Tornike Osadze

Akaki Tsereteli State University, Faculty of Business, Law and Social Sciences, Doctoral student in Economics


Today unemployment and related socio-economic problems are perceived by the society as particularly painful.

Therefore, the issues of the effective functioning of the labor market are particularly prominent. Due to these

challenges, the issue of development of institutions is becoming more and more urgent, which is confirmed by

the experience of advanced countries of the world.

With purpose to study the labor market institutions, this paper uses Douglas North’s division of institutions

into formal and informal institutions.

The paper considers the institutions as an economic category and discusses the role of the formal and informal

institutions in the functioning of the labor market, and the peculiarities of the functioning of labor market

institutions in Georgia.

As this study confirms, labor market formal and informal institutions are closely connected with other institutions

and changes in one area affect other areas. Therefore, economic decisions should take into account

the interests of all areas as much as possible. In addition, the state have to give priority to formal institutions in

the functioning of the labor market, since the existence of informal institutions in Georgia is characterized by

shortcomings and in many cases injustice.

The institutional development of the labor market in Georgia is characterized by a number of peculiarities:

the connection between institutions of different fields is characterized by instability and does not have a complex

approach at the state level; A changing political course changes the agenda and undermines the importance

of institutions; Informal institutions of the labor market are mostly characterized by shortcomings, which are

widespread among the population of Georgia and have deep historical roots.

Keywords: labor market institutions; institutional development; institutional framework; government agencies; Social psychology.


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The New Economist N 1 (2024), Vol. 19, Issue 1

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