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

Randolph Luca Bruno*

*Autore corrispondente per questo lavoro

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review


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. © The European Bank for Reconstruction and Development, 2006.
Lingua originaleEnglish
pagine (da-a)69-100
Numero di pagine32
RivistaEconomics of Transition
Stato di pubblicazionePubblicato - 2006


  • Job uncertainty
  • Optimal speed of transition
  • Participation rate
  • Social safety net


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