Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution

Author/Editor:

Thomas Fox Rutherford ; Svend E. Hougaard Jensen ; Tobias N. Rasmussen

Publication Date:

October 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

A defining feature of transition economies is the expansion of the private sector. Motivated by the observation that new enterprises in transition economies seem to have a strong preference for recruiting young people, this paper studies intergenerational redistribution following from market reforms that stimulate private sector activity and firm creation. We implement a theoretical model and find that in some cases more than half of the current working age population may be made worse off by an increase in entrepreneurial capacity. This may help explain why market reforms have been voted down despite their long-run benefits.

Series:

Working Paper No. 2002/180

Subject:

Consumption Income Labor Trade balance Wages

English

Publication Date:

October 1, 2002

ISBN/ISSN:

9781451859126/1018-5941

Stock No:

WPIEA1802002

Pages:

28

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