Discussion paper

DP1224 The Transition in Russia: Successes (Privatization, Low Unemployment...) and Failures (Mafias, Liquidity Constraints...). A Theoretical Analysis

The paper analyses the transition in Russia through a theoretical model in which job-to-job mobility plays a crucial role. It shows that job-to-job mobility is a key factor preventing a discontinuous break in unemployment and insulating wages in declining sectors from aggregate disequilibria. In the case where the mafia can impose a tax on entry, it shows that a range of inefficient sectors can be kept indefinitely alive. In this case the spectrum of wages remains wide and will never reach perfect equalization as promised by laissez-faire.

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Citation

Cohen, D (1995), ‘DP1224 The Transition in Russia: Successes (Privatization, Low Unemployment...) and Failures (Mafias, Liquidity Constraints...). A Theoretical Analysis‘, CEPR Discussion Paper No. 1224. CEPR Press, Paris & London. https://cepr.org/publications/dp1224