Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution

By Thomas Fox Rutherford, Svend E. Hougaard Jensen, Tobias N. Rasmussen

October 1, 2002

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Format: Chicago

Thomas Fox Rutherford, Svend E. Hougaard Jensen, and Tobias N. Rasmussen Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution, (USA: International Monetary Fund, 2002) accessed November 23, 2024

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.

Subject: Consumption, Income, Labor, Trade balance, Wages

Keywords: Interest rate, Physical capital, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/180
Stock No:

WPIEA1802002
ISBN:

9781451859126
ISSN:

1018-5941

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