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Publication Details
AFRICAN RESEARCH NEXUS
SHINING A SPOTLIGHT ON AFRICAN RESEARCH
economics, econometrics and finance
Skill shortages and labor market outcomes in Central Europe
Economic Systems, Volume 33, No. 1, Year 2009
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Description
The new Central European members of the EU have been characterized by low employment rates, especially among unskilled workers, despite the GDP recoveries and large private sector shares in output and employment. Evidence points at skill shortages in Central Europe as a key impediment to faster labor reallocation and convergence to the EU-15 employment structures. In this paper, we develop a simple model of labor reallocation with transaction costs and show how skill shortages can inhibit firm creation and increase income inequality. We use the model to examine the impact of training subsidies and their financing on skill acquisition and start-ups of new private firms, and show that the positive effect of subsidies would be mostly offset by high wage taxes. Shifting financing from wage to consumption taxes would improve incentives for workers' training and firm start-ups, while relying more on income taxes could reduce the income gap between workers and entrepreneurs. © 2008 Elsevier B.V.
Authors & Co-Authors
Brixiová, Zuzana
Ethiopia, Addis Ababa
Addis Ababa University
Li, Wenli
United States, Philadelphia
Federal Reserve Bank of Philadelphia
Yousef, Tarik M.
United Arab Emirates, Dubai
Mohammed Bin Rashid School of Government
Statistics
Citations: 44
Authors: 3
Affiliations: 3
Identifiers
Doi:
10.1016/j.ecosys.2008.07.002
ISSN:
09393625
Research Areas
Health System And Policy