Unemployment in transition economies: theory, econometrics and policy implications for Romania.

Summary The main objective of this thesis is to propose an explanation of unemployment in the countries of Central and Eastern Europe (CEEC), currently in transition to a market economy. First, the literature on transition allows us to position the problem of unemployment in this general economic context. Second, three main causes of unemployment are identified: the contraction of aggregate demand (cyclical unemployment), labor shifts between industries (restructuring unemployment), and some degree of wage rigidity (structural unemployment). The microeconomic foundations of the first two categories of unemployment are studied in the light of standard theories. For the latter, we propose an original explanation, which takes into account the impact on unemployment of the institutions and mechanisms in force in the labor market of the CEECs. Once the conceptual framework is specified, we analyze the problem of unemployment in the concrete case of an economy in transition, that of Romania. The progress of reforms and the creation of a labor market are presented in detail. A vector autoregressive model of the Romanian economy allows us to draw conclusions about the relative weight of the factors determining the growth of unemployment. Finally, we propose several economic policy recommendations aimed at the reform strategy in general and the functioning of the labor market in particular.