Shocked by therapy: employment patterns across the socioeconomic transition threshold in Poland
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Monika Oczkowska, Centre for Economic Analysis “Shocked by therapy: employment patterns across the socioeconomic transition threshold in Poland”
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Shocked by therapy: employment patterns across the socioeconomic transition threshold in Poland
- 1. Shocked by therapy: employment patterns across the socio-economic transition threshold in Poland Monika Oczkowska (joint work with Michał Myck) SITE Academic Conference: 25 years of transition Stockholm, 06/12/2016
- 2. • The socio-economic transition of late 1980s and early 1990s as one of key developments in modern European history. • Yet, so far very little quantitative analysis of individual experiences at the time – largely due to lack of reliable micro-level data. • Aim to shed some light on the developments across the transition threshold in Poland with the focus on individual labour market experiences using detailed retrospective information: • descriptive paper focused on cohorts born between 1928 and 1957 (aged 31-60 in 1988); • analysis based on data from the Survey of Health, Ageing and Retirement in Europe (SHARE); • Focus of the paper: • how much can we learn about the transition in Poland from retrospective data? • identification of groups most and least affected by the “shock therapy” policies; • long term effects of transition shocks: health, well-being and material conditions? Key objectives of the paper SITE Academic Conference
- 3. • Poland on the verge of transition: • a centrally planned economy with underdeveloped private sector, very high inflation and growing levels of public foreign debt; • labour market characterized by low levels of productivity, weak relation between productivity and wages, low levels of returns to education and high rate of labour force participation. • The “shock therapy” package of the Mazowiecki government (Balcerowicz Plan, 01.01.1990) included: • fiscal consolidation (reductions in subsidies, reform of the tax system); • restrictive monetary policy to reduce inflation (including strict policies to limit wage growth); • convertibility of the currency; • liberalization in foreign trade; Transition in Poland • Economic transition and the labour market: • 1989 – very liberal unemployment legislation; tightened until 1995; • Early 1990s – generous regulations on disability/early-retirement pensions Year Rate % unemployed without benefit Dec 1990 6.3 20.8 Dec 1991 11.8 21.0 Dec 1992 13.6 47.7 Dec 1993 16.4 51.7 Dec 1994 16.0 49.9 Dec 1995 14.9 41.1 Registered unemployment in Poland Source: CSO. SITE Academic Conference
- 4. • Our approach to examine labour market developments of the Polish transition: • use international Survey of Health, Ageing and Retirement in Europe (SHARE): • Panel data on individuals aged 50+ from Europe (+ Israel); • Regular waves (2004,2007,2011,2013,2015): current conditions • SHARE-Life (2008/09): detailed retrospective data on individual life history: childhood conditions, accommodation, detailed labour market history. • build individual labour market histories: from the end of education till the time of the survey; • analyse these histories before and after the transition and look at the implications of the reforms for labour market outcomes at individual level. • Analysis focuses on individuals born between 1928 and 1957 (745 men and 915 women with valid information): • divided into three birth cohorts; • compared to same cohorts in selected other SHARE countries: • “central” Europe: Belgium, France, Germany (West), Netherlands; • “southern” Europe: Spain, Greece, Italy. Transition in Poland SITE Academic Conference
