Transition on the Shop Floor - The Restructuring of a Weaving Mill, Hungary 1988-97

While a variety of studies analysed the benign effects of privatisation on firm performance under post-socialist transition using financial data very little is known about how the apparent productivity gains were achieved. This paper follows a weaving mill from 1998 to 1997 on its way of becoming a capitalist enterprise and gives a detailed account of the sources and limits of productivity growth. The data suggests that the factory was not far from the competitive optimum given the size of ‘plant and equipment’ - efficiency gains were mostly achieved by plant size reduction and asset stripping. The gains from this sort of initial restructuring helped many former state enterprises stay on the market but they did not necessarily indicate high levels of adaptability, capacity to innovate and ability to attract outside investors. In economies with many `seemingly restructured` privatised enterprises the elimination of the former state sector jobs is likely to continue within the private sector. The process may last for years after privatisation as a legal act had been fully accomplished.http://deepblue.lib.umich.edu/bitstream/2027.42/40031/3/wp645.pd

Transition on the Shop Floor - The Restructuring of a Weaving Mill, Hungary 1988-97

While a variety of studies analysed the benign effects of privatisation on firm performance under post-socialist transition using financial data very little is known about how the apparent productivity gains were achieved. This paper follows a weaving mill from 1998 to 1997 on its way of becoming a capitalist enterprise and gives a detailed account of the sources and limits of productivity growth. The data suggests that the factory was not far from the competitive optimum given the size of ‘plant and equipment’ - efficiency gains were mostly achieved by plant size reduction and asset stripping. The gains from this sort of initial restructuring helped many former state enterprises stay on the market but they did not necessarily indicate high levels of adaptability, capacity to innovate and ability to attract outside investors. In economies with many `seemingly restructured` privatised enterprises the elimination of the former state sector jobs is likely to continue within the private sector. The process may last for years after privatisation as a legal act had been fully accomplished.firm behaviour, firm objectives, compensation, transition, Hungary

Fighting “Low Equilibria” by Doubling the Minimum Wage ? Hungary’s Experiment

In January 2001 the Hungarian government increased the minimum wage from Ft 25,500 to Ft 40,000. One year later the wage floor rose further to Ft 50,000. The paper looks at the short-run impact of the first hike on small-firm employment and flows between employment and unemployment. It finds that the hike significantly increased labor costs and reduced employment in the small firm sector; and adversely affected the job retention and job finding probabilities of low-wage workers. While the conditions for a positive employment effect were mostly met in depressed regions spatial inequalities were amplified rather than reduced.http://deepblue.lib.umich.edu/bitstream/2027.42/40030/3/wp644.pd

Fighting “Low Equilibria” by Doubling the Minimum Wage ? Hungary’s Experiment

In January 2001 the Hungarian government increased the minimum wage from Ft 25,500 to Ft 40,000. One year later the wage floor rose further to Ft 50,000. The paper looks at the short-run impact of the first hike on small-firm employment and flows between employment and unemployment. It finds that the hike significantly increased labor costs and reduced employment in the small firm sector; and adversely affected the job retention and job finding probabilities of low-wage workers. While the conditions for a positive employment effect were mostly met in depressed regions spatial inequalities were amplified rather than reduced.Minimum wages, Regional labor markets, Transition, Hungary