Labour Mobility During Transition : Evidence from Georgia

This paper deals with labour mobility in Georgia during economic transition. We use quarterly 1998-99 panel data to examine mobility across six labour market statuses (inactivity, unemployment, formal wage employment, informal wage employment, self-employment and farming). Our findings are consistent with the hypothesis of labour market segmentation. Formal employment is preferred to informal employment. Unemployment is largely a queuing device for individuals with higher education waiting for formal jobs. Some self-employment is subsistence activities and consistent with a segmented labour market, while other is high risk and potentially high return activities. Age, gender and education are significant determinants of labour mobility; Finally, informal employment serves as a buffer in times of recession - with farming and informal wage employment absorbing labour shed by other statutes during the Russian financial crisis