Book Description

This study analyzes which factors affect the probability of exiting to employment and, hence, the duration of unemployment spells in a transition economy (Poland). The first empirical essay tests the key predictions from job search theory about the relationship between the duration of an unemployment spell and the reservation wage. We applied a quasi-structural model, and our results indicate that the relationships predicted by optimal job search theory are certainly present in the Polish data: reservation wages directly affect durations of unemployment but seem to decline over time. In the next essay we analyze the impact of unemployment benefits and other factors on the probability of exiting to employment with hazard models. All results indicate that some features of the Polish unemployment benefit system effective in 1994--1997 discouraged exits from unemployment status. The estimated overall effect of unemployment benefits on the probability of exiting to a job is negative, and the hazard rate to employment increases dramatically as the benefit expiration moment approaches. At the same time, restrictions imposed on the level of additional income of benefit recipients seemed to prevent this disincentive effect from being stronger. The final essay presents a new direction of economic research in transition economics, namely the influence of the ownership status on labor market flows. We investigate how a rapidly growing private sector in Poland affects labor market dynamics and, in particular, unemployment. The analyses of labor market flows indicate the existence of a moderate mobility, however, after disaggregating the flows, it becomes clear that private sector employees exhibit greater labor market mobility thin their public sector counterparts. Thus, the newly emerging and growing private sector will make the Polish labor market more dynamic and fluid.