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

33 Pages Posted: 29 Oct 2004

See all articles by Swati Basu

Swati Basu

McGill University - Desautels Faculty of Management

Saul Estrin

Centre for Economic Policy Research (CEPR); London School of Economics & Political Science (LSE); IZA Institute of Labor Economics

Jan Svejnar

School of International and Public Affairs, Columbia University, NY, USA; CEPR; IZA; CERGE-EI; University of Ljubljana

Multiple version iconThere are 2 versions of this paper

Date Written: October 2004

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.

Keywords: employment determination, transition economies

JEL Classification: J23, J50, J66

Suggested Citation

Basu, Swati and Estrin, Saul and Estrin, Saul and Svejnar, Jan, Employment Determination in Enterprises Under Communism and in Transition: Evidence from Central Europe (October 2004). Available at SSRN: https://ssrn.com/abstract=612226 or http://dx.doi.org/10.2139/ssrn.612226

Swati Basu

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

Saul Estrin (Contact Author)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jan Svejnar

School of International and Public Affairs, Columbia University, NY, USA ( email )

420 West 118th Street
New York, NY 10027
United States

CEPR

London
United Kingdom

IZA

P.O. Box 7240
Bonn, D-53072
Germany

CERGE-EI

P.O. Box 882
7 Politickych veznu
111 21 Prague 1, Prague
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

University of Ljubljana ( email )

Dunajska 104
Ljubljana, 1000
Slovenia

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