Labour markets in Central and Eastern Europe (CEE) will be a key vehicle for the expression and reallocation of skills and talents in the transformation process. To a large extent, the emergence of unemployment is an indicator of this restructuring and reallocation. This paper surveys some of...

This paper argues that the application of the `2% rule' to the case of Eastern Germany, which implies convergence in three decades or more, is overly pessimistic. First, it ignores discrete improvements in initial conditions related to the transition, which have been significant to date. Because...

Using time-diary data from four countries we show that the unemployed spend most of the time not working for pay in additional leisure and personal maintenance, not in increased household production. There is no relation between unemployment duration and the split of time between household...

Widespread concern over real effects of EMU is consistent with new Keynesian approaches to macroeconomic fluctuations, but more difficult to reconcile with a real business cycle (RBC) paradigm. Using a model with frictions as a point of departure, I speculate that nominal price rigidity in...

The increase in dispersion of regional unemployment in the Czech Republic, despite low overall joblessness, is suggestive of low labour mobility. At the same time, standard matching functions estimated with district level panel data exhibit spatial instability. A simple model of non-sequential...

The need for locational competition among labour markets arises when labour is immobile. At the same time market clearing under such conditions can lead to wage and income variability. In such cases demand for insurance against regional shocks arises, which can be provided by nationwide...

Existing theories of unions emphasize their impact on wage levels relative to the opportunity cost of leisure. This paper explores the possibility that monopoly unions provide income insurance against idiosyncratic wage variability. An optimal union contract is characterized by real wage and...

The short- and longer-term regional consequences of migration for European aggregate supply are examined in a simple model in which human capital enters the production function externally. The planner chooses a reallocation of population across East and West that cannot be replicated by the...

This paper studies the exchange rate between the East and West German mark in the period before German monetary union. We show that standard exchange rate theory contains strong predictions about the dynamics of the exchange rate under these circumstances, and we use state-space methods to...

The determinants of migration propensities of East Germans in the German Socioeconomic Panel are investigated. The option value of waiting is proposed to capture important aspects of the migration decision. Logit analysis of migration intentions reveals that age, rents, friends and relatives in...