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

Posted: 10 May 2005

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

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Abstract

The authors present a comparative analysis of employment determination in four transition economies as they moved from central planning to a market economy in the early 1990s. They 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. For the most part, firms appear to have been quick to adjust employment to wage levels, and there is little evidence of labor hoarding. There were important 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: Communism, Czech Republic, Hungary, Poland, Slovakia, central planning, transition

JEL Classification: J23, J24, J3, J4

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. Available at SSRN: https://ssrn.com/abstract=716462

Swati Basu (Contact Author)

McGill University - Desautels Faculty of Management ( email )

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

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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

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IZA Institute of Labor Economics

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Jan Svejnar

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

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United States

CEPR

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IZA

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Germany

CERGE-EI

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University of Ljubljana ( email )

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