سرمایه انسانی، بازار ناقص، و تخصیص مجدد نیروی کار در اقتصادهای در حال گذار

In this paper, we investigate the effects of human capital and factor market imperfections on household decisions regarding labor use and reallocation in transition countries. We develop a model that accounts explicitly for heterogeneity in the supply of labor and analyze its impact on the allocation of labor. Furthermore, the effects of imperfections in the capital and labor markets on the reallocation process are modeled. Using a dataset based on a countrywide representative survey of Hungarian rural households, we estimate the effects empirically and find them to be important. Journal of Comparative Economics32 (4) (2004) 745–774.

The literature on economic restructuring in transition economies identifies several factors that contribute to the initial decline in output and the growth of unemployment. Blanchard and Katz (1997) model the increase in unemployment by assuming that subsidy cuts led to a reduction in demand for labor by existing restructuring firms at a time when the growth in employment in the emerging private sector was insufficient to absorb displaced workers. In addition, Blanchard and Kremer (1997) argue for the importance of disorganization problems within the supply chain and Roland and Verdier (1999) identify search frictions as a cause for reductions in output and employment. Konings et al. (1996), Bilsen and Konings (1998), Acquisti and Lehmann (2000), Basu et al. (2000), Dries and Swinnen (2002) and Konings and Lehmann (2002) provide empirical evidence on the problems of reallocating labor between firms. These authors find major differences in the effects of disorganization on newly established private firms and on restructuring existing firms and also considerable variation across different types of firms regarding labor market behavior. Microeconomic studies of labor adjustment processes in transition economies focus primarily on the firms and investigate the effects of their hiring policies and characteristics on the restructuring process. Hence, job creation and destruction in the economy are examined. Although important, these are not the only factors relevant to the labor adjustment process. Human capital and other characteristics of the labor force have an important impact on restructuring processes and growth as Huffman (1980), Lucas (1988) and Barro and Sala-i-Martin (1992) demonstrate in general, and Fan et al. (1999), Kertesi and Kollo (2001) and de Brauw et al. (2002) find in transition countries. Household characteristics, including human capital, affect not only household wages but also household decisions on labor allocation to various activities according to Becker (1965), Sahn and Alderman (1988) and Ahituv and Kimhi (2002). Kimhi (2000) and Kertesi and Kollo (2001) study these effects on part-time employment and early retirement, while Zhao (1999) and Germenji and Swinnen (2003) examine their impact on migration. Earle and Sakova (2000) highlight the growth of self-employment in transition countries. Self-employment, often in food production, has grown dramatically since the beginning of the transition, especially in rural areas as Kollo and Vincze (1999), Rizov (2003) and Lerman et al. (2004) attest. In this paper, we develop a model of the impact of human capital on household decisions about labor allocation in transition countries. The model accounts explicitly for household heterogeneity and analyzes its effect on the allocation of labor, both to self-employment in farming and to wage employment off-farm. Moreover, the model investigates the influence of imperfections in the capital and labor market on the reallocation process. Using a dataset containing information on 1618 Hungarian rural households based on a countrywide representative survey, we assess the impact of human capital and factor market imperfections on labor allocation empirically. Self-employment of rural households in farming is very widespread in Hungary and we find that both the decision to engage in self-employment and the determination of the amount of labor allocated to this activity depend on human capital characteristics, e.g., age and education, and on market imperfections, in particular imperfections in the rural credit market.

