Skill Acquisition and Firm Creation in Transition Economies

Wenli Li, Zuzana Brixiová Schwidrowski and Tarik Yousef

No 1999/130, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; private sector; Skill acquisition; firm creation; transition; government policy; business opportunity; transition economy; government budget constraint; unskilled worker; entrepreneur hire; Self-employment; Public sector; Labor force; Human capital; Central and Eastern Europe; Baltics; Eastern Europe (search for similar items in EconPapers)
Pages: 31
Date: 1999-09-01
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Citations: View citations in EconPapers (11)

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