Synopsis
This report primarily concerns the changing behavior of firms and their complex interaction with the labor market, most particularly with unemployment. The results reported here shed light on the factors that determine the shape and pace of the transition from planned to market economies. While finding significant variation across countries, the chapter authors point to major adjustments within firms, both private and public. It examines critical feedback from the labor market to the decisions made by workers and managers regarding privatization and restructuring. Chapter 1 sets out the main findings of the individual chapters and places them in context. It also provides a simple analytical framework for understanding firms ' response to shocks before summarizing the principal conclusions. The report ' s main focus is on the Czech and Slovak Republics, Bulgaria, Hungary, Poland, and Russia (covered in Chapters 2-4); but the empirical results can be generalized across all countries in transition. Chapters 5, 6, and 7 develop models that use the empirical findings and institutional detail and structure reported in earlier chapters.