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What Drives the Speed of Job Reallocation During Episodes of Massive Adjustment?

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  • Stepan Jurajda
  • Katherine Terrell

Abstract

This paper uses individual-level data to characterize economy-wide job creation and destruction during periods of massive structural adjustment. We contrast the gradualist Czech and the rapid Estonian approach to the destruction of the communist economy to provide evidence on selected macroeconomic theories of reallocation with frictions. We find that gradualism (slowing down job destruction) effectively synchronizes job creation and destruction. Drastic job destruction leads to little or no slowdown of job creation. Small newly established firms are the under-researched fountainhead of jobs during the transition from communist to market oriented economies.

Suggested Citation

  • Stepan Jurajda & Katherine Terrell, 2002. "What Drives the Speed of Job Reallocation During Episodes of Massive Adjustment?," William Davidson Institute Working Papers Series 432, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2001-432
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    Cited by:

    1. Balla, Katalin & Köllo, János & Simonovits, András, 2008. "Transition with heterogeneous labor," Structural Change and Economic Dynamics, Elsevier, vol. 19(3), pages 203-220, September.
    2. Faggio, Giulia, 2007. "Job destruction, job creation and unemployment in transition countries: what can we learn?," LSE Research Online Documents on Economics 19716, London School of Economics and Political Science, LSE Library.
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    4. Duverger, Catherine & van Pottelsberghe de la Potterie, Bruno, 2011. "Determinants of productivity growth: Science and technology policies and the contribution of R&D," EIB Papers 9/2011, European Investment Bank, Economics Department.
    5. Štěpán Jurajda & Katherine Terrell, 2003. "Job growth in early transition: Comparing two paths," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(2), pages 291-320, June.
    6. Uppenberg, Kristian, 2011. "Economic growth in the US and the EU: a sectoral decomposition," EIB Papers 2/2011, European Investment Bank, Economics Department.
    7. John E. Jackson & Bogdan Mach, 2002. "Job Creation, Destruction and Transition in Poland, 1988-1998: Panel Evidence," William Davidson Institute Working Papers Series 502, William Davidson Institute at the University of Michigan.
    8. Strauss, Hubert, 2011. "Productivity and growth in Europe: Editor's introduction," EIB Papers 1/2011, European Investment Bank, Economics Department.
    9. Faggio, Giulia & Konings, Jozef, 2003. "Job creation, job destruction and employment growth in transition countries in the 90s," Economic Systems, Elsevier, vol. 27(2), pages 129-154, June.
    10. Lauerová, Jana Stefanová & Terrell, Katherine, 2002. "Explaining Gender Differences in Unemployment with Micro Data on Flows in Post-Communist Economies," IZA Discussion Papers 600, Institute of Labor Economics (IZA).
    11. Wolff, Joachim, 2004. "The Duration of New Job Matches in East and West Germany," Discussion Papers in Economics 360, University of Munich, Department of Economics.
    12. Kőrösi, Gábor, 2005. "Vállalati munkahelyteremtés és -rombolás [Corporate job creation and job destruction]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 825-845.
    13. Stepán Jurajda & Katherine Terrell, 2003. "Job growth in early transition: Comparing two paths ," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(2), pages 291-320, June.
    14. Arnold, Jens & Scarpetta, Stefano & Nicoletti, Giuseppe, 2011. "Regulation, resource reallocation and productivity growth," EIB Papers 4/2011, European Investment Bank, Economics Department.
    15. Raul Eamets, 2004. "Labour market flows and adjustment to macroeconomic shocks in the Baltic States," Post-Communist Economies, Taylor & Francis Journals, vol. 16(1), pages 47-71.
    16. Jaan Masso & Raul Eamets & Kaia Philips, 2004. "Where Have All The Jobs Gone? Gross Job Flows In Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 28, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    17. Altomonte, Carlo & Ottaviano, Gianmarco, 2011. "The role of international production sharing in EU productivity and competitiveness," EIB Papers 3/2011, European Investment Bank, Economics Department.
    18. Claude Mathieu & Yann Nicolas, 2006. "Coûts d'ajustement de la demande de travail : une comparaison entre la France et la République tchèque," Economie & Prévision, La Documentation Française, vol. 0(2), pages 135-152.
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    22. 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.
    23. K. Balla & G. Kertesi, 2005. "Privatization, Unemployment and Subsidy," 2005 Meeting Papers 75, Society for Economic Dynamics.
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    25. Haltiwanger, John, 2011. "Firm dynamics and productivity growth," EIB Papers 5/2011, European Investment Bank, Economics Department.

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    More about this item

    Keywords

    job creation; job destruction; transition;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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