WAGE-CONTROLS AND EMPLOYMENT IN ECONOMIES IN TRANSITION

Wage controls have been an important element of economic policy in socialist economies and have been introduced or continued in many economies in transition. In most cases, limits have been placed on each firm's total wage bill, rather than on the wage rate paid. This paper uses a simple model of a labor-managed enterprise to analyze the behavior of wages and employment under such an income policy. It also examines how the results would differ if similar controls were applied to private enterprises. J. Comp. Econom., October 1994, 19(2), pp. 171-187. International Monetary Fund, Washington, DC, 20431. (C) 1994 Academic Press, Inc.