We model job reallocation and unemployment as outcomes jointly determined by the structure of inherited social capital within a two-sector Optimal Speed of Transition model. Treating regions of Poland as independent labour markets, the socio-economic inheritance of regions is found to be a legacy of planning that determines regional job reallocation rates. In turn, higher rates of (instrumented) regional job reallocation is shown to boost regional unemployment turnover, reduce the duration of frictional and increase the incidence of structural unemployment. At the regional level, the benefit system facilitates the job reallocation process and accumulates out-of–date human capital.
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Paper provided by LICOS - Centre for Institutions and Economic Performance, K.U.Leuven in its series LICOS Discussion Papers with number
9100.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Philippe Aghion & Olivier J. Blanchard, 1994.
"On the Speed of Transition in Central Europe,"
NBER Chapters,
in: NBER Macroeconomics Annual 1994, Volume 9, pages 283-330
National Bureau of Economic Research, Inc.
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