Transition, recession and labour supply in Kazakhstan (1990-1996).

This thesis explores how transitional reforms and the concomitant recession have transformed the labour market in Kazakhstan and how changes in the labour market have transformed workers' attitudes to labour supply. It is found that the initially expected reallocation of labour from the state to the private sector has been a very weak phenomenon and that, instead, a sharp growth of self-employment has occurred. During a period of transition and recession, such as the one that Kazakhstan is experiencing, income seems to converge towards a subsistence minimum across working sectors altering the relationship between growth, wages and productivity. In such an environment, the supply of labour is mainly determined by non-income factors and so is the cross-sector mobility. Unemployment exists not as a temporary phenomenon instrumental in labour reallocation but as a permanent condition for the very poor. Current labour market policies, originally designed for structurally different labour markets, seem inconsistent with the nature of unemployment and unsustainable in the long run. The prolonged stagnation is dragging the economy towards a third world scenario rather than a first. Hence, future prospects and policies are to be rethought not in terms of transition but in terms of economic development.