On the Speed of Transition in Central and Eastern Europe

This paper examines how the on-the-job search of workers in the state sector who are seeking jobs in the private sector affects private sector employment, the unemployment level, and the unemployment duration in the transition economies of Central and Eastern Europe. The main finding is that on-the-job searching can account for the coexistence of a quickly growing private sector and a high unemployment level of long duration. The paper also addresses the issue of the optimal (output maximizing) rate of state sector closure and finds that the rate is slower when workers are simultaneously job hunting than when they are not.Unemployment;Transition economies;Central and Eastern Europe;employment, job search, unemployed, unemployment duration, private sector employment, unemployment rates, unemployment level, employment levels, duration of unemployment, unemployment rate, high unemployment, job creation, unemployment benefits, unemployed workers, high unemployment rates, unemployment increases, unemployment durations, social insurance, declining unemployment, persistent unemployment, employment increases, welfare implications, unemployment transition, low unemployment rate, search unemployment, unemployment benefit, low unemployment, equilibrium unemployment, private employment