Returns to Mobility in the Transition to a Market Economy

Tito Boeri and Christopher Flinn

No 2098, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In spite of ongoing dramatic changes in labor market structure, transitional economies display rather low worker flows across sectors and occupations. Such low mobility can be explained by low returns to job changes as well as by market segmentation in the allocation of job offers. We develop an econometric model which enables us to characterize intertemporal changes in probabilities of dismissal, remuneration, and offer arrival rates on the basis of information on observed transitions and wage payments. The model is estimated using data from the Polish Labor Force Survey. Our results indicate a significant degree of segmentation in the allocation of job offers and more stability in public sector versus private sector jobs. Our model can also be used for policy experiments. In particular, we infer that reductions of 10 per cent in the generosity of unemployment benefits will not significantly boost outflows from the unemployment state. These findings support explanations for low mobility in transitional economies, which are based on informational failures, and high costs of moving from public to private enterprises for those with high levels of job tenure and labor market experience in the public sector.

Keywords: Market Segmentation; returns to mobility; Worker Flows (search for similar items in EconPapers)
JEL-codes: J62 J63 J64 (search for similar items in EconPapers)
Date: 1999-03
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Citations: View citations in EconPapers (41)

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Related works:
Journal Article: Returns to Mobility in the Transition to a Market Economy (1999)
Working Paper: Returns to Mobility in the Transition to a Market Economy (1999)
Working Paper: Returns to Mobility in the Transition to a Market Economy (1997)
Working Paper: Returns to Mobility in the transition to a Market Economy (1997)
Working Paper: Returns to Mobility in the Transition to a Market Economy
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