Worker Displacement During The Transition: Experience From Slovenia
The transition to market in Slovenia created labor displacements that were on par or greater than that experienced in North America in the 1980s. A simple theoretical model suggests that factors which raise the probability of layoff should also increase the probability of a quit, predictions that are borne out in data. Probability of both layoffs and quits fell with worker tenure, firm profitability and expected severance costs. Individuals facing a higher probability of displacement accepted slower wage growth than otherwise comparable workers. The incentives to avoid displacement were strongï¾—workers that actually were displaced faced a slow process of transiting out of unemployment with only one-third finding reemployment. Correcting for selection, real wage losses for displaced workers are comparable to those reported for displaced workers in North America.
Year of publication: |
2004-08-30
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Authors: | Orazem, Peter ; Vodopivec, Milan ; Wu, Ruth |
Institutions: | Department of Economics, Iowa State University |
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