The reallocation of workers and jobs in Russian industry

Gross job and worker flows in Russian industry are studied using panel data from a survey of 530 firms selected through national probability sampling. The data permit examination of several crucial measurement issues, including the timing and definition of employment and the role of reorganizations, and they contain rich information on firm characteristics. We find that new and reorganized firms display larger flows than unreorganized enterprises. Product market dispersion and managerial and dispersed outsider ownership are associated with greater worker churning, and unionization and concentrated outsider ownership with less. There is little evidence that the average firm's employment adjustments have become more responsive to adjustment costs during the transition, but private ownership and product market competition appear to increase responsiveness. JEL Classifications: E24, J23, J63, P23, P31.     

Wage and employment effects of a wage norm

Most transition countries used tax‐supported wage norms in the early 1990s, as a part of their market liberalization programmes. This article analyses how a firm‐level tax (or subsidy) on deviations from a pre‐set wage norm may promote employment by rotating the labour demand curve perceived by the workers’ union around the value of the norm. We derive the conditions under which it yields a positive employment effect. We test the effect of the norm on the wages on a sample of Polish firms in 1990 and 1991. The data support the role of the wage norm on the position of the perceived labour demand curve and the role of the tax rate on its slope.     

Privatization in PolandWhat was the government trying to achieve?1

This article uses the sequencing of privatization to infer the objective pursued by the Polish government in the privatization of its large manufacturing firms in the second half of the 1990s. We construct a model of mixed oligopoly and use it to evaluate the privatization process; our analysis is based on the assumption that firms which furthered the government's objective function the most would be chosen to be privatized first. Based on the features of the firms that were chosen for early privatization, our empirical analysis suggests that welfare maximization was more important than the desire to maximize the revenues from privatization and the government's budget or to minimize employment losses.     

The optimality and overuse of labour in Estonian manufacturing enterprises*

Transition economies need labour market flexibility for successful restructuring and reallocation of the labour force, and for coping with the requirements of the European Monetary Union. In this paper we apply a novel approach to the issue of labour market flexibility in transition countries by studying the optimality and efficiency of labour usage in Estonian manufacturing enterprises. We employ a dynamic model in which both the long‐run optimal level of employment and the speed at which actual employment is adjusted to the optimal are modelled as functions of several variables. Firm‐level panel data of 1995–99 were used. The results showed that in the long run, employment responds most strongly to wages, followed by value added and capital stock. The speed of adjustment, labour use optimality and efficiency all show much greater variations over firms than over time. In the course of time, both labour‐saving technical change and an increase in the efficiency of labour usage occur. On average, there is shortage of labour compared to firms’ own optimal level, along with overuse of labour compared to best‐practice technology. Capital seems to be a binding constraint on the development of employment in the Estonian labour market.     

Determinants of the Timing of Downsizing Among Large Japanese Firms: Long‐Term Employment Practices and Corporate Governance

This paper analyses the relation between corporate governance and employment adjustment behaviour among Japanese firms. The results are summarized in the following two points. First, in the period before 1997, although main banks were likely to allow firms' employment maintenance until they experienced 2 consecutive years of losses, they tended to press firms to downsize once firms faced financial distress. Second, the reduced function of main banks and the increased influence of foreign owners have changed the timing of downsizing since 1997. Changes in corporate governance have brought about slight but non‐negligible changes in Japanese employment practices.     

Taxation of early retirement windows and delaying retirement: The French experience

This paper investigates the effect of the 2003 French pension reform on hiring, firing and employment rates among older workers. This reform increased the mandatory retirement age and simultaneously it set a tax levied on early retirement windows paid by firms to their older workers, to encourage them to leave their job early. We use a matching model with endogenous job destruction extended to account for a mandatory retirement age and we calibrate the model with data drawn from the French Labor Force Surveys for the years 2002 and 2003. We show that in the case of a high tax rate, delaying retirement raises job separation rates, which partially offsets its positive effect on job finding rates. Consequently, the combination of an increase in the retirement age and a taxation on early retirement windows may have negative effects on the employment rate among older workers.     

