Working Paper: CEPR ID: DP3218
Authors: T. Siqjurajda; Katherine Terrell
Abstract: This Paper uses individual-level data to characterize economy-wide job creation and destruction during periods of massive structural adjustment. We contrast the gradualist Czech and the rapid Estonian approach to the destruction of the communist economy to provide evidence on selected macroeconomic theories of reallocation with frictions. We find that gradualism (slowing down job destruction) effectively synchronizes job creation and destruction. Drastic job destruction leads to little or no slowdown of job creation. Small newly established firms are the under-researched fountainhead of jobs during the transition from communist to market oriented economies.
Keywords: job creation; job destruction; transition
JEL Codes: E00; J20; O10; O40; P20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| speed of job destruction (J63) | rate of job creation (J23) |
| gradual job destruction (J63) | job creation (J68) |
| drastic job destruction (F66) | minimal slowdown in job creation (J23) |
| small newly established firms (M13) | job creation (J68) |