Labour Reallocation During Transition: The Case of Poland

Abstract

This paper analyses the reallocation of labour during the transition period, which is argued not only to ease the transition from a planned to market orientated economy, but also to be fundamental to the successful integration of Poland into the European Union. Labour force survey data is used to gauge the overall level of reallocation during the period 1994-1998, a period in which the transition process is considered to be well and truly under way. The results obtained illustrate the inherent immobility prevailing in the Polish labour market during this period and would appear to suggest the presence of relatively significant structural rigidities in the labour market. It is argued that mobility rates of this magnitude are likely to result in considerable strains being placed on the Polish economy when it enters the European Union and could, over the medium term, result in relatively high levels of unemployment. Unless mobility is stimulated, European accession is therefore likely to be a socially costly process. The microeconometric analysis of the determinants of individual mobility presented in the second part of the paper offers a first step to identifying the demographic, economic and social attributes which either aid or inhibit effective labour reallocation. The results obtained highlight a number of important differences in mobility behaviour across age, gender, educational attainment, occupational grouping and labour market experience, which will need to be taken into account in the formulation of active labour market policies to stimulate individual mobility.