Economic Restructuring, Unemployment, and Growth in a Transition Economy

49 Pages Posted: 15 Feb 2006

See all articles by Bankim Chadha

Bankim Chadha

affiliation not provided to SSRN

Fabrizio Coricelli

University of Siena - Department of Political and International Sciences ; Paris School of Economics (PSE); Centre for Economic Policy Research (CEPR)

Kornélia Krajnyák

International Monetary Fund (IMF)

Date Written: March 1993

Abstract

This paper develops a model of the process of reallocation of labor from the state sector to the private sector. When growth is exogenously determined, we show that in the initial stages of transition unemployment will rise over time. After a critical stage in the transition process, restructuring is accompanied by a decline in unemployment. When growth is endogenously determined, and human capital is acquired by learning-by-doing, we show that whether restructuring eventually occurs is determined by the level of human capital in the private sector and the rate of unemployment. The effects of various shocks and government policies in affecting the costs, speed, and eventual outcome of restructuring are analyzed.

JEL Classification: E24, P20

Suggested Citation

Chadha, Bankim and Coricelli, Fabrizio and Krajnyak, Kornelia, Economic Restructuring, Unemployment, and Growth in a Transition Economy (March 1993). IMF Working Paper No. 93/16, Available at SSRN: https://ssrn.com/abstract=883440

Bankim Chadha (Contact Author)

affiliation not provided to SSRN

No Address Available

Fabrizio Coricelli

University of Siena - Department of Political and International Sciences ( email )

Via Mattioli, 10
Siena, 53100
Italy

Paris School of Economics (PSE)

48 Boulevard Jourdan
Paris, 75014 75014
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Kornelia Krajnyak

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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