Research objectives and content
Objective: Training towards the development of a methodology that investigates the impact of employment restructuring on unemployment turnover and the evolution of Long Term Unemployment, (LTU), in both Transition and Western Europe Economies.
Content: We intend to document the changing structure of gross jobs flows in the restructuring economies of Bulgaria Poland, Romania and Slovenia, by newly established private, privatised and state owned firms controlling for characteristics such as sector, region, firm size and age. These results in turn will be linked to the magnitude and composition o unemployment flows. Increased job reallocation would be expected to increase unemployment turnover but it may also induce heterogeneity in the characteristics of workers that flow into unemployment. Older workers separated from previously labor hoarding state sectors may have very different survival rates in unemployment compared to the majority of workers in the inflows. The innovation of this project is to link the impact of restructuring in employment and the observed changes in the job flows to unemployment flows and the build-up of LTU. The results will be compared with those computed for EU countries. One of the central themes that we hope to develop is that Schumpeterian competition o creative destruction must be promoted in these economies to achieve longer term success even if, as a consequence, some individuals endure very long spells of unemployment in transition. IN addition, we hope to gain some insights into the potential for further growth once creative destruction takes place. In particular, whether performance by new private firms i driven by ownership, life-cycle effects and size effects.
Training content (objective, benefit and expected impact)
Objective: LICOS will provide an ideal environment for high quality research and training in the field of the micro economic analysis of transition economies. LICOS will provide access to unique micro economic databases, specialized programs and computer expertise and a specialist library. Training will also involve field work, lectures on the institutional aspects of transition and seminars.
Benefit and Impact: The project will show the role of unemployment in the creative destruction process of restructuring. will also identify the factors that lead to the growth of new private firms in transition economies and western economies. The reforms in transition economies give us a natural experiment to examine the impact that discrete structural changes in employment can have on unemployment flows and stocks. A clear understanding of the origin of unemployment is the first step to developing good passive and active labor market policies. It may be the case that industrial policy towards the development of new private firms may have a greater impact on the development of unemployment flows and stocks the conventional labor supply policies.
Links with industry / industrial relevance (22)
An understanding the restructuring process is not only important for policy makers but also for investors looking to expand into the East European market. The microeconomic analysis of transition and structural change gives important information to business men and governments. The results will be made available as LICOS discussion papers and distributed in the normal manner.