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Workers in transition

  • Rutkowski, Michael
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    After Central and Eastern European and Central Asian economies abandoned central planning, nearly 195 million workers had to adjust to new rules of work and life. Most transition economies have not yet fully committed themselves to the rules of the market place. A few that have are already enjoying growth in wages and employment; in other countries, labor income growth is still to come. Reform has not been so well accepted in countries that were forced to enter the transition. Transition brought increasing differentiation in wages, incomes, and employment status. But there is a positive relationship between stabilization, structural reform, and private sector development on the one hand, and labor incomes on the other. The balance between benefits of such a path (dynamic growth of private employment and wages) and the drawbacks (labor force withdrawal, increasing unemployment, income differentiation, and poverty) improves every year in the leading reform countries. Continued stagnation in the countries resisting reform could result in persistently low labor income. The Organization for Economic Cooperation and Development (OECD) experience with active labor market policies has not been entirely encouraging but in the transition economies such policies - if well designed - could help build social acceptance of reform and smooth the labor force's adjustment to new demands.

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1556.

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    Date of creation: 31 Dec 1995
    Date of revision:
    Handle: RePEc:wbk:wbrwps:1556
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    1. Fretwell, D. & Goldberg, S., 1993. "Developing Effective Employment Services," World Bank - Discussion Papers 208, World Bank.
    2. Commander, Simon & Yemtsov, Ruslan, 1995. "Russian unemployment : its magnitude, characteristics, and regional dimensions," Policy Research Working Paper Series 1426, The World Bank.
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    5. John Ham & Jan Svejnar & Katherine Terrell, 1993. "The Emergence of Unemployment in the Czech and Slovak Republics*," Comparative Economic Studies, Palgrave Macmillan, vol. 35(4), pages 121-134, December.
    6. Brada, Josef C, 1989. "Technological Progress and Factor Utilization in Eastern European Economic Growth," Economica, London School of Economics and Political Science, vol. 56(224), pages 433-48, November.
    7. Krumm, Kathie & Milanovic, Branko & Walton, Michael, 1994. "Transfers and the transition from socialism : key tradeoffs," Policy Research Working Paper Series 1380, The World Bank.
    8. Fox, Louise, 1994. "Old age security in transitional economies," Policy Research Working Paper Series 1257, The World Bank.
    9. Bergson, Abram, 1987. "Comparative Productivity: The USSR, Eastern Europe, and the West," American Economic Review, American Economic Association, vol. 77(3), pages 342-57, June.
    10. Milanovic, Branko, 1995. "Poverty, inequality, and social policy in transition economies," Policy Research Working Paper Series 1530, The World Bank.
    11. S Estrin & M Schaffer & I.J. Singh, 1995. "The Provision of Social Benefits in State Owned," CEP Discussion Papers dp0223, Centre for Economic Performance, LSE.
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