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No Pain, No Gain: Market Reform, Unemployment, and Politics in Bulgaria

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Abstract

In 1997, a new center-right government came to power in Bulgaria with a mandate to accelerate market reforms. By the time of the next elections in 2001, 75 percent of GDP was produced in the private sector, compared to 45 percent in 1996. The government however lost the elections. This paper uses unique survey data to examine whether the high unemployment associated with market reform contributed to the election outcome. The results suggest that high unemployment does not explain the election loss. In fact, many of the unemployed believed that high unemployment was the necessary price for future prosperity.

Suggested Citation

  • Neven Valev, 2003. "No Pain, No Gain: Market Reform, Unemployment, and Politics in Bulgaria," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0310, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0310
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp0310.pdf
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    Cited by:

    1. Doyle, Orla & Walsh, Patrick Paul, 2005. "Did Political Constraints Bind During Transition? Evidence from Czech Elections 1990-2002," IZA Discussion Papers 1719, Institute for the Study of Labor (IZA).
    2. Smeets, Valerie & Warzynski, Frederic, 2006. "Job creation, job destruction and voting behavior in Poland," European Journal of Political Economy, Elsevier, vol. 22(2), pages 503-519, June.
    3. Aguayo, Eva & Expósito, Pilar & Vázquez, Emilia, 2009. "Tourism in EU Transition Countries," Estudios Economicos de Desarrollo Internacional, Euro-American Association of Economic Development, vol. 9(2), pages 125-128.
    4. Hayo, Bernd, 2004. "Public support for creating a market economy in Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 720-744, December.
    5. Kim, Byung-Yeon & Pirttila, Jukka, 2006. "Political constraints and economic reform: Empirical evidence from the post-communist transition in the 1990s," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 446-466, September.
    6. Eva Aguayo & Pilar Exposito & Emilia Vazquez, 2006. "Potential Tourism Market in Transition Countries: A Regional Analysis," ERSA conference papers ersa06p743, European Regional Science Association.
    7. Aguayo, E., 2011. "Impact of Tourism on Employment: An Econometric Model of 50 CEEB Regions," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 11(1).
    8. Bernd Hayo & Florian Neumeier, 2017. "Public Attitudes toward Fiscal Consolidation: Evidence from a Representative German Population Survey," Kyklos, Wiley Blackwell, vol. 70(1), pages 42-69, February.
    9. Neher, Frank, 2011. "Markets wanted: Expectation overshooting in transition," Discussion Papers 2011/1, Free University Berlin, School of Business & Economics.
    10. repec:tcd:wpaper:tep15 is not listed on IDEAS
    11. Dimitar Dimitrov & Rumen Dobrinsky & Nasko Dochev & Rumyana Kolarova & Nikolay Markov & Boyko Nikolov, 2004. "Understanding Reform: A Country Study for Bulgaria," wiiw Balkan Observatory Working Papers 56, The Vienna Institute for International Economic Studies, wiiw.
    12. Frank Neher, 2013. "Markets wanted: expectation overshooting in transition economies," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(2), pages 187-219, June.
    13. Orla Doyle & Patrick Paul Walsh, 2007. "Did political constraints bind during transition?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15, pages 575-601, July.
    14. Begovic, Boris & Paunovic, Marko, 2011. "Political support for enterprise restructuring and voting in Serbia," European Journal of Political Economy, Elsevier, vol. 27(1), pages 171-180, March.
    15. Rovelli, Riccardo & Zaiceva, Anzelika, 2009. "Transition Fatigue? Cross-Country Evidence from Micro Data," IZA Discussion Papers 4224, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Market Reform; Unemployment; Politics; Bulgaria;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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