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Why Labour Hoarding may be Rational: A model of firm behaviour during transition

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  • Ceema Zahra Namazie

Abstract

In the Former Soviet Union, the early 1990s were characterized by large falls in GDP and small changes to already low unemployment. The slow adjustment to unemployment was a result of employers using various means to maintain employment levels, including; extended periods of unpaid leave, reduced hours of work and non-payment of wages. A theoretical model presented here explains why it was rational for firms to adjust labour in this way. The nature of inherited features of the Soviet labour market and lack of institutions necessary for a competitive market economy meant it was in the firm's interest initially to maintain employment levels. Quantitative analysis using Kyrgyz data for 1993 and 1996 provides evidence of changing economic behaviour in agents over this period.

Suggested Citation

  • Ceema Zahra Namazie, 2003. "Why Labour Hoarding may be Rational: A model of firm behaviour during transition," CASE Papers 069, Centre for Analysis of Social Exclusion, LSE.
    • Handle: RePEc:cep:sticas:069
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    File URL: https://sticerd.lse.ac.uk/dps/case/cp/CASEpaper69.pdf
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    1. R. D. Portes, 1969. "The Enterprise under Central Planning," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(2), pages 197-212.
    2. Meghnad Desai & S Estrin, 1992. "Some Simple Dynamics of Transition from Command to Market Economy," CEP Discussion Papers dp0085, Centre for Economic Performance, LSE.
    3. F. P. R. Brechling, 1965. "The Relationship between Output and Employment in British Manufacturing Industries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 187-216.
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    Cited by:

    1. Ceema Zahra Namazie, 2003. "The Effect of Unobservables on Labour Supply Decisions: The formal and informal sector during transition," CASE Papers 072, Centre for Analysis of Social Exclusion, LSE.
    2. Doruk, Ömer Tuğsal & Pastore, Francesco, 2020. "Gender Wage Gap - A Matching Analysis for Three MENA Countries: Egypt, Jordan and Turkey," IZA Discussion Papers 13934, Institute of Labor Economics (IZA).
    3. Ceema Zahra Namazie, 2003. "The Effect of Unobservables on Labour Supply Decisions: The formal and informal sector during transition," CASE Papers case72, Centre for Analysis of Social Exclusion, LSE.
    4. Namazie, Ceema Zahra, 2003. "The effect of unobservables on labour supply decisions: the formal and informal sector during transition," LSE Research Online Documents on Economics 6329, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    transition; enterprise production; labour demand;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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