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.Svend E. Hougaard Jensen, Tobias N. Rasmussen, Thomas Fox Rutherford. I. Introduction The introduction of free markets and extensions of property rights have provided the opportunity for greater entrepreneurial ... For example, Fischer and Sahay (2001) report evidence that the private sector share of GDP in transition economies has grown, ... Or it may be that people have to acquire these skills, and that the cost/benefit trade-off of this investment is more favorable to the young.
|Title||:||Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution|
|Author||:||Svend E. Hougaard Jensen, Tobias N. Rasmussen, Thomas Fox Rutherford|
|Publisher||:||International Monetary Fund - 2002-10-01|