Worker Displacement during the Transition: Experience from Slovenia

Peter Orazem, Milan Vodopivec and Ruth Wu
Additional contact information
Ruth Wu: Federal Reserve Board

No 1297, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The transition to market in Slovenia created labor displacements that were on par or greater than that experienced in North America in the 1980s. A simple theoretical model suggests that factors which raise the probability of layoff should also increase the probability of a quit, predictions that are borne out in data. Probability of both layoffs and quits fell with worker tenure, firm profitability and expected severance costs. Individuals facing a higher probability of displacement accepted slower wage growth than otherwise comparable workers. The incentives to avoid displacement were strong – workers that actually were displaced faced a slow process of transiting out of unemployment with only one-third finding reemployment. Correcting for selection, real wage losses for displaced workers are comparable to those reported for displaced workers in North America.

Keywords: displacement; subsidies; wages; reemployment; Slovenia; selection; specific human capital (search for similar items in EconPapers)
JEL-codes: J63 P2 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2004-09
New Economics Papers: this item is included in nep-tra
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Citations: View citations in EconPapers (7)

Published - published in: Economics of Transition, 2005, 13 (2), 311-340

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Related works:
Journal Article: Worker displacement during the transition: Experience from Slovenia (2005)
Working Paper: Worker Displacement During The Transition: Experience From Slovenia (2004)
Working Paper: Worker displacement during the transition: experience from Slovenia (1995)
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