Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution, Issues 2002-2180
International Monetary Fund, Oct 1, 2002 - Structural adjustment (Economic policy) - 27 pages
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.
What people are saying - Write a review
We haven't found any reviews in the usual places.
Other editions - View all
Baltic baseline interest rate becomes worse benchmark benefit blueprints calibrate capital accumulation capital losses capital mobility cost share decline domestic interest rate effect endowment of entrepreneurial entering the economy entrepreneurial capacity equal to g equivalent variation exogenous expanding product varieties experience a welfare firm creation firms producing intermediates formulation household income impact implies increase in entrepreneurial initial population inputs of final intergenerational intermediate firms intermediate inputs investments in firm knowledge capital level of entrepreneurial lifetime consumption long-run increase number of firms number of intermediate numeraire older open economy assumption outcome overlapping generations model parameter percent physical capital population that becomes present value price of entrepreneurial productive business proportion relative prices returns to scale shock shown in Panel small open economy steady-state growth rate total factor productivity trade balance trade deficit transition economies transition process transitional dynamics uniform scenario welfare changes welfare loss world market YOUNG scenario