani Rodrik, 1994. "Foreign Trade in Eastern Europe's Transition: Early Results," NBER Chapters,in: The Transition in Eastern Europe, Volume 2: Restructuring, pages 319-356 National Bureau of Economic Research, Inc.
    7. Barberis, Nicholas & Maxim Boycko & Andrei Shleifer & Natalia Tsukanova, 1996. "How Does Privatization Work? Evidence from the Russian Shops," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 764-790, August.
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    9. 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.
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    11. Brown, James N & Ashenfelter, Orley, 1986. "Testing the Efficiency of Employment Contracts," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 40-87, June.
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    Citations

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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. Mickiewicz, Tomasz & Gerry, Christopher J. & Bishop, Kate, 2005. "Privatisation, corporate control and employment growth: Evidence from a panel of large Polish firms, 1996-2002," Economic Systems, Elsevier, vol. 29(1), pages 98-119, March.
    3. Vit Storm & Katherine Terrell, 1999. "A Comparitive Look at Labor Mobility in the Czech Republic: Where Have all the Workers Gone?," William Davidson Institute Working Papers Series 140, William Davidson Institute at the University of Michigan.
    4. Kate Bishop & Tomasz Mickiewicz, 2003. "While Labour Hoarding May Be Over, Insiders??? Control Is Not. Determinants Of Employment Growth In Polish Large Firms, 1996-2001," William Davidson Institute Working Papers Series 2003-593, William Davidson Institute at the University of Michigan.
    5. Tomasz Mickiewicz & Kate Bishop, 2003. "Wage Determination: Privatised, New Private And State Owned Companies. Empirical Evidence From Panel Data," William Davidson Institute Working Papers Series 584, William Davidson Institute at the University of Michigan.
    6. Jan Svejnar, 2002. "Transition Economies: Performance and Challenges," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 3-28, Winter.
    7. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.
    8. Jan Svejnar, 2002. "Assistance to the Transition Economies : Were There Alternatives?," World Bank Publications, The World Bank, number 20232.
    9. Janos Kollő & Tomasz Mickiewicz, 2005. "Wage Bargaining, Privatisation, Ability to Pay and Outside Options: Evidence from Hungary," Post-Communist Economies, Taylor & Francis Journals, vol. 17(4), pages 465-483.
    10. Natalia V. Smirnova, 2003. "Re-employment Probabilities and Wage Offer Function for Russian Labor Market," William Davidson Institute Working Papers Series 547, William Davidson Institute at the University of Michigan.
    11. Tichit, Ariane, 2006. "The optimal speed of transition revisited," European Journal of Political Economy, Elsevier, vol. 22(2), pages 349-369, June.
    12. Jan Svejnar, 2002. "Labor Market Flexibility in Central and East Europe," William Davidson Institute Working Papers Series 496, William Davidson Institute at the University of Michigan.
    13. Jaan Masso & Almas Heshmati, 2004. "The optimality and overuse of labour in Estonian manufacturing enterprises," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(4), pages 683-720, December.
    14. Guido Friebel & Gerard McCullough & Laura Padilla, 2016. "Product Market Deregulation's Winners and Losers: US Railroads between 1981 and 2001," Working Papers 2016-005, Universidad Loyola Andalucía, Department of Economics.
    15. Maxim Bouev, 2004. "Diverging Paths: Transition in the Presence of the Informal Sector," William Davidson Institute Working Papers Series 2004-689, William Davidson Institute at the University of Michigan.
    16. Stefan Bojnec, 2003. "Wage formation during economic transformation: macroeconomic facts and firm survey evidence from Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 15(4), pages 571-593.
    17. Tomasz Marek Mickiewicz & Christopher Gerry & Kate Bishop, 2004. "Inherited labour hoarding, insiders and employment growth. Panel data results: Poland, 1996-2002," UCL SSEES Economics and Business working paper series 37, UCL School of Slavonic and East European Studies (SSEES).
    18. Oyvat, Cem, 2016. "Agrarian Structures, Urbanization, and Inequality," World Development, Elsevier, vol. 83(C), pages 207-230.
    19. Jed Friedman, 2004. "Firm Ownership and Internal Labor Practices in a Transition Economy: An Exploration of Worker Skill Acquisition in Vietnam," William Davidson Institute Working Papers Series 2004-696, William Davidson Institute at the University of Michigan.
    20. repec:wfo:wstudy:25287 is not listed on IDEAS

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    Keywords

    Russia; Central Europe; employment; wages; Labor and Human Resources;

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