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Labor markets and poverty in Bulgaria

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  • Rutkowski, Jan J.

Abstract

Economic transition in Bulgaria has been associated with the emergence of unemployment, the fall in real wages and a substantial increase in wage inequality. The ranks of low-paid workers have grown and their relative wage status has substantially deteriorated. Unemployment is of long duration. A part of the problem is that the unemployed have excessive wage expectations. Their reservation wages far exceed the wages that employers actually offer for people of given qualifications. The reservation wages hardly fall with the duration of unemployment, which implies that job search is not adaptive. The receipt of unemployment benefits does not seem to reduce the job search effort. The transition hit the hardest the low-skilled workers among whom both the incidence of unemployment and low pay is the highest. Poverty in Bulgaria tends to be a result of both low (relative) earnings and low household labor supply, which often go hand-in-hand. However, work does not keep families out of poverty: the"working poor"account for one-third of all poor. Moreover, poverty incidence s quite high even among families with two earners. Thus, Bulgaria does not conform to the usually observed pattern whereby two earners effectively protect against poverty.

Suggested Citation

  • Rutkowski, Jan J., 1999. "Labor markets and poverty in Bulgaria," Social Protection and Labor Policy and Technical Notes 20817, The World Bank.
  • Handle: RePEc:wbk:hdnspu:20817
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    Citations

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    Cited by:

    1. Flabbi, Luca & Paternostro, Stefano & Tiongson, Erwin R., 2008. "Returns to education in the economic transition: A systematic assessment using comparable data," Economics of Education Review, Elsevier, vol. 27(6), pages 724-740, December.
    2. Sumon Kumar Bhaumik & Ralitza Dimova & Jeffrey B. Nugent, 2006. "Pulls, Pushes and Entitlement Failures in Labor Markets: Does the State of Development Matter?," CEDI Discussion Paper Series 06-07, Centre for Economic Development and Institutions(CEDI), Brunel University.
    3. Rutkowski, Jan, 2003. "Why is unemployment so high in Bulgaria?," Policy Research Working Paper Series 3017, The World Bank.
    4. Dimova, Ralitza & Gang, Ira N., 2007. "Self-selection and wages during volatile transition," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 612-629, September.
    5. Dimova, Ralitza & Wolff, Fran├žois-Charles, 2008. "Are private transfers poverty and inequality reducing? Household level evidence from Bulgaria," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 584-598, December.
    6. Dimova, Ralitza & Gang, Ira N. & Landon-Lane, John, 2005. "The Informal Sector During Crisis and Transition," WIDER Working Paper Series 018, World Institute for Development Economic Research (UNU-WIDER).
    7. Rutkowski, Jan, 2006. "Labor market developments during economic transition," Policy Research Working Paper Series 3894, The World Bank.

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