IDEAS home Printed from
   My bibliography  Save this paper

Social Aspects of Industrial Restructuring and their Financing


  • Paul G. Hare


The paper starts by outlining some basic definitions and conceptions of restructuring, noting that in transition economies the needed scale of restructuring is substantial, with the result that unemployment, and the associated social costs, can turn out to be very high unless the process of change is well managed. In what follows, I clarify what is meant by the social aspects of restructuring and give some examples to illustrate why dealing with them might be difficult. Then we examine the financial outlays associated with the identified social costs and consider various views of who should pay for them. Next, we highlight some key trade-offs in the restructuring process, starting from the observation that many countries, not exclusively, but especially countries from the CIS, have bowed to political pressures and allowed restructuring to be delayed, ostensibly for social reasons. While acknowledging that this is an appealing line of argument, I shall argue that in the longer term it is exceptionally costly. The argument continues by identifying a few aspects of restructuring that seem to me to be unusually problematic for transition economies, especially for those that are not on track to join the EU in May 2004. These aspects include the special problems faced by small states, and those faced by rapidly declining regions within larger states. We conclude with a list of major findings about the social aspects of restructuring and their financing, plus a short list of suggested policy recommendations.

Suggested Citation

  • Paul G. Hare, 2003. "Social Aspects of Industrial Restructuring and their Financing," CERT Discussion Papers 0305, Centre for Economic Reform and Transformation, Heriot Watt University.
  • Handle: RePEc:hwe:certdp:0305

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Alison L. Booth & Marco Francesconi & Carlos Garcia-Serrano, 1999. "Job Tenure and Job Mobility in Britain," ILR Review, Cornell University, ILR School, vol. 53(1), pages 43-70, October.
    2. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    3. Even, William E. & Macpherson, David A., 1990. "Plant size and the decline of unionism," Economics Letters, Elsevier, vol. 32(4), pages 393-398, April.
    4. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
    5. Cramer, J. S. & Ridder, G., 1991. "Pooling states in the multinomial logit model," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 267-272, February.
    6. Jones, David R & Makepeace, Gerald H, 1996. "Equal Worth, Equal Opportunities: Pay and Promotion in an Internal Labour Market," Economic Journal, Royal Economic Society, vol. 106(435), pages 401-409, March.
    7. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    8. Dolton, Peter J & Kidd, Michael P, 1998. "Job Changes, Occupational Mobility and Human Capital Acquisition: An Empirical Analysis," Bulletin of Economic Research, Wiley Blackwell, vol. 50(4), pages 265-295, October.
    9. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-724, September.
    10. Robert H. Topel & Michael P. Ward, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 439-479.
    11. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    12. Harper, Barry, 1995. "Male Occupational Mobility in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(3), pages 349-369, August.
    Full references (including those not matched with items on IDEAS)

    More about this item


    restructuring; social costs; financial support; unemployment; public finance.;

    JEL classification:

    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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:hwe:certdp:0305. 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: (Colin Miller). General contact details of provider: .

    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.