Transition has involved major job destruction and creation. This paper examines the skill content of these changes using a detailed three country firm survey. It shows that transition has exerted a strong bias against unskilled labour that has lost employment disproportionately. The skill content of blue collar work has shifted upwards. Shifts away from low-skilled labour were accelerated by technological change. By 2000, the actual and desired levels of employment were close to each other but we find some evidence that technological changes had given rise to shortages of skilled blue collar workers. Although there is variation across the sampled countries, this appears to be explained by differences in the timing of reforms. The observed changes will have major longer run implications for the level and structure of employment and for inequality through the distribution of earnings. Copyright (c) 2008 The Authors.
