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

Swati Basu (), Saul Estrin () and Jan Svejnar
Additional contact information
Swati Basu: McGill University
Saul Estrin: London School of Economics

No 1370, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: transition economies; employment determination (search for similar items in EconPapers)
JEL-codes: J23 J50 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-10
New Economics Papers: this item is included in nep-eec and nep-tra
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Citations: View citations in EconPapers (10)

Published - published in: Industrial and Labor Relations Review, 2005, 58 (3), 353-369

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Journal Article: Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe (2005)
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