IDEAS home Printed from https://ideas.repec.org/p/zbw/bofitp/bdp2000_001.html
   My bibliography  Save this paper

Employment- wage decisions in the insider-owned firm

Author

Listed:
  • Polterovich, Victor

Abstract

The paper is intended to explain low sensitivity of employment decisions observed in transition economies where insider ownership prevails and capital markets are not highly developed.We introduce a stability concept for employment levels of a labor-managed firm and prove that there exists a segment of stable employment levels. If a level belongs to the interior of the segment then the firm keeps the same labor input level under any not too large changes. By contrast, the wage rate is responsive.Only the firms on the boundaries of the segment may reconsider employment decisions. Deterioration of market conditions entails decreasing labor inputs for firms with much excess labor and, the same time, increases employment for firms with low levels of labor input.This creates inter-firm flows of workforce and restrains the rise of total unemployment.Stability segments exist also for firms where employment-wage decisions are made by bargaining between workers and managers, and may exist for manager-dominated firms as well. Several concepts of labor hoarding are discussed.

Suggested Citation

  • Polterovich, Victor, 2000. "Employment- wage decisions in the insider-owned firm," BOFIT Discussion Papers 1/2000, Bank of Finland Institute for Emerging Economies (BOFIT).
    • Handle: RePEc:zbw:bofitp:bdp2000_001
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/212468/1/bofit-dp2000-001.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Estrin Saul & Svejnar Jan, 1993. "Wage Determination in Labor-Managed Firms under Market-Oriented Reforms: Estimates of Static and Dynamic Models," Journal of Comparative Economics, Elsevier, vol. 17(3), pages 687-700, September.
    2. Dreze, Jacques H, 1976. "Some Theory of Labor Management and Participation," Econometrica, Econometric Society, vol. 44(6), pages 1125-1139, November.
    3. Derek C Jones, 1998. "The Economic Effects of Privatization: Evidence from a Russian Panel," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 40(2), pages 75-102, July.
    4. Richard Layard & Andrea Richter, 1995. "How much unemployment is needed for restructing: the Russian experience," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(1), pages 39-58, March.
    5. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    6. 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.
    7. Simeon Djankov, 1999. "Ownership Structure and Enterprise Restructuring in Six Newly Independent States," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 41(1), pages 75-95, April.
    8. 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.
    9. Craig Ben & Pencavel John, 1993. "The Objectives of Worker Cooperatives," Journal of Comparative Economics, Elsevier, vol. 17(2), pages 288-308, June.
    10. Susan J Linz & Gary Krueger, 1998. "Enterprise Restructuring in Russia's Transition Economy: Formal and Informal Mechanisms," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 40(2), pages 5-52, July.
    11. Miyazaki, Hajime & Neary, Hugh M, 1985. "Output, Work Hours and Employment in the Short Run of a Labour-managed Firm," Economic Journal, Royal Economic Society, vol. 95(380), pages 1035-1048, December.
    12. Swati Basu & Saul Estrin & Jan Svejnar, 1997. "Employment and wage behaviour of industrial enterprises in transition economies: The cases of Poland and Czechoslovakia1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(2), pages 271-287, November.
    13. Susan J Linz, 1998. "Job Rights in Russian Firms: Endangered or Extinct Institution?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 40(4), pages 1-32, December.
    14. Steinherr, A. & Thisse, J. -F., 1979. "Are labor-managers really perverse?," Economics Letters, Elsevier, vol. 2(2), pages 137-142.
    15. Philippe Aghion & Olivier J. Blanchard, 1998. "On privatization methods in Eastern Europe and their implications1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 87-99, May.
    16. Bonin, John P., 1981. "The theory of the labor-managed firm from the membership's perspective with implications for marshallian industry supply," Journal of Comparative Economics, Elsevier, vol. 5(4), pages 337-351, December.
    17. Susan J. Linz, 1998. "Job Rights in Russian Firms: Endangered or Extinct Institution?," William Davidson Institute Working Papers Series 128, William Davidson Institute at the University of Michigan.