In this paper, we develop a model to determine the effects of human capital and market imperfections on labor allocations by households and identify important aspects of the microeconomics of labor adjustment in transition economies. We derive a relationship between human capital and self-employment in farming. Households facing perfect markets would display an inverse U-shaped relationship between human capital and self-employment in farming. However, if households are constrained in the amount of labor they can supply to the non-farm labor market, this relationship changes. The less well endowed is the household with human capital, the stricter will be the constraint; hence, the higher will be the quantity of labor reallocated to farming. In this constrained situation, the relationship between human capital and self-employment in farming is more likely to be negative. Using household data from rural Hungary, we estimate this relationship empirically. We test for market imperfections and for the non-separation of household decisions by incorporating standard exclusion tests in the specification of the farm labor use equation that includes household characteristics and endowments by testing whether these are significant determinants of the labor allocation decisions. In perfect markets, household can borrow capital and supply labor to the market without constraint so that the quantity of labor allocated to farming depends only on prices and human capital endowments. If the availability of wage employment opportunities is constrained, labor use in farming is a function of the household's shadow cost of labor, which is in turn related to the household's labor endowment, non-earned income, and the productive assets owned by the household. Moreover, if credit market imperfections constrain the household ability to borrow on financial markets, labor use in farming will also depend on the household's endowment of non-labor inputs. Our empirical results confirm that human capital and market imperfections have significant impacts on household labor allocation decisions in rural Hungary. Economic reforms and the restructuring of farm organizations during the transition period have influenced considerably the rural labor market in Hungary. Unemployment increased dramatically during the 1990s and self-employment of rural households in farming became widespread. Our analysis shows that the decisions both to enter self-employment in farming and the amount of labor allocated to this activity depend on human capital characteristics of Hungarian households and on market imperfections. Age is an important explanatory variable; during the most important working age interval from 20 to 65 years, we find a strong positive correlation between age and labor allocation to household farming. Younger households allocate less labor to self-employment in farming than do older households. Only at a high age of the household head, i.e., beyond 65 years, does labor allocation decrease with age. We find that education has a significant, but subtle, impact. At very low levels of education, an increase in the education of the household head increases labor allocation to household farming. Since higher education is likely to lead to improved managerial skills and better understanding of market opportunities, an increase in the returns from self-employment of household labor in farming induces households to allocate even more labor to household farming. This effect is more pronounced for the household head than for other members of the household. Hence, either the human capital of the household head is the most important factor affecting managerial capabilities of the household or constraints on wage employment are more important for other members of the household at low levels of education. The positive relationship between education of household members and self-employment in farming holds for low levels of education. As education increases, households allocate increasingly smaller amounts of labor to self-employment in farming and shift more of their labor to wage employment. The implications of these empirical results for the functioning of the labor market in rural Hungary are mixed. The inverse U-shaped relationship between education and the allocation of labor to self-employment by the household head and the strong reductions of self-employment at higher education levels are consistent with relatively well functioning labor markets. However, the evidence suggests that more important constraints may exist for other household members. Moreover, we find important regional variations in this relationship suggesting important differences in the functioning of the rural labor market across rural regions. A stronger indication of both employment constraints and the violation of separability of household model is the positive effects of the size and composition of the household on labor allocation decisions, after controlling for household capital endowments. An increase in the number of household members, particularly those in working age, has a strong impact on total labor allocated to household farming. At the same time, the larger household size allows the head to spend more time working for wages. These results suggest that frictions in the substitution of household for non-household labor impede labor allocation. Access to non-earned income sources, e.g., pensions or rents, has also a significant, but subtle, effect. Although alternative income sources reduce the likelihood of self-employment, access to these finances induces more self-employment in farming for those who are involved in household farming. This finding is consistent with the hypothesis that self-employed farmers are liquidity constrained and that credit market imperfections play an important role in the labor allocation decision. Our tests for regional differences confirm these general conclusions. First, the empirical results show that mobility costs and regional variations in unemployment and geographic conditions are important factors. On the one hand, closeness to urban centers or transport infrastructure and lower regional unemployment rates reduce self-employment because of the better opportunities available for wage employment. On the other hand, better agricultural conditions stimulate self-employment in farming by increasing its relative benefits. Second, in regions with higher unemployment, human capital variables have a different effect on labor allocation due to fewer alternative employment opportunities or to more labor market constraints. We do not find significant regional differences in the estimated coefficient of the capital asset variables, which suggests that factor market imperfections are persistent throughout the rural areas. In summary, these results indicate that labor markets function to an extent in rural Hungary, but that significant constraints remain and regional differences are considerable. Labor allocations are influenced significantly by physical and human capital factors, which affect mobility costs both between sectors and regionally. Since Hungary is one of the most advanced transition countries, the constraints and imperfections identified are likely to be more severe in other transition countries. Hence, investments in physical infrastructure to reduce mobility costs, expenditures on education to upgrade managerial and employable skills, improvements in the credit and insurance infrastructure, and well-functioning healthy financial intermediaries will improve the speed and efficiency of labor reallocation in transition countries.