Unemployment in Eastern and Central Europe

Douglas Galbi

Labor and Demographic Economics
Welfare Economics: Allocative Efficiency, Externalities, Fairness, Altruism
Production and Firm Behavior
Labor and Demographic Economics
Economic History
Law and Economics
Public Economics
International Economics
Economic Systems
Macroeconomics and Monetary Economics
Economic Development, Technological Change, and Growth

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Unemployment, once unknown and illegal in the formerly communist regimes in eastern and central Europe, has become a significant social and economic phenomenon. The rise in unemployment rates has been large but varied across countries. The transition from centrally planned economies to market-oriented economies has produced significant reductions in employment in the state sector as consumer-driven incentives begin to influence industrial structure. Reductions in employment in the state sector were partially offset by reductions in labor force particpation. Differences in the decline in labor force participation among countries led to significant differences in the relationship between unemployment growth and contraction in employment. However, the decline in labor force participation seems to be concentrated in the early stages of the transition, and in the future declining labor force participation is not likely to play as significant a role in dampening the growth of unemployment.