Labour mobility during transition: evidence from Georgia

This paper deals with labour mobility in Georgia during economic transition. We use quarterly 1998-99 panel data to examine mobility across six labour market statuses (inactivity, unemployment, formal wage employment, informal wage employment, selfemployment and farming). Our findings are consistent with the hypothesis of labour market segmentation. Formal employment is preferred to informal employment. Unemployment is largely a queuing device for individuals with higher education waiting for formal jobs. Some self-employment is subsistence activities and consistent with a segmented labour market, while other is high risk and potentially high return activities. Age, gender and education are significant determinants of labour mobility. Finally, informal employment serves as a buffer in times of recession -with farming and informal wage employment absorbing labour shed by other statuses during the Russian financial crisis.