- 5. Key variables of interest: Job spells: • start/end, • basic job characteristics, • first wage/income, • reason for leaving. Gaps between job episodes (min. 6 months): • labour market status (unemployed, homemaker, disabled, etc.); • income sources during gaps; • situation after last job and preceding retirement. Sample 1928-37 1938-47 1948-57 Total Total N 359 529 772 1,820 Gender women % 53.2 54.4 56.5 56.1 Years of education 15 or more % 15.6 18.9 32.4 23.9 Living with partner yes % 88.9 91.5 92.6 90.7 Has children in 1988 yes % 91.6 91.3 89.9 90.7 Employment sit. in 1988 working % 55.7 82.2 86.0 74.9 unemployed % 0.8 0.8 1.9 1.4 retired % 16.2 2.3 0.1 6.9 disabled % 5.3 2.7 2.2 3.2 homemaker % 14.5 10.0 8.6 10.6 other % 7.5 2.1 1.8 3.0 Working in 1988 – employee/self-emp self-employed % 37.5 23.5 14.8 21.6 Working in 1988 - sector agriculture % 48.5 33.8 18.4 28.7 industry % 25.0 31.5 41.8 35.0 services % 26.5 34.7 39.8 36.3 SITE Academic Conference
- 6. 2005 2006 2007 2008 mple: 7168 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 1817 pl ret home dis oth PL Employment situation 1980-2008 SITE Academic Conference 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7743 west 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7168 south 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 1817 pl Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 24 Jun 2016 edu full/e part/e unem n/look unem look ret home dis oth Years (1980-2008)
- 7. 2005 2006 2007 2008 mple: 7168 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 1817 pl ret home dis oth PL Employment situation 1980-2008 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7743 west 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7168 south 0 .2 .4 .6 .8 1 1980 Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 24 Jun 2016 edu full/e part/e unem n/look unem look ret SITE Academic Conference 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7743 west 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7168 south 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 1817 pl Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 24 Jun 2016 edu full/e part/e unem n/look unem look ret home dis oth ES, GR, ITBE, DE-West, FR, NL Years (1980-2008) Years (1980-2008) Years (1980-2008)
- 8. 2005 2006 2007 2008 mple: 7168 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 1817 pl ret home dis oth PL Employment situation 1980-2008 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7743 west 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7168 south 0 .2 .4 .6 .8 1 1980 Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 24 Jun 2016 edu full/e part/e unem n/look unem look ret SITE Academic Conference 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7743 west 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 7168 south 0 .2 .4 .6 .8 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sample: 1817 pl Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 24 Jun 2016 edu full/e part/e unem n/look unem look ret home dis oth ES, GR, ITBE, DE-West, FR, NL Years (1980-2008) Years (1980-2008) Years (1980-2008)
- 9. 1928-1937 Employment situation for ages 17-59 y.o. in cohorts in Poland, men SITE Academic Conference 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 168 pl gender1 cohort1 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 240 pl gender1 cohort2 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 332 pl gender1 cohort3 Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 23 Nov 2016 edu full/e part/e unem n/look unem look ret home dis oth 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 168 pl gender1 cohort1 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 240 pl gender1 cohort2 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 332 pl gender1 cohort3 Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 23 Nov 2016 edu full/e part/e unem n/look unem look ret home dis oth Age (17-59)
