The Sustainable Rate of Unemployment in Transition Countries

The process of transition from a centrally-planed to
a market economy has had a tremendous impact on
various aspects of socio-economic life including the
labour market. In these circumstances alongside the
traditional forms of adjustment emerge additional
mechanisms such as employment in the informal sector,
inactivity and emigration. Each of these plays an
important role in cushioning the economic and social
consequences of unemployment. With this in mind, the
sustainable rate of unemployment is defined as the
rate, given the job creation in the formal sector,
that in the long-run provides a balance between
welfare expenditure and revenues from the payroll
taxes, taking into account the capacity of the
alternative labour market adjustment mechanisms to
absorb a part of the unemployed workforce. This book
provides a model of the sustainable rate of
unemployment which yields several testable results
from a comparative static point of view and enables a
dynamic simulation of labour market outcomes. The
analysis should help shed some light on the
transitional labour markets and should be especially
useful to professionals and policy makers in the
field of labour economics.

Autorentext

Dimitar Nikoloski is lecturer at the Faculty of Economics-Prilep, Macedonia. His main subjects of interest are applied econometrics and labour economics. Among the author's achievements is the second prize on the annual competition for young researchers in the field of macroeconomics organised by the Macedonian National Bank (April, 2007).

Klappentext

The process of transition from a centrally-planed toa market economy has had a tremendous impact onvarious aspects of socio-economic life including thelabour market. In these circumstances alongside thetraditional forms of adjustment emerge additionalmechanisms such as employment in the informal sector,inactivity and emigration. Each of these plays animportant role in cushioning the economic and socialconsequences of unemployment. With this in mind, thesustainable rate of unemployment is defined as therate, given the job creation in the formal sector,that in the long-run provides a balance betweenwelfare expenditure and revenues from the payrolltaxes, taking into account the capacity of thealternative labour market adjustment mechanisms toabsorb a part of the unemployed workforce. This bookprovides a model of the sustainable rate ofunemployment which yields several testable resultsfrom a comparative static point of view and enables adynamic simulation of labour market outcomes. Theanalysis should help shed some light on thetransitional labour markets and should be especiallyuseful to professionals and policy makers in thefield of labour economics.