The poor may find it especially difficult to cope with the falls in wages and employment that tend to occur during the transition. Sometimes women are disproportionately affected. And the pain can be deeply felt if the transition is accompanied by recession or if the renewal of growth takes longer than expected.
Most households depend largely on their incomes from work.
But looking at wages alone can be deceptive because other factors influence current standards of living, such as labor force participation rates, rates of personal saving, the variety and quality of products consumed, and formal and informal income transfers. The reduction is most pronounced in sectors that are no longer economically viable. Almost no adjusting economy entirely escapes a temporary decline in real wages and increase in unemployment, but the size and duration of both effects differ from country to country. Among workers who remain employed, the effects of reforms can vary greatly. Table 1 looks at who wins and who loses in transitions.