Human Capital Formation during Communism and Transition: Evidence from Bulgaria

Simeonova-Ganeva, Ralitsa (2005): Human Capital Formation during Communism and Transition: Evidence from Bulgaria.

Abstract

Is it true that communist countries had well-developed human capital, or is it just a myth? What were human capital stocks at the beginning of transition to market economy? What happened to human capital formation during the transition? We attempt to answer these questions using evidence from Bulgaria. This is also a story about how a communist government had coped with labour market problems in a small closed economy. Unfortunately, during communism, there had been quite insufficient public information on human capital. Therefore, in the first place, we collect, synthesize and analyze all available information from official statistical publications as well as internal reference books and administrative documents, which used to be classified during communism, and at present are available at the Central State Archives. Next, we construct human capital indicators based on educational data for the communist period and track the dynamics in human capital formation for both communism and transition. Finally, we identify key policy and political measures which have affected human capital formation. Main findings show that communism started with extremely underdeveloped human resources. During the entire period the government had tried to provide favorable conditions for human capital formation. Communist policy measures gave significant results in the 60s, but had been ineffective in sustaining better education in the long run. As a result, the start of transition was characterized by poor levels of human capital due to an educational crisis in the last decade of communism (then, about 60% of the population in Bulgaria was with primary or lower-level of education). We assume that lack of economic incentives at individual level had determined weak pursuit of better education.

• Item Type: MPRA Paper
• Language: English
• Keywords: human capital, communism, transition, human capital formation, determinants of human capital, labour market policies in communism
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; P - Economic Systems > P2 - Socialist Systems and Transitional Economies; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J48 - Public Policy; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy > N34 - Europe: 1913-; J - Labor and Demographic Economics > J0 - General

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