Wage Controls and Employment in a Socialist Economy

November 1, 1991

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Format: Chicago

Timothy D. Lane Wage Controls and Employment in a Socialist Economy, (USA: International Monetary Fund, 1991) accessed December 22, 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

Wage controls have been an important element of several of the stabilization programs recently introduced in reforming socialist economies. In some cases, the controls have been placed on each state enterprise’s total wage bill, rather than on the wage rate paid. Such an incomes policy would be expected to have a dampening effect on employment, but this has not generally occurred; on the contrary, declines in employment in state enterprises have typically been much less than the associated declines in output. This paper presents a simple model of a labor-managed enterprise which offers an explanation of the behavior of wages and employment under such an incomes policy.

Subject: Employment, Expenditure, Income, Labor, Labor markets, National accounts, Unemployment benefits, Wages

Keywords: Bill constraint, Central and Eastern Europe, Employment, Employment decision, Income, Incomes policy, Labor markets, Labor-managed firm, Privatized firm, Profit contour, Socialized firm, Unemployment benefits, Wage control, Wages, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1991/111
Stock No:

WPIEA1111991
ISBN:

9781451853384
ISSN:

1018-5941

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