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Unemployment in reforming countries: Causes, fiscal impacts and the success of transformation

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  • Treier, Volker

Abstract

The paper addresses and summarizes the role of unemployment in the transformation process from an economic system with a dominant state sector to a system with a dominant private sector. After reviewing the basic facts and some of the main explanations why unemployment is high during transition in countries of Central and Eastern Europe the role of unemployment and the fiscal problems due to unemployment is discussed within a model of economies of transition. The model highlights the ambivalent role of unemployment. On the one hand unemployment could jeopardize the transformation process when it reaches a critical value but on the other hand it could be regarded as an unavoidable byproduct and even a necessary device for the success of the whole process. After presenting the main features and conclusions of the model concerning the role of unemployment, another point of view, which lets doubt about the necessity and temporariness of 'transitional unemployment', will be discussed.

Suggested Citation

  • 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.
    • Handle: RePEc:zbw:bamber:29
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    More about this item

    Keywords

    Central and Eastern Europe; transition; unemployment; restructuring; fiscal dynamics;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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