EFFECT OF PRIVATIZATION AND BROADER REFORMS ON LABOUR USE ADJUSTMENTS AND EFFICIENCY

State‐owned firms were said to have an excessive use of labour. The cost of job losses after privatization was debated but ignored due to perceived efficiency gains in the utilization of labour. We estimate longer time employment risk, labour use adjustment and the efficiency of labour utilization in the Pakistani cement industry. We conclude that firms have made significant adjustments in labour use and employment risks have indeed reduced. Our estimates however, show that long run labour use efficiency in the industry and in the privatized firms has not improved, but that, surprisingly, firms set‐up and operated privately have experienced a decrease in labour efficiency.     

Financial Liberalization,Multinational Banks and Credit Supply: The case of Poland

Part of the Polish transformation process has been an opening of the domestic financial market to foreign entrants. While the number of multinational banks (MNBs) has risen from zero to 15 within six years, the ratio of bank credit to private and public enterprises relative to GDP decreased continuously after 1991. In this paper, I develop an argument as to why these two trends may be connected. Further, using monthly data provided by the weekly Polish publication Gazeta Bankowa, the National Bank of Poland, the Central Statistical Office, the BIS and the IMF, I test the hypothesis that more MNB entry may lead to a declining credit supply during the early stages of the transition process. Multivariate regression results indicate that more MNB entry results in a lower credit supply by Polish banks during the early transition phase. This result holds regardless of the measurement of international financial competition, and regardless of a bank's history, and it is only partially affected by a bank's location. More importantly, the overall impact of increased international financial competition on the credit supply of Polish banks is strong enough to lower the total credit supply in the Polish economy. Since an earlier study has found that Polish industries operate under hard budget constraints and are finance constrained during the early stages of the transition process, a reduction in the credit supply has adverse effects on business investments (Cornelli et al., 1996;Weller, 1999).     

Investment and Finance in de novo private firms: Empirical Results from the Czech Republic, Hungary and Poland

In this paper we use a survey of 281 Czech, Hungarian and Polish newly-established small private firms in order to shed some light on the constraints these firms face in the credit market. The results of our survey show that imperfections in capital markets in Central European economies do not seem to actually inhibit the growth of new private firms. Credit markets do exist for de novo private firms in the three Central European transition economies studied, and they provide quite a large amount of financing from an early stage of the existence of firms. Financial intermediation works reasonably well as far as de novo private firms are concerned: loss-making de novo firms have a lower probability of getting credit than profitable ones. Banks protect themselves against the risk of a deteriorating pool of borrowers by requiring collateral for their loans. We do not find convincing evidence concerning the existence of adverse selection. Loss-making firms are not ready to pay higher interest rates than profitable firms and are not more likely to ask for credit than profitable firms.     

Economic transition and elections in Poland1

Poland's economic and political transition, one of the most successful, has depended very heavily on job creation in new firms to replace the jobs lost in the formerly state‐owned enterprises. This paper uses survey and aggregate data from three Polish elections to suggest that these de novo firms, the individuals they employ, and the residents in the local areas where they exist become an important constituency supporting pro‐reform political parties and constraining the actions of parties less sympathetic to the reforms. The creation of this political constituency helps explain how countries can successfully pursue both economic and political reforms. JEL classification: D72, P26.     

Tariff reduction and employment in Canadian manufacturing

Abstract.  This paper uses firm-level tax data to investigate whether the link between tariff changes and manufacturing employment differed across firms with various productivity and leverage characteristics over the period 1988–94. The results suggest that the effect of domestic tariff reductions on employment was typically small, but that losses were significantly larger for less productive firms. For instance, firms with average productivity in 1988 responded to domestic tariff changes by cutting employment by 11.3% over the period 1988–94, while lower-productivity firms typically shed 20.8% of their workforce over the same period. This paper also indicates that firms with unhealthy balance sheets – those with relatively too much equity or too much leverage – downsized more in the face of declining domestic tariffs, suggesting that financial constraints became more binding when tariff cuts were implemented. These results suggest that firms with high productivity and better financial health were better positioned to face the challenge of trade liberalization.     

