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Labor markets and poverty in Bulgaria

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  • Rutkowski, Jan J.
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    Abstract

    Economic transition in Bulgaria has been associated with the emergence of unemployment, the fall in real wages and a substantial increase in wage inequality. The ranks of low-paid workers have grown and their relative wage status has substantially deteriorated. Unemployment is of long duration. A part of the problem is that the unemployed have excessive wage expectations. Their reservation wages far exceed the wages that employers actually offer for people of given qualifications. The reservation wages hardly fall with the duration of unemployment, which implies that job search is not adaptive. The receipt of unemployment benefits does not seem to reduce the job search effort. The transition hit the hardest the low-skilled workers among whom both the incidence of unemployment and low pay is the highest. Poverty in Bulgaria tends to be a result of both low (relative) earnings and low household labor supply, which often go hand-in-hand. However, work does not keep families out of poverty: the"working poor"account for one-third of all poor. Moreover, poverty incidence s quite high even among families with two earners. Thus, Bulgaria does not conform to the usually observed pattern whereby two earners effectively protect against poverty.

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    Bibliographic Info

    Paper provided by The World Bank in its series Social Protection Discussion Papers with number 20817.

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    Date of creation: 31 Aug 1999
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    Handle: RePEc:wbk:hdnspu:20817

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    Related research

    Keywords: Labor Markets; Economic Theory&Research; Environmental Economics&Policies; Health Monitoring&Evaluation; Youth and Governance;

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    Cited by:
    1. Rutkowski, Jan, 2006. "Labor market developments during economic transition," Policy Research Working Paper Series 3894, The World Bank.
    2. Rutkowski, Jan, 2003. "Why is unemployment so high in Bulgaria?," Policy Research Working Paper Series 3017, The World Bank.
    3. Dimova, Ralitza & Gang, Ira N. & Landon-Lane, John, 2005. "The Informal Sector During Crisis and Transition," Working Paper Series RP2005/18, World Institute for Development Economic Research (UNU-WIDER).
    4. Bhaumik, Sumon K. & Dimova, Ralitza & Nugent, Jeffrey B., 2006. "Pulls, Pushes and Entitlement Failures in Labor Markets: Does the State of Development Matter?," IZA Discussion Papers 2258, Institute for the Study of Labor (IZA).
    5. Ralitza Dimova & Ira N. Gang, 2006. "Self-Selection And Wages During Volatile Transition," CEDI Discussion Paper Series 06-03, Centre for Economic Development and Institutions(CEDI), Brunel University.
    6. Dimova, Ralitza & Wolff, Fran├žois-Charles, 2008. "Are private transfers poverty and inequality reducing? Household level evidence from Bulgaria," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 584-598, December.
    7. Flabbi, Luca & Paternostro, Stefano & Tiongson, Erwin R., 2007. "Returns to education in the economic transition : a systematic assessment using comparable data," Policy Research Working Paper Series 4225, The World Bank.

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