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Economic Restructuring, Unemployment, and Growth in a Transition Economy

Author

Listed:
  • Ms. Kornelia Krajnyak
  • Mr. Bankim Chadha
  • Fabrizio Coricelli

Abstract

This paper develops a model of the process of reallocation of labor from the state sector to the private sector. When growth is exogenously determined, we show that in the initial stages of transition unemployment will rise over time. After a critical stage in the transition process, restructuring is accompanied by a decline in unemployment. When growth is endogenously determined, and human capital is acquired by learning-by-doing, we show that whether restructuring eventually occurs is determined by the level of human capital in the private sector and the rate of unemployment. The effects of various shocks and government policies in affecting the costs, speed, and eventual outcome of restructuring are analyzed.

Suggested Citation

  • Ms. Kornelia Krajnyak & Mr. Bankim Chadha & Fabrizio Coricelli, 1993. "Economic Restructuring, Unemployment, and Growth in a Transition Economy," IMF Working Papers 1993/016, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:1993/016
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    Citations

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    Cited by:

    1. Nauro F. Campos & Abrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 793-836, September.
    2. Denizer, Cevdet, 1997. "Stabilization, adjustment, and growth prospects in transition economies," Policy Research Working Paper Series 1855, The World Bank.
    3. Treier, Volker, 1999. "Unemployment in reforming countries: Causes, fiscal impacts and the success of transformation," BERG Working Paper Series 29, Bamberg University, Bamberg Economic Research Group.
    4. Caballero, Ricardo J. & Hammour, Mohamad L., 1996. "On the ills of adjustment," Journal of Development Economics, Elsevier, vol. 51(1), pages 161-192, October.
    5. Philippe Aghion & Olivier Jean Blanchard, 1994. "On the Speed of Transition in Central Europe," NBER Chapters, in: NBER Macroeconomics Annual 1994, Volume 9, pages 283-330, National Bureau of Economic Research, Inc.
    6. Nikolay Nenovsky & Kalina Dimitrova, 2002. "Dual Inflation Under the Currency Board: The Challenges of Bulgarian EU Accession," William Davidson Institute Working Papers Series 487, William Davidson Institute at the University of Michigan.
    7. Zuzana Brixiova & Wenli Li, 1998. "Skill Acquisition and Private Firm Creation in Transition Economies," William Davidson Institute Working Papers Series 162, William Davidson Institute at the University of Michigan.
    8. Konings, Jozef & Lehmann, Hartmut & Schaffer, Mark E., 1996. "Job creation and job destruction in a transition economy: Ownership, firm size, and gross job flows in Polish manufacturing 1988-1991," Labour Economics, Elsevier, vol. 3(3), pages 299-317, October.
    9. Marukawa, Tomoo, 2017. "Regional unemployment disparities in China," Economic Systems, Elsevier, vol. 41(2), pages 203-214.
    10. Ariane Tichit, 1998. "Reprise économique dans les pays post-communistes : application d'un modèle de durée," Économie et Prévision, Programme National Persée, vol. 136(5), pages 73-92.
    11. Chadha, Bankim & Coricelli, Fabrizio, 1997. "Fiscal constraints and the speed of transition," Journal of Development Economics, Elsevier, vol. 52(1), pages 221-249, February.
    12. J. Konings & H. Lehmann & M.E. Schaffer, 1996. "Job Creation and Job Destruction in a Transition Economy: Ownership, Firm Size," CERT Discussion Papers 9611, Centre for Economic Reform and Transformation, Heriot Watt University.
    13. Peter Huber & Herbert Brücker & Janos Köllö & Iulia Traistaru & Tomasz Mickiewicz, 2002. "Regional and Labour Market Development in Candidate Countries. A Literature Survey," WIFO Studies, WIFO, number 23340, Juni.
    14. André Fourçans & Radu Vranceanu, 1996. "Chômage structurel et emploi dans les économies en transition," Revue Française d'Économie, Programme National Persée, vol. 11(2), pages 3-28.
    15. Randolph Luca Bruno, 2003. "Speed of Transition, Unemployment Dynamics and Nonemployment Policies: Evidence from the Visegrad Countries," LEM Papers Series 2003/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    16. Alessandro Acquisti & Hartmut Lehmann, 2000. "Job Creation and Job Destruction in the Russian Federation," Trinity Economics Papers 20001, Trinity College Dublin, Department of Economics.

    More about this item

    Keywords

    WP; private sector employment; employment decision; UH curve; employment in the private sector; private sector wage; private sector good; private sector activity; Public sector; Employment; Unemployment; Human capital; Unemployment rate; Central and Eastern Europe;
    All these keywords.

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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