Industrial Labor Relations Review - CERGE-EI.pdfVIP

Industrial Labor Relations Review Volume 58, Issue 3 2005 Article 3 Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe Swati Basu∗ Saul Estrin† Jan Svejnar‡ ∗McGill University, †London Business School, ‡University of Michigan, c Copyright 2005 by the authors. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, elec- tronic, mechanical, photocopying, recording, or otherwise, without the prior written permis- sion of the publisher, bepress, which has been given certain exclusive rights by the author. In- dustrial Labor Relations Review is produced by The Berkeley Electronic Press (bepress). /ilrreview Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe∗ Swati Basu, Saul Estrin, and Jan Svejnar 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 from immediately before to immediately 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