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In a market economy, human work is offered and sought in the labor market. It is valued because of the level of demand for it and the rarity of the required qualifications. At the same time, because of the different contexts and conditions, there are many labor markets that are defined as the professional labor markets, local labor markets, dual labor markets, and black and gray labor markets.

This paper summarizes the evolution of labor markets and labor market institutions and policies in the countries of Central and Eastern Europe as well as of Central Asia over the last two decades. The main focus is on the evolution of labor market institutions, which are among candidate explanations for the very diverse trajectories of labor markets in the region. We consider recent contributions that attempt to assess the effect of labor market institutions on labor market performance of TEs, including the policy-relevant issue of complementarity of institutions.

The dual labor market theory is one of the primary explanations for the gender differences in earnings. It shows that gender inequality and stereotypes lead to employment of men and women in different segments of the labor market characterized by various incomes. This theory is based on the hypothesis that such markets are divided into segments, which are divided by different rules of conduct for workers and employers. Differences also include production conditions, terms of employment, productivity of employees, and the characteristics of the workers' jobs. This labor division is related to employee characteristics such as gender, age, and race that define their work environment and lifestyle.