- 10. 1928-1937 1938-1947 1948-1957 Employment situation for ages 17-59 y.o. in cohorts in Poland, men SITE Academic Conference 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 168 pl gender1 cohort1 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 240 pl gender1 cohort2 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Sample: 332 pl gender1 cohort3 Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 23 Nov 2016 edu full/e part/e unem n/look unem look ret home dis oth Age (17-59) Age (17-59) Age (17-59)
- 11. Who became unemployed during transition? • Descriptive analysis of labour market states before and after transition: work => unemployment • 1988 used as the “pre-transition” period: • Experience of unemployment between 1989-1991 as a measure of transition shock: • how true is the unemployment inflow story? • did people come onto the labour market to claim benefits? SITE Academic Conference Situation in 1988 Men Women Total working % 77.8 62.2 67.3 unemployed % 22.2 35.1 30.9 homemaker % 0.0 0.0 0.0 other % 0.0 2.7 1.8 Total % 100.0 100.0 100.0 N 18 37 55 Declared unemployment between 1989-1991
- 12. Unemployment in early 1990s, conditional on working in 1988 • Probability models to examine which cohorts were most/least affected • Different impact of unemployment at transition threshold and in early 90s Pr 𝑤 = 𝑈8991 𝑋, 𝑤88 = 1 = 𝛽𝑋 + 𝜀 SITE Academic Conference Pr 𝑤 = 𝑈9295 𝑋, 𝑤88 = 1 = 𝛽𝑋 + 𝜀
- 13. Unemployment in early 1990s, conditional on working in 1988 Coeff. SE Sign. Years of education>15 -0.000 (0.012) Female 0.014 (0.011) Cohort 1948-1957 0.026 (0.013) * Agriculture in 1988 -0.018 (0.016) Family background included Childhood circumst. included N 1,138 * p < 0.10 ** p < 0.05 *** p < 0.01 unemployed between 1989-1991 • Probability models to examine which cohorts were most/least affected • Different impact of unemployment at transition threshold and in early 90s Pr 𝑤 = 𝑈8991 𝑋, 𝑤88 = 1 = 𝛽𝑋 + 𝜀 SITE Academic Conference Pr 𝑤 = 𝑈9295 𝑋, 𝑤88 = 1 = 𝛽𝑋 + 𝜀 Probability of unemployment if worked in 1988, marginal effects
- 14. Unemployment in early 1990s, conditional on working in 1988 Coeff. SE Sign. Years of education>15 -0.000 (0.012) Female 0.014 (0.011) Cohort 1948-1957 0.026 (0.013) * Agriculture in 1988 -0.018 (0.016) Family background included Childhood circumst. included N 1,138 * p < 0.10 ** p < 0.05 *** p < 0.01 unemployed between 1989-1991 • Probability models to examine which cohorts were most/least affected • Different impact of unemployment at transition threshold and in early 90s Pr 𝑤 = 𝑈8991 𝑋, 𝑤88 = 1 = 𝛽𝑋 + 𝜀 SITE Academic Conference unemployed between 1992-1995 Pr 𝑤 = 𝑈9295 𝑋, 𝑤88 = 1 = 𝛽𝑋 + 𝜀 Coeff. SE Sign. Years of education>15 -0.045 (0.019) ** Female 0.026 (0.015) * Cohort 1948-1957 0.045 (0.018) ** Agriculture in 1988 -0.043 (0.022) ** Family background included Childhood circumst. included N 1,138 Probability of unemployment if worked in 1988, marginal effects
- 15. Transition shocks and current outcomes • Matching experiences of unemployment shocks in early 1990s to: • indicators of health, well-being and material conditions from the 2007 survey and from SHARE-Life (2008/09): • health indicators: 1+ADLs, 2+symptoms, poor self-reported health • well-being indicators: CASP-12 4 categories, life satisfaction 0-10 scale, EURO-D 0-12 depression symptoms • HH material situation: great difficulties in making ends meet (MEM), total HH income • Outcomes compared conditional on working in 1988 and experiencing unemployment between 1989-1991: • unemployment in the early years treated as exogenous job loss resulting from the shock therapy; SITE Academic Conference