Private sector employment in Russia: Scale, composition and performance

In Russia, as across Central and Eastern Europe, privatization and the establishmemt of new private firms have been viewed as key factors in labour market adjustment during the transition period. This paper considers the overall employment developments in the private sector in Russia and the extent to which the private sector employment performance is differentiated from that of other sectors in five Russian regions. The analysis is based on a fresh look at these issues using official statistics published by Goskomstat and drawing on microdata from the March 1996 Russian Labour Force Survey (LFS). A special questionnaire attached to the LFS in the study regions provides supplementary information.
The paper highlights shifts in the sectoral composition of employment, including growth in private sector employment. Compared to other forms of ownership, the analysis confirms a tendency for private sector ownership in the study regions to be associated with stronger employment performance with respect to hours worked and, in some cases, timely payment of wages. Private sector firms appear to have relatively flexible employment patterns, utilizing more fixed-term or part-time employment than other types of firms and experiencing greater labour turnover. Also, private sector employees tend to be somewhat younger and probably more adaptable people. However, there is significant variation across the study regions and substantial exceptions exist with respect to the above-mentioned tendencies. With respect to employment issues, the differentiation between sectors appears to be less pronounced than one might have expected.     

反垄断调查的一个鉴别：一致性定价行为背后的差异与合谋

如何区分成本上涨时企业同时涨价的行为究竟是价格合谋还是寡头竞争的企业正常的价格调整行为？这是反垄断执法机构面临的一个难题。本文通过数理模型证明了无论企业进行伯川德竞争还是古诺竞争，寡头竞争的企业的定价随着成本的变化存在一个连续调整路径，而组成卡特尔的企业的定价则会随着成本的变化出现一个不连续的跳跃。因此反垄断执法机构在观察到企业的一致性定价行为之后，如果能从以往的价格监测纪录中发现这些企业在成本下跌时，价格存在着更大幅度的下调，则可以据此怀疑这些企业存在着价格合谋，应开展更深入的调查来搜集这些企业违反《反垄断法》的全面证据。     

MINIMUM WAGE IMPACTS IN CHINA: ESTIMATES FROM A PRESPECIFIED RESEARCH DESIGN, 2000–2007

We use a prespecified research design to estimate the employment effect of minimum wages in China over the period 2000 to 2007. Our results are consistent with theoretical expectations and institutional realities of Chinese labor markets. These include: negative employment effects in slower growing regions; larger negative effects in non‐state‐owned organizations that tend to be more responsive to market pressures; much larger lagged effects reflecting the time needed for adjustments to occur; no adverse employment effects in the prosperous and growing Eastern region; and a positive employment effect in state‐owned enterprises in the East—consistent with monopsonistic behavior. (JEL J38)     

PARTIAL ADJUSTMENT WITHOUT APOLOGY*

Econometric partial adjustment models perform relatively well at the aggregate level; however, many kinds of microeconomic behavior involve discrete and occasional choices. Analyzing the classic employment adjustment problem, we show how a generalized partial adjustment model tractably accommodates both observations by aggregating the actions of heterogeneous producers facing fixed adjustment costs. Aggregate disturbances cause changes in establishment‐level target employment and in the measure of establishments actively adjusting to their target, whereas aggregate responses exhibit partial adjustment. Our framework also can be applied in general equilibrium settings with persistent idiosyncratic shocks without forfeiting the convenient use of linear solution methods.     

