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Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe

Author

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  • Basu, Swati

    (McGill University)

  • Estrin, Saul

    (London School of Economics)

  • Svejnar, Jan

    (Columbia University)

Abstract

In this paper, we present a comparative analysis of employment determination in four transition economies as they move from central planning to a market economy in the early 1990s. We use firm level panel data sets from the Czech Republic, Hungary, Poland and Slovakia to estimate dynamic employment equations for the period immediately before and after the start of transition. We find evidence that firms behave for the most part as if they were on their labor demand curves, with little evidence of labor hoarding. There were significant cross-country variations in the determinants of employment during the reform process however. Hungarian and Polish firms started the transition already substantially reformed, and became even more responsive to market signals as transition proceeded. In contrast, firms in the Czech and Slovak republics started in the completely unresponsive mode characteristic of central planning, but rapidly caught up with their counterparts in Hungary and Poland.

Suggested Citation

  • Basu, Swati & Estrin, Saul & Svejnar, Jan, 2004. "Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe," IZA Discussion Papers 1370, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1370
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    References listed on IDEAS

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    2. Jun Han & Junsen Zhang, 2010. "Wages, participation and unemployment in the economic transition of urban China1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 513-538, July.
    3. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. Fathi Fakhfakh & Virginie Pérotin & MÓnica Gago, 2012. "Productivity, Capital, and Labor in Labor-Managed and Conventional Firms: An Investigation on French Data," ILR Review, Cornell University, ILR School, vol. 65(4), pages 847-879, October.
    5. Beatrice Conradie & Jenifer Piesse & Colin Thirtle & Nick Vink, 2018. "Labour Demand in the Post‐apartheid South African Wine Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 815-832, September.
    6. Fakhfakh F. & Perotin V. & Gago M., 2009. "Productivity, Capital and Labor in Labor-Managed and Conventional Firms," Working Papers ERMES 0910, ERMES, University Paris 2.
    7. Jan Babecky & Kamil Galuscak & Lubomir Lizal, 2011. "Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis," Working Papers 2011/15, Czech National Bank.
    8. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2015. "The own-wage elasticity of labor demand: A meta-regression analysis," European Economic Review, Elsevier, vol. 80(C), pages 94-119.
    9. 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.
    10. Görzig, Bernd & Gornig, Martin & Werwatz, Axel, 2006. "Firm specific wage spread in Germany: Decomposition of regional differences in inter firm wage dispersion," SFB 649 Discussion Papers 2006-045, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    11. Natália Monteiro & Miguel Portela & Odd Straume, 2011. "Firm Ownership and Rent Sharing," Journal of Labor Research, Springer, vol. 32(3), pages 210-236, September.
    12. Svejnar, Jan, 2007. "China in Light of the Performance of Central and East European Economies," IZA Discussion Papers 2791, Institute of Labor Economics (IZA).
    13. Munich, Daniel & Svejnar, Jan, 2007. "Unemployment in East and West Europe," Labour Economics, Elsevier, vol. 14(4), pages 681-694, August.
    14. Pierella Paci & Erwin R. Tiongson & Mateusz Walewski & Jacek Liwinski & Maria M. Stoilkova, 2007. "Internal Labor Mobility in Central Europe and the Baltic Region," World Bank Publications - Books, The World Bank Group, number 6598.
    15. Costa-Font, Joan & Nicińska, Anna, 2023. "Comrades in the family? Soviet communism and demand for family insurance," LSE Research Online Documents on Economics 118472, London School of Economics and Political Science, LSE Library.
    16. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.
    17. Ales Berk, 2006. "Determinants of Leverage in Slovenian Blue-Chip Firms and Stock Performance Following Substantial Debt Increases," Post-Communist Economies, Taylor & Francis Journals, vol. 18(4), pages 479-494.
    18. Ralitza Dimova, 2006. "Monopolistic wages or efficient contracts?: What determined the wage–employment bargain in post‐privatization Bulgaria?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 321-347, April.
    19. Maxim Bouev, 2005. "State Regulations, Job Search and Wage Bargaining: A Study in the Economics of the Informal Sector," William Davidson Institute Working Papers Series wp764, William Davidson Institute at the University of Michigan.
    20. Ádám Bereczk, 2013. "Output and Staff Number in Hungarian Manufacturing before, during and after the Crisis," Theory Methodology Practice (TMP), Faculty of Economics, University of Miskolc, vol. 9(02), pages 15-21.
    21. repec:hum:wpaper:sfb649dp2006-045 is not listed on IDEAS
    22. Iga Magda & David Marsden & Simone Moriconi, 2012. "Collective Agreements, Wages, and Firms' Cohorts: Evidence from Central Europe," ILR Review, Cornell University, ILR School, vol. 65(3), pages 607-629, July.

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    More about this item

    Keywords

    transition economies; employment determination;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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