DOES COMPENSATION FOR DISRUPTIONS STIMULATE REFORMS - THE CASE OF AGRARIAN-REFORM IN CENTRAL AND EASTERN-EUROPE

Most Central and Eastern European governments have decided to restore land to former owner's, but there has been opposition to land reform f rom managers and workers of collective farms. This opposition has slow ed down the reform because the local reform-implementing institutions (the 'Reform Councils') are heavily influenced by collective-farm inte rests. Governments have contemplated offering compensation to encourag e acceptance of the reforms. This paper argues that compensation will not stimulate agrarian reform in CEECs unless it is explicitly linked to the implementation of the reforms. The paper discusses alternative options for changing the incentive structure of the Reform Councils, b ut concludes that results depend on the initial institutional design o f the Reform Councils and the selection of their members.