Skill Acquisition and Firm Creation in Transition Economies
31 Pages Posted: 15 Feb 2006
Date Written: September 1999
The transition from plan to market has hinged on the development of a dynamic private sector that would serve as the engine of growth and employment creation. This paper examines the link between the availability of skilled workers and the creation of new private firms. Using a dynamic search model, it shows how the lack of skilled workers inhibits entrepreneurship and depresses the rate of firm creation, slowing the recovery of aggregate output and labor productivity during the transition. The paper also shows how policies designed to encourage skill acquisition by workers have a positive impact on the economy.
Keywords: Skill acquisition firm creation transition
JEL Classification: J4 J31 P21
Suggested Citation: Suggested Citation