This books deals with labour reallocation in the midst of structural change, drawing on the experience of economic transition in formerly planned economies. It details those features of social welfare systems best suited to fostering structural change while at the same time reducing social costs. The interaction between labour and social policies is studies, showing the crucial role that non-employment benefits play in both the scope and the
speed of transition. By including the influence of education systems, institution-building, and policy-enforcement mechanisms, this book goes beyond previous studies to provide a detailed analysis of
the many contributing factors to the success or failure of the transition process.
`As transition took place in Eastern Europe, the first order of business was to understand the interactions between the decline of the state sector, the growth of the private sector, and unemployment. The second was to think about the role of existing institutions, in particular labour market institutions, in shaping these evolutions. The third was to think about the best way to redesign the institutions. This remarkable book presents what we have learned
at each step. It should be required reading for all those involved in understanding, guiding, and shaping transition.'
Olivier Blanchard, Massachusetts Institute of Technology
`This book provides a sharp and penetrating analysis of the interaction between labour and social policies, and illuminates the often neglected influence of education systems, and institution-building. Highly recommended reading for everyone interested in post-socialist transition, labour economics, and welfare state reform.'
Janos Kornai, Harvard University and Collegium Budapest
Chapter 1. The Puzzles of Transition
Annex 1. Building blocks of the models of the speed of transition
Chapter 2. The Timing of Reforms
Annex 2. A simple model of transition
Chapter 3. Safety Nets, Earning Inequalities, and Reallocation
Annex 3. The structure of benefits and job reallocation
Chapter 4. Returning to Europe
Annex 4. Non-employment benefits and the informal sector