Job creation,job destruction,labour mobility and wages in Poland, 1988–19981

Longitudinal data from interviews with Poles of working age conducted in 1988, 1993 and 1998 combined with longitudinal firm‐level data present a detailed view of the transition from a state‐dominated to a market economy. Job losses in state firms and job creation in new private firms are the dominant employment changes, other than retirements from the labour force. In the Polish case, a significant proportion of this movement over the 1988–1998 period involves a spell of unemployment or exit from the labour force before obtaining a private sector job. This results in considerable job competition between workers leaving the state sector and those who are out of the labour force or unemployed. Income differences between the state sector and the de novo sector appear to have little association with mobility. These results suggest that movement to the new private sector is more likely to be the result of job loss than the result of people looking for better, higher paying jobs. Self‐employment plays an important role in the development of the private sector. People working on their own account have higher incomes than wageworkers and are likely to become owners employing additional workers. Incomes are higher in regions with high rates of job creation and depressed in regions with job destruction.     

COOPERATIVE FIRMS AND THE CRISIS: EVIDENCE FROM SOME ITALIAN MIXED OLIGOPOLIES

We investigate how cooperative firms reacted to the current crisis. This allows us to compare the behaviour of cooperative and conventional firms facing exogenous shifts in demand. After a short survey of a stream of theoretical literature, we analyze a large group of Italian production cooperatives in the periods 2003–2010 and 1994–2011 and we contrast co‐ops behaviour with the overall trend in the industries in which they operate. Our sample's evidence suggests that the cooperative's behaviour has a stabilizing effect on employment with respect to shocks in output demand. Unlike profit‐maximizers, cooperative firms seem to be adjusting pay more than employment when facing shocks. Production co‐ops look better equipped than their profit‐maximizing counterparts in tackling the long recession also because they have been very cautious in their profit policies over time. Unlike conventional firms, they have significantly increased their own equity during ‘good’ years instead of distributing large dividends to their members.     

Trade Competitiveness and Employment: Job Creation or Job Destruction

This paper empirically examines the impact of fluctuations in international trade competitiveness on employment in the UK manufacturing sector over the period 1999–2010. We find statistically significant but economically small effects of a shock to international trade competitiveness on the level of employment. Our results show that the adjustment process in employment mainly works through job creation. We also find that compared to large firms, small firms contribute more toward job creation than job destruction. Our results that changes in GDP growth rate and average wages are significantly related to employment suggest that the UK labour market significantly responds to market forces. Finally, we find that the effect of changes in the real exchange rate on both job creation and job destruction differs between exporting and non-exporting firms.     

The early stages of reform in Polish manufacturingStructural adjustment, ownership and size

This paper argues that a significant adjustment process has taken place in Polish industry in the early stages of the market-oriented reforms. We analyse comprehensive data on two-digit and three-digit manufacturing industries, disaggregated by firm ownership and size. By focusing on a decomposition of labour productivity growth, we obtain results which suggest that structural determinants of the recovery have outweighed cyclical ones. With regard to firm ownership and economic performance, we find that the productive response of state enterprises has been markedly different from that of private firms, with the latter outperforming the former. Finally, our results indicate that size matters, at least among private firms, and our results provide mild evidence of increasing returns.
JEL classification: D21, E63, P21.     

Worker flows, job flows and firm wage policies

Like many transition economies, Slovenia is undergoing profound changes in the workings of the labour market with potentially greater flexibility in terms of both wage and employment adjustment. To investigate the impact of these changes, we use unique longitudinal matched employer‐employee data that permits measurement of employment transitions and wages for workers and enables links of the workers to the firms in which they are employed. We can thus measure worker flows and job flows in a comprehensive and integrated manner. We find a high pace of job flows in Slovenia especially for young, small, private and foreign‐owned firms and for young, less educated workers. While job flows have approached the rates observed in developed market economies, the excess of worker flows above job flows is lower than that observed in market economies. A key factor in the patterns of the worker and job flows is the determination of wages in Slovenia. A base wage schedule provides strict guidelines for minimum wages for different skill categories. However, firms are permitted to offer higher wages to an individual based upon the success of the worker and/or the firm. Our analysis shows that firms deviate from the base wage schedule significantly and that the idiosyncratic wage policies of firms are closely related to the observed pattern of worker and job flows at the firm. Firms with more flexible wages (measured as less compression of wages within the firm) have less employment instability and are also able to improve the match quality of their workers. JEL Classifications: J23, J31, J41, J61, P23, P31.