Labor Markets and the Applied Microeconomics of Transition

After several years of large-scale social and economic reforms in Central and East Europe, higher education is apparently the least changed sector in many countries. To a certain extent, this accounts for traditional conservatism of institutions of higher learning. However, it may also be related to general economic conditions in the countries which have experienced significant downgrading and restructuring of national economies as a part of dismantling the centrally planned systems. These changes have not allowed to make necessary investments into higher education needed to renew or even maintain the existing infrastructure and the purpose of the course is to provide East European economists with further education in the microeconomic analysis of the restructuring process a transitional economies, with a special emphasis on labor market adjustment. Currently, there is great interest on the part of policymakers throughout the region and international organizations on the design of policies both to facilitate and to cushion the effects of restructuring, yet rather little research has addressed the behavioral and social implications of alternative strategies. The course would provide a forum to share the methodologies and findings developed by the CEU Economics Department and Labor Project, which has become a center for research and data collection in this area, and to develop a wider network of faculty and scholars cooperating on the investigation of these topics. Curriculum While the bulk of the economic literature on transition is highly descriptive, a significant theoretical literature has also developed. The biggest gap, and the one which this course seeks to address, is bringing together well-defined theoretical propositions with econometric tools and appropriate microdata sets for testing them. Accordingly, the course will include classes in both theory and in econometrics, as well as seminars on the empirical implementation of theories on actual data sets. The theory classes will emphasize institutional economics and models of mobility and information. The econometrics classes will include limited dependent variable estimation, hazard functions, duration dependence, and other techniques appropriate for microdata, particularly involving qualitative variables. The seminars will include discussions of labor supply, earnings differentials, Labor market transitions, unemployment, multiple job holding and second economy activities, managerial behavior, and the social costs and political economy of transition.