Productivity and Inequality Effects of Rapid Labor Reallocation – Insights from a Meta-Analysis of Studies on Transition

From a theoretical perspective the link between the speed and scope of rapid labor reallocation and productivity growth or inequalities remains unclear. Do reallocations with more flows tend to produce higher productivity growth? Does such link appear at the expense of higher inequalities? We explore the rich evidence from earlier studies on worker flows in the period of massive and rapid labor reallocation, i.e. the economic transition from a centrally planned to a market-oriented economy in Central and Eastern Europe. We apply the tools typical for a meta-analysis to verify the empirical regularities between labor flows and productivity growth as well as inequalities. We collected over 450 estimates of job flows from the literature and use these inputs to estimate the short-run and long-run relationship between job flows, labor productivity and inequalities. Our findings suggest relatively weak and short term links with productivity for job destruction/separations. On the other hand, data reveal a strong pattern for inequalities more churning during reallocation is associated with a permanent level efect towards increased Gini indexes.