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Optimal speed of transition with a shrinking labour force and under uncertainty

Bruno, RL; (2006) Optimal speed of transition with a shrinking labour force and under uncertainty. The Economics of Transition , 14 (1) pp. 69-100. 10.1111/j.1468-0351.2006.00241.x. Green open access

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Abstract

In the 1990s – during the restructuring of large state enterprises – Central European economies experienced high unemployment. Social policy expenditures, particularly targeted to the non-employed, grew faster than expected due to the need to finance the out-of-the-labour categories. In 1992, after the Passive Labour Market Policies’ reforms, the pace of transition decelerated. Unemployment dynamics, speed of transition and non-employment policies are modelled based on the assumption that the labour force is shrinking over time. Dismissed workers have the opportunity to choose an outside-option alternative to labour force participation. Individual uncertainty is assumed in a first phase of transition, while aggregate uncertainty – generating opposition to restructuring – is modelled in a second phase. The model predicts a slowdown in the speed of transition.

Type: Article
Title: Optimal speed of transition with a shrinking labour force and under uncertainty
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/j.1468-0351.2006.00241.x
Publisher version: https://doi.org/10.1111/j.1468-0351.2006.00241.x
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > SSEES
URI: https://discovery.ucl.ac.uk/id/eprint/10128703
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