Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46748 
Year of Publication: 
1996
Citation: 
[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1996
Series/Report no.: 
Kiel Working Paper No. 742
Publisher: 
Kiel Institute of World Economics (IfW), Kiel
Abstract: 
This paper presents error correction estimates of a simple interdependent model of the labour market using monthly data over 1990-1994 for the industrial sector in Poland and Hungary. The aim is to investigate three issues in the performance of labour markets during transition. First, is there a stable labour market equilibrium or do high unemployment rates across the region indicate hysteresis? Second, has the intensity of employment adjustment increased with progress in institutional reforms that strengthened corporate governance at the enterprise level? Third, what governs the evolution of real wages and to what extent is there evidence for strong insider power in the labour market? The results reveal striking differences between Poland and Hungary. The former exhibits hysteresis and evidence for considerable insider power while the latter has experienced adjustment towards a stable labour market equilibrium. The intensity of adjustment, however, is high in both countries over the sample period and fails to respond to the initiation of institutional reforms.
Subjects: 
Hysteresis
Adjustment Intensity
Insider Power
JEL: 
J20
P52
Document Type: 
Working Paper
Document Version: 
Digitized Version

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