Essays on worker mobility, skills and unemployment in transition economies

Abstract

Worker mobility is an essential part of transition from the socialist plan to a market economy. However, not all worker mobility is the same and the type of mobility is important for success in transition. Two features of worker mobility are particularly vital for a successful transition. First, according to the European Bank of Reconstruction and Development (EBRD): ”...higher mobility is not necessarily desirable in itself. What is desirable is reallocation from less to more productive enterprises” (p.104; EBRD, 2000). This comment suggests that the direction of worker mobility matters. In the transition context higher productivity is a priori associated with private ownership, an assumption that is supported by empirical evidence. As a result, it is possible to rephrase the comment by stating that mobility from state jobs to private employment is more desirable than other types of worker mobility. Second, the human capital characteristics of workers that move are important. Workers are different in the amount of human capital and skills that they possess, and consequently, some workers are more productive than others. Assuming that the private sector is more efficient in its use of resources, the reallocation of workers with high human capital and skills to the new private sector is more desirable. Moreover, the reallocation of human capital determines growth of the new private sector. The private sector requires workers and their skills - educated professionals, skilled machine-operators, as well as those who are able to adapt to the new environment - in order to grow and be productive.