Effects of Labor Reallocation on Productivity and Inequality: Insights from Studies on Transition

Joanna Tyrowicz, Lucas van der Velde and Jan Svejnar

No 10229, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: From a theoretical perspective the link between the speed and scope of rapid labor reallocation and productivity growth or income inequality is ambiguous. Do reallocations with more flows tend to produce higher productivity growth? Does such a link appear at the expense of higher income inequality? We explore the rich evidence from earlier studies on worker flows in the period of massive and rapid labor reallocation, i.e. the economic transition from a centrally planned to a market-oriented economy in Central and Eastern Europe. We have collected over 450 estimates of job flows from the literature and used these inputs to estimate the short-run and long-run relationship between labor market flows, labor productivity and income inequality. We apply the tools typical for a meta-analysis to verify the empirical regularities between labor flows and productivity growth as well as income inequality. Our findings suggest only weak and short term links with productivity, driven predominantly by business cycles. However, data reveal a strong pattern for income inequality in the short-run - more churning during reallocation is associated with a level effect towards increased Gini indices.

Keywords: transition; job creation; job destruction; worker flows; unemployment (search for similar items in EconPapers)
JEL-codes: D21 D24 D92 G21 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2016-09
New Economics Papers: this item is included in nep-eff, nep-pbe and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Journal of Economic Surveys, 2017, 31 (3), 712-732

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Related works:
Journal Article: EFFECTS OF LABOR REALLOCATION ON PRODUCTIVITY AND INEQUALITY—INSIGHTS FROM STUDIES ON TRANSITION (2017)
Working Paper: Effects of Labor Reallocation on Productivity and Inequality -- Insights from Studies on Transition (2016)
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