Working Paper: CEPR ID: DP4144
Authors: Janez Pranikar; Jan Svejnar
Abstract: Given the concern about restructuring and the role of insiders during the transition, we analyse the determinants of (and trade-off between) investment and wages in Slovenian firms. We find that investment behaviour is more consistent with the imperfect capital market (internal funds) hypothesis than with the neoclassical or accelerator models. Firms also display a trade-off between investment and wages, and workers share in firms’ surplus and appropriate funds that are supposed to be used for depreciation investment. Most findings are consistent with the principal theoretical models of restructuring. The models, however, underestimate the power of (elite) managers to restrain worker demands and overestimate this power on the part of external owners.
Keywords: investment; ownership; restructuring; wages
JEL Codes: C33; D92; J50; P20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| value added (D46) | investment (G31) |
| labor cost (J30) | investment (G31) |
| insider power (D73) | wage setting (J38) |
| investment (G31) | value added (D46) |
| wage setting (J38) | investment (G31) |
| ownership structure (G32) | firm performance (L25) |