Discussion Paper Details

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Title: What Drives the Speed of Job Reallocation During Episodes of Massive Adjustment?

Author(s): Stepan Jurajda and Katherine Terrell

Publication Date: February 2002

Keyword(s): job creation, job destruction and transition

Programme Area(s): Labour Economics and Transition Economics

Abstract: This Paper uses individual-level data to characterize economy-wide job creation and destruction during periods of massive structural adjustment. We contrast the gradualist Czech and the rapid Estonian approach to the destruction of the communist economy to provide evidence on selected macroeconomic theories of reallocation with frictions. We find that gradualism (slowing down job destruction) effectively synchronizes job creation and destruction. Drastic job destruction leads to little or no slowdown of job creation. Small newly established firms are the under-researched fountainhead of jobs during the transition from communist to market oriented economies.

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Bibliographic Reference

Jurajda, S and Terrell, K. 2002. 'What Drives the Speed of Job Reallocation During Episodes of Massive Adjustment?'. London, Centre for Economic Policy Research.