The transition to a market economy in Poland started in 1990 with radical and comprehensive reforms aimed at eliminating detailed state intervention in both labour and product markets. Increasing competition, restructuring and privatisation necessitated massive layoffs. The government set up social security schemes for workers losing their jobs, but due to public finance constraints the generousness of these schemes was soon substantially reduced. The introduction of market rules into the labour market resulted in increasing income inequality, with a growing wage premium for highly skilled workers. Partly as a response to rising returns to skills and partly due to reforms allowing for the establishment of private education institutions, rapid tertiary education expansion has taken place. Higher education enrolment rates increased more than threefold between 1989 and 2004.
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