Department of Economics, Heriot-Watt University, Riccarton, Edinburgh, EH14 4AS Tel: 0131 451 3483/3486 Fax: 0131 451 3498 E-Mail: ecocert@hw.ac.uk World-Wide Web: http://www.hw.ac.uk/ecoWWW/cert/certhp.htm Job Creation and Job Destruction in a Transition Economy: Ownership, Firm Size, and Gross Job Flows in Polish Manufacturing 1988-91 Jozef Konings Leuven Institute for Central and East European Studies, Catholic University of Leuven, De Beriotstraat 34, B-3000 Leuven, Belgium Hartmut Lehmann Department of Economics, Trinity College, Dublin 2, Ireland Mark E. Schaffer Centre for Economic Reform and Transformation, Department of Economics, Heriot-Watt University, Riccarton, Edinburgh EH14 4AS, UK May 1996 Abstract Comprehensive firm-level data for Polish manufacturing show that in state-owned firms the large drop in net employment since the start of the transition in 1990 has been driven by a jump in the job destruction rate; job creation, by contrast, is located disproportionately in the private sector. Small firms are more dynamic than large firms, but even after controlling for size, private firms have a higher net employment growth rate. JEL Classification: J63. Keywords: Job creation, job destruction, Central and Eastern Europe, transition, private firms. Acknowledgements This paper is a product of a World Bank Research Project on Enterprise Behaviour and Economic Reform in Central and Eastern Europe (PRDTE). The views expressed in the paper are those of the authors and not those of the World Bank or other institutions. We benefited from seminars and presentations at the London School of Economics, LICOS, K.U. Leuven, the Central European University, a CEPR Workshop and the EEA Annual Meeting 1995.