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The results of the decomposition analysis, presented in Tables A1-A8 should be read the following way (using Table A1 as an example). The first piece of information is the size of the differential to be explained (just above the main table). This is a percentage growth rate, e.g., in the first table the gap is 8.04% faster aggregate employment growth in Cohesion countries than in EU8 countries.

The first block of results is the “Amount attributable to” E, C, CE, and E+C+CE=total differential. Note that the E+C+CE total equals the total differential to be explained. These are grouped by: Sectors; Size (new private); Sectors + Size (new private; Ownership (levels and size effects);

The second and third blocks of results are the regression coefficients on which the decompositions are based (including their statistical significance), the means, and the coeff*mean = predicted values. Thus in the table for Cohesion vs. EU8 countries, the coefficient of 14.20 for Construction times the mean of 0.130 (=13% of total employment in construction) = 1.85 percentage points of the total Cohesion employment growth of 6.40%.

In the aggregate employment growth results, the total gap is about 8 percentage points. Sectoral differences explain about -4 percentage points, i.e., faster sectoral growth, and endowments of employment in faster growing sectors, actually shrink the Cohesion-EU8 gap (help the New EU countries close the gap). New private size effects are negligible. All the action is in ownership (mostly in levels though there is a privatized size effect): continued downsizing of state owned and new private firms in the New EU countries more than explains the employment growth stagnation.

The same results are visible in the Cohesion vs EU8 coefficients and means. The coefficients can be interpreted as aggregate growth rates for sectors, and the growth rate relative to the new private sector for ownership (state and privatized). The sum of the predicted values for Cohesion = 6.40%, which is the growth rate of total employment. The sum for the EU8 new private firms is 10.20%, which is faster than in the Cohesion. This is completely wiped out by the negative ownership effect of -11.85%.


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