Skill Acquisition and Firm Creation in Transition Economies

ByWenli Li, Zuzana Brixiova, Tarik Yousef

September 1, 1999

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The transition from plan to market has hinged on the development of a dynamic private sector that would serve as the engine of growth and employment creation. This paper examines the link between the availability of skilled workers and the creation of new private firms. Using a dynamic search model, it shows how the lack of skilled workers inhibits entrepreneurship and depresses the rate of firm creation, slowing the recovery of aggregate output and labor productivity during the transition. The paper also shows how policies designed to encourage skill acquisition by workers have a positive impact on the economy.

Subject: Economic sectors, Human capital, Labor, Labor force, Public sector, Self-employment

Keywords: Baltics, business opportunity, Central and Eastern Europe, Eastern Europe, entrepreneur hire, firm creation, government budget constraint, government policy, Human capital, Labor force, private sector, Public sector, Self-employment, Skill acquisition, transition, transition economy, unskilled worker, WP

Pages:
31
Volume:
1999
DOI:
https://doi.org/10.5089/9781451855173.001
Issue:
130
Series:
Working Paper No. 1999/130
Stock No:
WPIEA1301999
ISBN:
9781451855173
ISSN:
1018-5941

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