- 16. Shocks in the past and future outcomes * p < 0.10 ** p < 0.05 *** p < 0.01 SITE Academic Conference Unemployed 89-911 Other 89-911 Female Education years N Meth. Coeff. SE Coeff. SE Coeff. SE Coeff. SE Health 1+ ADL (2007) 0.990** (0.417) 0.355 (0.257) 0.374** (0.180) -0.001 (0.026) 1214 logit 2+ health symptoms (2007) 0.612 (0.385) 0.011 (0.237) 0.619*** (0.143) -0.049** (0.021) 1218 logit Poor self-rep.health (2007) 0.688* (0.406) 0.540** (0.226) -0.027 (0.158) -0.148*** (0.028) 1214 logit Poor self-rep.health (2008/09) 0.294 (0.396) 0.496** (0.210) 0.080 (0.146) -0.088*** (0.024) 1386 logit Material conditions great difficul.with MEM(2007) 0.694* (0.360) 0.384* (0.222) -0.155 (0.145) -0.136*** (0.025) 1383 logit ln HH income , imput. (2007) -0.217* (0.121) -0.004 (0.069) -0.058 (0.044) 0.026*** (0.006) 1377 OLS ln HH income (2008/09) 0.050 (0.135) 0.021 (0.076) -0.053 (0.049) 0.025*** (0.007) 1281 OLS Well-being CASP-12 4 categ. (2007) -0.352* (0.209) 0.060 (0.128) -0.252*** (0.078) 0.055*** (0.012) 1177 oprobit Life satisfaction 0-10 (2007) -0.609*** (0.179) 0.032 (0.106) -0.165** (0.067) 0.046*** (0.010) 1206 oprobit EURO-D 0-12 (2007) 0.333* (0.179) 0.089 (0.107) 0.546*** (0.068) -0.048*** (0.010) 1190 oprobit Controls: age gr., regional dum., industry in 1988, work experience until 1988, severe injuries until 1988, childhood health, family SE sit. at age10 1 Reference group for unemployed/other 89-91: working continously 89-91 Sample: working in 1988
- 17. Shocks in the past and future outcomes * p < 0.10 ** p < 0.05 *** p < 0.01 SITE Academic Conference Unemployed 89-911 Other 89-911 Female Education years N Meth. Coeff. SE Coeff. SE Coeff. SE Coeff. SE Health 1+ ADL (2007) 0.990** (0.417) 0.355 (0.257) 0.374** (0.180) -0.001 (0.026) 1214 logit 2+ health symptoms (2007) 0.612 (0.385) 0.011 (0.237) 0.619*** (0.143) -0.049** (0.021) 1218 logit Poor self-rep.health (2007) 0.688* (0.406) 0.540** (0.226) -0.027 (0.158) -0.148*** (0.028) 1214 logit Poor self-rep.health (2008/09) 0.294 (0.396) 0.496** (0.210) 0.080 (0.146) -0.088*** (0.024) 1386 logit Material conditions great difficul.with MEM(2007) 0.694* (0.360) 0.384* (0.222) -0.155 (0.145) -0.136*** (0.025) 1383 logit ln HH income , imput. (2007) -0.217* (0.121) -0.004 (0.069) -0.058 (0.044) 0.026*** (0.006) 1377 OLS ln HH income (2008/09) 0.050 (0.135) 0.021 (0.076) -0.053 (0.049) 0.025*** (0.007) 1281 OLS Well-being CASP-12 4 categ. (2007) -0.352* (0.209) 0.060 (0.128) -0.252*** (0.078) 0.055*** (0.012) 1177 oprobit Life satisfaction 0-10 (2007) -0.609*** (0.179) 0.032 (0.106) -0.165** (0.067) 0.046*** (0.010) 1206 oprobit EURO-D 0-12 (2007) 0.333* (0.179) 0.089 (0.107) 0.546*** (0.068) -0.048*** (0.010) 1190 oprobit Controls: age gr., regional dum., industry in 1988, work experience until 1988, severe injuries until 1988, childhood health, family SE sit. at age10 1 Reference group for unemployed/other 89-91: working continously 89-91 Sample: working in 1988
- 18. • Unemployment increased dramatically in Poland after 1989 in Poland – officially from 0% in 1989 to over 16% in 1994. • We conduct first micro-level analysis of labour market flows across the transition threshold. • We find some support for inflow into unemployment from among those not working before the transition (30% of those who experienced long-term unemployment in early 1990s). • Different nature of unemployment at transition threshold (1989-1991) and in subsequent years (1992-1995): • losing a job in early years of transition unrelated to such characteristics as gender, age and education. • Strong implications of unemployment during transition on later life outcomes : • poorer health, worse material situation, lower indicators of well-being. Summary SITE Academic Conference
- 19. men women Employment situation for ages 17-69 y.o., Poland SITE Academic Conference 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 Sample: 791 pl gender1 0 .2 .4 .6 .8 1 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 Sample: 1020 pl gender2 Notes: Weighted with SHARE wave3 individual weights Data release: 29 Apr 2016 Current date: 23 Nov 2016 edu full/e part/e unem n/look unem look ret home dis oth Age (17-69) Age (17-69)