Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution

28 Pages Posted: 3 Feb 2006

See all articles by Svend E. Hougaard Jensen

Svend E. Hougaard Jensen

Copenhagen Business School - Department of Economics

Tobias Rasmussen

International Monetary Fund (IMF)

Thomas F. Rutherford

Centre for Energy Policy and Economics

Date Written: October 2002

Abstract

A defining feature of transition economies is the expansion of the private sector. Motivated by the observation that new enterprises in transition economies seem to have a strong preference for recruiting young people, this paper studies intergenerational redistribution following from market reforms that stimulate private sector activity and firm creation. We implement a theoretical model and find that in some cases more than half of the current working age population may be made worse off by an increase in entrepreneurial capacity. This may help explain why market reforms have been voted down despite their long-run benefits.

Keywords: Transition economies structural reforms economic growth intergenerational distribution dynamic general equilibrium models

JEL Classification: O11 O21 O31 O33 C68

Suggested Citation

Hougaard Jensen, Svend Erik and Rasmussen, Tobias and Rutherford, Thomas F., Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution (October 2002). IMF Working Paper No. 02/180, Available at SSRN: https://ssrn.com/abstract=880251

Svend Erik Hougaard Jensen (Contact Author)

Copenhagen Business School - Department of Economics ( email )

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(+45) 3815 3478 (Phone)

Tobias Rasmussen

International Monetary Fund (IMF) ( email )

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Washington, DC 20431
United States

Thomas F. Rutherford

Centre for Energy Policy and Economics ( email )

ETH-Zentrum
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United States
+41 (0)44/632 6359 (Phone)
+41 (0)44/632 1622 (Fax)

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