ABSTRACT
This chapter provides an assessment of the extent to which labor market institutions and regulations in Central and East European (CEE) economies have contributed positively or negatively to economic performance since 1989. The initial labor market conditions varied across the CEE countries. While it was functioning, the Soviet-type economic system was characterized by full employment of labor (zero open unemployment) and centrally set wages, prices and output targets for state-owned enterprises. The chapter discusses the principal differences in the institutional and regulatory framework in the transitional labor markets and examines the extent to which they explain relative economic performance of the CEE countries. It also provides a selective review of the conclusions that may be drawn from analytical studies of transitional labor markets. This evidence is a useful complement of the review of institutional and regulatory developments. State-owned enterprises in all the transition economies rapidly decreased employment and/or real wages in the early 1990s.
