Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/20563
Authors: 
Orazem, Peter F.
Vodopivec, Milan
Wu, Ruth
Year of Publication: 
2004
Series/Report no.: 
IZA Discussion paper series 1297
Abstract: 
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 strong – 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.
Subjects: 
displacement
subsidies
wages
reemployment
Slovenia
selection
specific human capital
JEL: 
P2
J63
Document Type: 
Working Paper

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