Labour Market Flows and Unemployment Duration in Transition Countries: Evidence from Bulgarian and Polish Micro-data

One of the most striking characteristics of the transition process in central and eastern European countries is the labour market segmentation: certain social groups as the youth, unskilled workers and women face a high risk of unemployment, but joblesness also varies significantly across the local labour markets. This paper sheds some lights in these regional labour market disparities in transition countries by analysing individual records of people registered at the labour offices of two Polish regions (Warsaw and Ciechanov) and two Bulgarian regions (Sofia and Botevgrad) over the period 1990-1993. The econometric analysis is conducted using a piece-wise constant hazard model with multiple destinations, i.e. employment and exit of the labour force. The empirical results confirm the existence of a highly selective process in the Polish and Bulgarian labour markets. Overall, unskilled or poorly educated workers have the highest probability of becoming unemployed and remaining without a job for a long period of time. Competition among unemployed people seems also to have increased over time. Workers with a high education and previous experience in the private sector have a higher probability of getting a new job, especially in the more dynamic labour markets, while those without previous work experience tend to stay unemployed for a longer period of time and often leave the labour market. The econometric results also suggest that the reforms of the unemployment benefit systems have produced important effects on unemployment.