Question

Explain how economic restructuring following the end of communism has resulted in higher unemployment in some lander.

Answer 1

Friedman and Johnson (1997) show that for a wide range of dynamic optimization problems, supermodularity is both necessary and sufficient for monotone static results. In the present context, this implies that our supermodular model requires the minimum set of assumptions to obtain monotonicity in the optimal decision variables.

2

The evidence presented here needs to be supplemented with information about inter- and intrafamily income transfers. This issue was addressed in a follow-up survey, but analysis of the results is not yet complete.