Wage and Investment Behavior in Transition: Evidence from a Polish Panel Data Set

Delta Working Paper No. 9717

38 Pages Posted: 17 Oct 1997

See all articles by Irena Grosfeld

Irena Grosfeld

Paris School of Economics

Jean-Francois Nivet

University of Amiens - Economics; Université Paris I Panthéon-Sorbonne

Date Written: July 1997

Abstract

This paper looks at the behavior of large industrial firms in Poland in 1988-1994. Using a longitudinal enterprise level data set, we are able to systematically test various hypotheses concerning firms' reactions to the change in their environments. The results confirm a structural break after the introduction of the package of reforms in 1990. Labor market conditions and product market competition exert important downward pressure on wages. However, after 1993, this initially strong response is weakened. Comparison of wage setting behavior across different types of firms confirms important differences in wage negotiation. In SOEs insiders capture an important part of productivity increase while in privatized firms there is no positive relationship between firm ability to pay and wage increases. Privatization appears important for the strategic dimension of enterprise restructuring. Privatized firms invest more and have greater capacity to ensure higher output growth.

JEL Classification: C33, D21, P21

Suggested Citation

Grosfeld, Irena and Nivet, Jean-Francois, Wage and Investment Behavior in Transition: Evidence from a Polish Panel Data Set (July 1997). Delta Working Paper No. 9717, Available at SSRN: https://ssrn.com/abstract=34686 or http://dx.doi.org/10.2139/ssrn.34686

Irena Grosfeld (Contact Author)

Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014
France

Jean-Francois Nivet

University of Amiens - Economics

Chemin du Thil
80025 Amiens Cedex 1
France

Université Paris I Panthéon-Sorbonne

12, place du Panthéon
Paris, IL
France