    18. Bonin, John P., 1992. "Privatization and efficient contracts: The workers' stake in the transition," Journal of Comparative Economics, Elsevier, vol. 16(4), pages 716-732, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Polterovich, Victor, 2000. "Employment- wage decisions in the insider-owned firm," BOFIT Discussion Papers 1/2000, Bank of Finland, Institute for Economies in Transition.
    2. repec:zbw:bofitp:2000_001 is not listed on IDEAS
    3. Полтерович В.М., 2003. "Парадоксы Российского Рынка Труда И Теория Коллективных Фирм," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 39(2), апрель.
    4. Susan Linz, 2000. "Restructuring with What Success? A Case Study of Russian Firms," William Davidson Institute Working Papers Series 324, William Davidson Institute at the University of Michigan.
    5. Linz, Susan J., 2004. "Motivating Russian workers: analysis of age and gender differences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(3), pages 261-289, July.
    6. Burdín, Gabriel & Dean, Andrés, 2012. "Revisiting the objectives of worker-managed firms: An empirical assessment," Economic Systems, Elsevier, vol. 36(1), pages 158-171.
    7. Irina Akimova & Gerhard Schwödiauer, 1999. "Restructuring of Ukrainian Enterprises after Privatization: Does Ownership Structure Matter?," Industrial Organization 9903003, University Library of Munich, Germany.
    8. Barbara Blaszczyk & Iraj Hashi & Alexander Radygin & Richard Woodward, 2003. "Corporate Governance and Ownership Structure in the Transition: The Current State of Knowledge and Where to Go from Here," CASE Network Studies and Analyses 0264, CASE-Center for Social and Economic Research.
    9. Ichiro Iwasaki, 2007. "Enterprise Reform And Corporate Governance In Russia: A Quantitative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(5), pages 849-902, December.
    10. Swati Basu & Saul Estrin & Jan Svejnar, 2005. "Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe," ILR Review, Cornell University, ILR School, vol. 58(3), pages 353-369, April.
    11. André Fourçans & Radu Vranceanu, 1996. "Chômage structurel et emploi dans les économies en transition," Revue Française d'Économie, Programme National Persée, vol. 11(2), pages 3-28.
    12. Burdín, Gabriel & Dean, Andrés, 2009. "New evidence on wages and employment in worker cooperatives compared with capitalist firms," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 517-533, December.
    13. Shakhnovich Ruvim & Yudashkina Galina, 2001. "Wage-Setting and Employment Behavior of Enterprises during the Period of Economic Transition," EERC Working Paper Series 01-04e, EERC Research Network, Russia and CIS.
    14. Sprenger, Carsten, 2011. "The choice of ownership structure: Evidence from Russian mass privatization," Journal of Comparative Economics, Elsevier, vol. 39(2), pages 260-277, June.
    15. Helena Hannula, 2001. "Restructuring of the Estonian economy and the role of FDIs in it," University of Tartu - Faculty of Economics and Business Administration, in: Urmas Varblane (ed.), Foreign Direct Investments in the Estonian Economy, edition 1, volume 9, chapter 3, pages 91-174, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    16. Gabriel Burdí­n & Andrés Dean, 2009. "Las decisiones de empleo y salarios de cooperativas de trabajo y empresas capitalistas : evidencia para Uruguay en base a datos de panel," Documentos de Trabajo (working papers) 09-02, Instituto de Economía - IECON.
    17. Peter J. Luke & Mark E. Schaffer, 1999. "Wage Determination in Russia: An Econometric Investigation," CERT Discussion Papers 9908, Centre for Economic Reform and Transformation, Heriot Watt University.
    18. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    19. Graham Pyatt, 1986. "Inertia in Labor Markets," Eastern Economic Journal, Eastern Economic Association, vol. 12(3), pages 243-250, Jul-Sep.
    20. Alexei Izyumov & Leonid Kosals & Rosalina Ryvkina, 2000. "Privatisation of the Russian Defence Industry: Ownership and Control Issues," Post-Communist Economies, Taylor & Francis Journals, vol. 12(4), pages 485-496.
    21. Fidrmuc, Jana P. & Fidrmuc, Jan, 2006. "Can you teach old dogs new tricks? On complementarity of human capital and incentives," Journal of International Money and Finance, Elsevier, vol. 25(3), pages 445-458, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    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:zbw:bofitp:bdp2000_001. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/bofitfi.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.