Behzod Tagaev

National University of Uzbekistan named after Mirzo Ulugbek, Tashkent, Uzbekistan

Email: btagaev@nuu.uz

ORCID 0000-0002-4065-9817 

Institutional inertia and labor market adjustment in a late-reforming emerging economy

Liudmyla Akimova

National University of Water and Environmental Engineering,

Rivne, Ukraine; 

Cyprus University of Technology, Limassol, Cyprus; 

Email: l_akimova@ukr.net

ORCID 0000-0002-2747-2775

Desislava Serafimova

University of Economics,

Varna, Bulgaria

ORCID 0000-0001-8096-9396

Email: serafimova_d@ue-varna.bg

Tamás Fülöp

John von Neumann University,

Hungary

ORCID 0009-0001-0628-1451

Email: fulop.tamas@nje.hu

Abstract. Structural transformation in emerging economies often proceeds without a clear movement of labor into high-productivity sectors. This paper examines that pattern through Uzbekistan, a late-reforming economy in Central Asia, and reads its labor market trajectory against the wider post-socialist experience, drawing on Kazakhstan and Poland as contextual benchmarks. Using shift-share decomposition together with matched domain-specific and pooled panel regressions, we identify the sectors that drove employment change and assess how the supply of graduates relates to sectoral labor absorption. Employment change has followed a mainly service-led path, with manufacturing playing only a limited role in net job creation. The link between education and employment is uneven across sectors. Absorption is stronger in a few knowledge-intensive and highly skilled activities and weaker across several broader training areas. This pattern raises the question of whether labor reallocation is productivity-enhancing and underscores the need to align the expansion of higher education with the changing structure of labor demand.

Received: July, 2025

1st Revision: January, 2026

Accepted: May, 2026

DOI: 10.14254/2071-789X.2026/19-2/3

JEL Classification: J21, J24, O14, O53, P23

Keywords: structural transformation; sectoral labor reallocation; service-led transformation; skills mismatch; human capital allocation; emerging economies