Working Paper: CEPR ID: DP2384
Authors: Tito Boeri
Abstract: The adjustment of labour markets during transition has been quite different from that anticipated by the Optimal Speed of Transition (OST) literature. In particular, it has involved stagnant unemployment pools, large flows to inactivity and strikingly low workers' mobility especially when account is made of the changes occurring in the structure of employment by sector, occupation and ownership of firms. Furthermore the policy trade-offs embedded in the OST literature relate mainly to the alternative between a big-bang strategy and a gradual transition process. This amounts to assuming that governments can control the pace of closure of state enterprises. However, the facts discussed in this paper suggest that separations from state sector employment were, ultimately, an endogenous variable rather than a policy instrument, as they were to a large extent the by-product of voluntary choices of workers.
Keywords: speed of transition; structural change; unemployment
JEL Codes: P20; P23; P26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| removal of state subsidies (H29) | increased unemployment (J65) |
| state subsidies (H20) | increased unemployment (J65) |
| labor market conditions (J29) | voluntary separations from state sector employment (J63) |
| unemployment benefits (J65) | job creation in the private sector (J23) |
| unemployment benefits (J65) | restructuring in the state sector (L33) |
| structural changes in employment (J21) | labor market flows (J69) |