IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/1997-137.html
   My bibliography  Save this paper

Labor Market Institutions and Unemployment Dynamics in Transition Economies

Author

Listed:
  • Mr. Pietro Garibaldi
  • Ms. Zuzana Brixiova

Abstract

This paper studies interactions between labor market institutions and unemployment dynamics in transition economies. It presents a dynamic matching model in which state sector firms endogenously shed labor and private job creation takes time. Two main conclusions arises. First, higher unemployment benefits increase steady-state unemployment, and, during the transition, they reduce the fall in real wages and speed up closure of state enterprises. Second, higher minimum wages can theoretically speed up the elimination of state sector jobs without affecting steady-state unemployment. These results are broadly consistent with existing evidence on the dynamics of unemployment and real wages in transition economies.

Suggested Citation

  • Mr. Pietro Garibaldi & Ms. Zuzana Brixiova, 1997. "Labor Market Institutions and Unemployment Dynamics in Transition Economies," IMF Working Papers 1997/137, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1997/137
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=2361
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ariane TICHIT & Solenne TANGUY, 2012. "Initial reforms and dynamics of transition," Working Papers 201215, CERDI.
    2. Ana Lamo & Julian Messina & Etienne Wasmer, 2006. "Are Specific Skills an Obstacle to Labor Market Adjustment? Theory and an Application to the EU Enlargement," Working Papers hal-03459097, HAL.
    3. Lamo, Ana & Messina, Julián & Wasmer, Etienne, 2011. "Are specific skills an obstacle to labor market adjustment?," Labour Economics, Elsevier, vol. 18(2), pages 240-256, April.
    4. Tito Boeri, 1999. "Transition with Labour Supply," William Davidson Institute Working Papers Series 274, William Davidson Institute at the University of Michigan.
    5. Grosfeld, Irena & Kolenikov, Stanislav & Paltseva, Elena & Sénik-Leygonie, Claudia & Verdier, Thierry, 1999. "Dynamism and Inertia on the Russian Labour Market: A Model of Segmentation," CEPR Discussion Papers 2224, C.E.P.R. Discussion Papers.
    6. Jan J. Rutkowski & Stefano Scarpetta, 2005. "Enhancing Job Opportunities : Eastern Europe and the Former Soviet Union," World Bank Publications - Books, The World Bank Group, number 7408.
    7. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
    8. Tyrowicz, Joanna & van der Velde, Lucas, 2018. "Labor reallocation and demographics," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 381-412.
    9. Bhaumik, Sumon K. & Frensch, Richard & Huber, Stephan, 2021. "Political Economy of Labour Market Institutions in a Globalised Era," IZA Discussion Papers 14121, Institute of Labor Economics (IZA).
    10. Sergey Kapelyuk, 2015. "The effect of minimum wage on poverty," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(2), pages 389-423, April.
    11. Randolph Luca Bruno, 2003. "Speed of Transition, Unemployment Dynamics and Nonemployment Policies: Evidence from the Visegrad Countries," LEM Papers Series 2003/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    12. Jiri Vecernik & Andreas Wörgötter, 1999. "Arbeitsmarktpolitik in Ost-Mitteleuropa," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 25(4), pages 497-508.
    13. Alderman, Harold & Yemtsov, Ruslan, 2012. "Productive role of safety nets : background paper for the World Bank 2012-2022 social protection and labor strategy," Social Protection Discussion Papers and Notes 67609, The World Bank.
    14. Jarkko Turunen, 2004. "Leaving state sector employment in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 129-152, March.
    15. World Bank, 2012. "Resilience, Equity, and Opportunity [Capacidad de recuperación, equidad y oportunidades]," World Bank Publications - Reports 12648, The World Bank Group.
    16. Miguel A. León‐Ledesma & Peter McAdam, 2004. "Unemployment, Hysteresis And Transition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(3), pages 377-401, August.
    17. Tichit, Ariane, 2006. "The optimal speed of transition revisited," European Journal of Political Economy, Elsevier, vol. 22(2), pages 349-369, June.
    18. Cuestas, Juan C. & Gil-Alana, Luis A. & Staehr, Karsten, 2011. "A further investigation of unemployment persistence in European transition economies," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 514-532.
    19. Maxim Bouev, 2004. "Diverging Paths: Transition in the Presence of the Informal Sector," William Davidson Institute Working Papers Series 2004-689, William Davidson Institute at the University of Michigan.
    20. Maxim Bouev, 2001. "Labor Supply, Informal Economy and Russian Transition," William Davidson Institute Working Papers Series 408, William Davidson Institute at the University of Michigan.
    21. Joanna Tyrowicz & Lucas van der Velde, 2014. "Can We Really Explain Worker Flows in Transition Economies?," Working Papers 2014-28, Faculty of Economic Sciences, University of Warsaw.

    More about this item

    Keywords

    WP; private sector; minimum wage; labor market; Unemployment; Transition Economies; Matching Models; state sector job; job-worker pair; replacement ratio; CEE economy; capital gain; private sector job; unemployment insurance system; reservation productivity; wage arrears; opportunity cost; private sector employment; sector job; Public sector; Minimum wages; Unemployment benefits; Productivity; Central and Eastern Europe;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:1997/137. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.