Job Reallocation and Productivity Growth Under Alternative Economic Systems and Policies: Evidence from the Soviet Transition

Authors

J. David Brown, Heriot-Watt UniversityFollow
John S. Earle, W.E. Upjohn Institute for Employment ResearchFollow

Publication Date

12-1-2002

Series

Upjohn Institute Working Paper No. 02-88

DOI

10.17848/wp02-88

Abstract

How do economic policies and institutions affect job reallocation processes and their consequences for productivity growth? This paper studies the extreme case of economic system change and alternative transitional policies in the former Soviet Republics of Russia and Ukraine. Exploiting annual industrial census data from 1985 to 2000, we find that Soviet Russia displayed job flow behavior quite different from market economies, with very low rates of job reallocation that bore little relationship to relative productivity across firms and sectors. Since liberalization began, the pace, heterogeneity, and productivity effects of job flows have increased substantially. The increases occurred more quickly in rapidly reforming Russia than in "gradualist" Ukraine, as did the estimated effects of privatization and competitive pressures from product and labor markets on excess job reallocation and on the productivity-enhancing effects of job flows.

Issue Date

December 2002

Sponsorship

Financial support for data collection was provided by the Tacis ACE Programme of the European Union, the MacArthur Foundation, The Ruben Rausing Fund, the Bank of Sweden, and the Jan Wallander and Tom Hedelius Foundation.

Subject Areas

INTERNATIONAL ISSUES; International labor comparisons; Transition economies