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Workpackage 3
Competition-driven labour market developments, their institutional and policy implications

Partner responsible:    IEHAS

Partners involved:       IEHAS      CESR      RCEM


The main objective is to analyse labour market responses in employment and wage distribution to competitive pressure. As different sectors of the economy have very different labour market characteristics, and individual outcomes are very strongly influenced by skills, the homogeneity assumptions, underlying a traditional macroeconomic analysis, cannot be maintained. This calls for a disaggregate analysis of the labour market consequences of competitive pressure. We want to analyse the outcomes in different segments of the labour markets: the process of job creation and destruction at the different sectors, and for different skills, together with the wage determination. While all transition economies experienced a very substantial upsurge of family firms, these firms are almost exclusively consumption maximizing enterprises, especially in rural areas. Frequently their main activity is subsistence level farming. Competitive pressure, and the inherited business illiteracy of the rural population seems to inhibit the entry of profit maximizing small enterprises, which would be able to expand the currently very low level of rural employment. Governments will have to find an institutional solution to assist the creation of competitive business start-ups, especially in rural areas.


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Page last modified: 26 January, 2006