labour market, the labour demand is weak, industrialisation is limited, economy lacks diversity.
However, the evolution and root causes of persistent informal employment and rising economic inactivity have not been explored. The conventional approach to analysing the labour market’s supply and demand is insufficient. Instead, we argue a slightly different approach is necessary, and in this section, we aim to explain our method.
livestock and aim to focus on informality, labour market exit, family, networks and others, it may be suggested that there are constraints to approaching the Mongolian labour market from the normative labour economics. The specificities bring into question the effectiveness of the standard labour market and mainstream economic development approaches.
Therefore, the dissertation has raised an ‘extended labour economic model’, or extended the- oretical framework for analysing the Mongolian labour market as a method to enquire into the unique research target - Mongolia. Extended in a sense that it extends the conventional labour market analysis out of its borders into the informal institutions’ realm. The standard economic theories that only focus on formal institutions and tangible measurements of economic perfor- mance often lack the capacity to explain the causal relations and the historical path dependency permeating every aspect of formal and informal institutions. Economic transactions, including the ones in the labour market, are performed by actors whose values and behaviour patterns have been formed in the past. “Rules of the game require their own players as well as behaviour pat- terns and values suitable to the market. Those players, however, came from the former system, and therefore all transition economies experienced path-dependency” (Mizobata, 2012, p.5).
While, the transition economics and orthodox labour market supply-demand analyses focus primarily on the macroeconomics performance and the formal labour markets, while the VoC and recently the development economics approaches do recognise the importance of institutions, but they too focus on the performances of the formal labour markets.
However, as previous studies of the Mongolian labor market have pointed out, focusing solely on macroeconomic performance and the formal labor market does not provide a picture of the Mongolian labor market as a whole or identify the problems it contains. Therefore, this disser- tation combines such approaches with the analysis of the underlying institutions to analyse the often neglected parts of the labour market; informal employment and economic inactivity. Ad- ditionally, we identify the birthing behaviour of Mongolian women with potential implications
Chapter 2 Chapter 3 Chapter 4
Development VoC economics Standard Labour market approach
Transition economics Social policies Traditions
and institutions
History Structural
change Labour
market response
Transition policies
Birthing behaviour Informal
employment
Economic inactivity Focusing on formal
and informal institutions and their
institutional complementarities
Economic disciplines to analyse the formal institutions of the
labour market
Conventional economic disciplines
to analyse the economies of emerging/
developing countries Extended theoretical framework to analyse the Mongolian labour market
Figure 1.2: Conceptual framework defining the Mongolian labour market.
Source: Made by the author.
for the rise of the economically inactive. This behaviour, in turn, is shaped by the traditional val- ues, institutions and state’s social policies, and they are path-dependent (Stark, 1992; Mizobata, 2012).
What this dissertation reveals is that in the early years of the transition, the agricultural and in- formal sectors served as a buffer, absorbing those who would become unemployed, but since the 2000s, the agricultural sector has become smaller and the informal sector and the inactive pop- ulation have increased. Of course, some of these phenomena have been pointed out in previous studies, such as the problems of industrial structure, but what is more decisive in the difference from other transition countries is the population growth, and the institutions, including the re- lated female childbearing behavior and the various practices that determine people’s life plans, have a major impact The study also points out that the difference between the transition coun- tries and other countries is even more critical in terms of population growth. Therefore, it is inevitable to look at social policies in general, including family and labor market policies, and to consider their relationship to path dependency and economic development. As a result of our analysis, we expect to find that the agricultural and informal sectors acted as the main buffers during the early years of the transition. The reasons for this, especially regarding the agricul- tural sector, are the path-dependent nature of the sector. It is further hypothesised that the state’s population and social policies would have far-reaching consequences for the labour market.
This dissertation aims to answer the following research questions:
1. What were the major characteristics of the labour market in Mongolia at the start of the transition?
2. How did these characteristics affect the outcomes of the early transformation period?
3. To what degree can the challenges faced by the current labour market be traced back to the institutions and policies of the early transition?
4. How many of those institutions and policies can be regarded as path-dependent?
Finally, this dissertation aims not to fit the Mongolian experience of transformation within a cer- tain, predetermined group but to critically examine the labour market’s history, institutions, and policies. Comparisons are made to other countries to draw distinctions rather than similarities.