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Labor Supply after Transition: Evidence from the Czech Republic

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Abstract

We extend the scarce evidence on the labor supply in post-transition countries by estimating the wage elasticity of labor force participation in the Czech Republic. Using household income survey data, we find that a one-percent rise in the gross wage increases the probability of working by 0.16 and 0.02 percentage points for women and men, respectively. Taking into account the tax and benefit system, these semi-elasticities fall to 0.06 for women and 0.01 for men. We interpret the difference between the estimates from the two specifications as a summary measure of the welfare system disincentives. The estimated wage elasticities lie at the lower end of the range of values reported for mature market economies. This finding is consistent with the stylized fact that the labor supply in countries with high labor force participation rates, such as the Czech Republic, tends to be less sensitive to wages.

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  • Alena Bièáková & Jiøí Slaèálek & Michal Slavík, 2011. "Labor Supply after Transition: Evidence from the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(4), pages 327-347, August.
    • Handle: RePEc:fau:fauart:v:61:y:2011:i:4:p:327-347
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    Cited by:

    1. Zuzana Siebertova & Matus Senaj & Norbert Svarda & Jana Valachyova, 2013. "To Work or Not to Work? Estimates of Labour Supply Elasticities," Working and Discussion Papers WP 5/2013, Research Department, National Bank of Slovakia.
    2. Norbert Švarda & Jana Valachyová & Matúš Senaj & Zuzana Siebertová, 2015. "To Work or Not to Work? Updated Estimates of Labour Supply Elasticities," Discussion Papers 32, Central European Labour Studies Institute (CELSI).
    3. Alzbeta Mangarella, 2016. "Mind the employment gap: an impact evaluation of the Czech “multi-speed” parental benefit reform," Working Papers hal-04141578, HAL.
    4. World Bank, 2013. "EU11 Regular Economic Report, Issue #26, January 2013," World Bank Publications - Reports 16489, The World Bank Group.
    5. Larin, Alexander & Maksimov, Andrey & Chernova, Daria, 2016. "The elasticity of labor supply in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 41, pages 47-61.
    6. Hare, Denise, 2016. "What accounts for the decline in labor force participation among married women in urban China, 1991–2011?," China Economic Review, Elsevier, vol. 38(C), pages 251-266.
    7. Ledic, Marko, 2012. "Estimating Labor Supply at the Extensive Margin in the presence of Sample Selection Bias," MPRA Paper 55745, University Library of Munich, Germany.
    8. Kalíšková, Klára, 2014. "Labor supply consequences of family taxation: Evidence from the Czech Republic," Labour Economics, Elsevier, vol. 30(C), pages 234-244.
    9. Matus Senaj & Zuzana Siebertova & Norbert Svarda & Jana Valachyova, 2016. "Labour force participation elasticities and the move away from a flat tax: the case of Slovakia," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-26, December.
    10. Crespo Cuaresma, Jesus & Loichinger, Elke & Vincelette, Gallina A., 2016. "Aging and income convergence in Europe: A survey of the literature and insights from a demographic projection exercise," Economic Systems, Elsevier, vol. 40(1), pages 4-17.
    11. Arabsheibani, G. Reza & Kudebayeva, Alma & Mussurov, Altay, 2021. "A note on bride kidnapping and labour supply behaviour of Kyrgyz women," Economic Systems, Elsevier, vol. 45(4).
    12. Oybek Yuldashev & Obid Khakimov, 2011. "Income Taxation And Labor Force Participation In Transition Economies: Evidence From Bulgaria, Russian Federation And Serbia," Anadolu University Journal of Social Sciences, Anadolu University, vol. 11(3), pages 177-198, September.
    13. repec:cnb:ocpubv:as08 is not listed on IDEAS
    14. Alena Bičáková & Klára Kalíšková, 2024. "Is longer maternal care always beneficial? The impact of a 4-year paid parental leave," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-45, June.

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    More about this item

    Keywords

    labor supply; transition; welfare system;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General

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