IDEAS home Printed from https://ideas.repec.org/a/ecj/econjl/v102y1992i411p291-300.html
   My bibliography  Save this article

The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy

Author

Listed:
  • Dewatripont, M
  • Roland, G

Abstract

This paper presents a simplified model of sectoral restructuring in Eastern Europe. A move towards allocative efficiency is desired by the reform-minded government, but the shift to higher productivity which such efficiency requires would lead to massive layoffs and labour reallocation in the transition period. We look at the impact of political constraints (unanimity and/or majority worker approval) on reform proposals when the government faces a heterogeneous workforce, holding private information on relative outside opportunities. When the budgetary consequences of exit compensations are so important as to make partial reforms preferable to full reforms, gradualism emerges as the optimum in a dynamic context without government commitment. It is also shown that under democratic majority rule, a government in control of the agenda of reforms can win majority approval for plans which end up hurting majority interests intertemporally by threatening to switch majorities in future reform proposals.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Dewatripont, M & Roland, G, 1992. "The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy," Economic Journal, Royal Economic Society, vol. 102(411), pages 291-300, March.
  • Handle: RePEc:ecj:econjl:v:102:y:1992:i:411:p:291-300
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0013-0133%28199203%29102%3A411%3C291%3ATVOGAL%3E2.0.CO%3B2-S&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    More about this item

    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:ecj:econjl:v:102:y:1992:i:411:p:291-300. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/resssea.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.