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Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution

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  • Mr. Thomas Fox Rutherford
  • Mr. Svend E. Hougaard Jensen
  • Mr. Tobias N. Rasmussen

Abstract

A defining feature of transition economies is the expansion of the private sector. Motivated by the observation that new enterprises in transition economies seem to have a strong preference for recruiting young people, this paper studies intergenerational redistribution following from market reforms that stimulate private sector activity and firm creation. We implement a theoretical model and find that in some cases more than half of the current working age population may be made worse off by an increase in entrepreneurial capacity. This may help explain why market reforms have been voted down despite their long-run benefits.

Suggested Citation

  • Mr. Thomas Fox Rutherford & Mr. Svend E. Hougaard Jensen & Mr. Tobias N. Rasmussen, 2002. "Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution," IMF Working Papers 2002/180, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2002/180
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    References listed on IDEAS

    as
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    6. Michael P. Keane & Eswar S. Prasad, 2002. "Inequality, Transfers, And Growth: New Evidence From The Economic Transition In Poland," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 324-341, May.
    7. Philippe Aghion & Simon Commander, 1999. "On the dynamics of inequality in the transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 275-298, July.
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