Job creation, job destruction and employment growth in transition countries in the 90s
In this paper we document and analyse gross job flows in five transition countries, Poland, Estonia, Slovenia, Bulgaria and Romania. Using comparable firm level data over the years 1993- 1997, we find that in early transition job destruction dominates job creation, while the latter is picking up as the country enters into a mature stage of transition. Gross job reallocation rates in the more advanced transition countries are comparable to those of Western economies. We show that the restructuring process is a very heterogeneous one in terms of job creation and destruction: Even in transition countries, hit by very large negative aggregate shocks, we find simultaneous creation and destruction of jobs within narrowly defined sectors, regions and firm types. In addition, we find that most of the job reallocation occurs within sectors and regions, rather than across sectors and regions. We suggest that a measure for restructuring is the excess job reallocation rate and show that the excess job reallocation rate is positively correlated with the net employment growth rate at the sector and regional level. Finally, we find that ownership and firm size are the most relevant characteristics for understanding different cross-sectional patterns of job reallocation. Foreign firms have higher job creation and higher excess job reallocation rates, while small businesses are the most dynamic in terms of job reallocation. We investigate the job reallocation process at the firm level and test for trade orientation, ownership and size effects. The results show that firm growth depends on ownership and initial size. Trade orientation effects are important for countries in early transition but not for countries in a more mature stage of the transition process.
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advanced countries Annual average job average job flows Bulgaria and Romania C. M. Schmidt CATHERWOOD LIBRARY central planning competition creation and destruction Domestic private dummies Yes Yes Dustmann EBRD employment growth rate employment protection legislation employment shifts enterprises Estonia and Slovenia excess job reallocation Firm growth regression firm level employment firm performance Foreign firms Fraction of excess gross job creation gross job destruction gross job flows gross job reallocation gross net excess growth regression results job creation rate job destruction rate job flow rates job flows according job reallocation rate job reallocation resulting Konings Labour Economics labour market flexibility Leuven level employment growth Ljubljana lmmigrants Macroeconomic ownership types Panel Data Poland pos Neg gross positive correlation privatised firms regression results robust reported in brackets results robust estimation sector level sectors and regions significant Soest suggests Table Tallinn trade orientation transition economies Wages Yes Year dummies Yes Yes Yes