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Emigration and the Optimal Speed of Transition
Author(s) -
Papapanagos Harry,
Sanfey Peter
Publication year - 2003
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00401
Subject(s) - gradualism , economics , restructuring , pace , emigration , unemployment , transition (genetics) , labour economics , government (linguistics) , macroeconomics , paleontology , biochemistry , chemistry , linguistics , philosophy , geodesy , finance , political science , gene , law , biology , geography
The paper presents a model of labor reallocation in a transition economy and analyzes the determinants of the optimal speed of transition. The model is extended to consider the effect of emigration flows from the transition country. In general, a rapid rather than slow pace of restructuring is preferable in the long run, but an initial period of gradualism may be optimal. The authors conclude that emigration, by improving the rate of job creation in the private sector and by reducing the burden of unemployment on the government, may lead to an earlier switch to rapid adjustment of labor, and hence to a faster transition to a market economy.