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Returns to Mobility in the Transition to a Market Economy

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  • Boeri, Tito
  • Flinn, Christopher J

Abstract

In spite of ongoing dramatic changes in labor market structure, transitional economies display rather low worker flows across sectors and occupations. Such low mobility can be explained by low returns to job changes as well as by market segmentation in the allocation of job offers. We develop an econometric model which enables us to characterize intertemporal changes in probabilities of dismissal, remuneration, and offer arrival rates on the basis of information on observed transitions and wage payments. The model is estimated using data from the Polish Labor Force Survey. Our results indicate a significant degree of segmentation in the allocation of job offers and more stability in public sector versus private sector jobs. Our model can also be used for policy experiments. In particular, we infer that reductions of 10 per cent in the generosity of unemployment benefits will not significantly boost outflows from the unemployment state. These findings support explanations for low mobility in transitional economies, which are based on informational failures, and high costs of moving from public to private enterprises for those with high levels of job tenure and labor market experience in the public sector.

Suggested Citation

  • Boeri, Tito & Flinn, Christopher J, 1999. "Returns to Mobility in the Transition to a Market Economy," CEPR Discussion Papers 2098, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2098
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    References listed on IDEAS

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    1. Flinn, Christopher J., 1997. "Labor Market Structure and Welfare: A Comparison of Italy and the U.S," Working Papers 97-07, C.V. Starr Center for Applied Economics, New York University.
    2. Patrick Puhani & Viktor Steiner, 1997. "The Effectiveness and Efficiency of Active Labour Market Policies in Poland," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 24(3), pages 209-231, October.
    3. Lubyova, Martina & van Ours, Jan, 1997. "Unemployment dynamics and the restructuring of the Slovak unemployment benefit system," European Economic Review, Elsevier, vol. 41(3-5), pages 925-934, April.
    4. Puhani, Patrick A. & Steiner, Viktor, 1996. "Public works for Poland? Active labour market policies during transition," ZEW Discussion Papers 96-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Tito Boeri, 1994. ""Transitional" unemployment," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 1-25, March.
    6. Micklewright, John & Nagy, Gyula, 1996. "Labour market policy and the unemployed in Hungary," European Economic Review, Elsevier, vol. 40(3-5), pages 819-828, April.
    7. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-1024, September.
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    More about this item

    Keywords

    Market Segmentation; returns to mobility; Worker Flows;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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