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Abstract

Reforms in transition countries have caused important adjustments in agricultural employment. The adjustments differ strongly between countries. For example, in Hungary and Estonia labour use in agriculture has declined dramatically, in Poland and Slovenia it has decreased to a lesser extent and in Romania and Russia agricultural employment increased during transition. This paper argues that the differences in labour adjustment during transition are due to a combination of variations in initial conditions and differences in reform policies. The extent of reform-induced price and wage adjustments affected labour use in agriculture. Surplus labour outflow from agriculture is furtherstimulated by liberalisation of factor markets and by the privatisation of farm assets, improving incentives and removing constraints for optimal factor allocation and structural adjustments. The shift to individual farms has reduced the outflow of labour from agriculture by improving farm governance and labour efficiency.

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