In this paper, we estimate a model of labor market dynamics for Ro- mania using a three years panel of individuals from 1994 to 1996. This period was marked by the continued slow pace of economic liberalization and transformation that began in 1990. Our model of labor market transitions examines changing movements in and out in and out of employment, unemployment and self-employment, and incorporates specific features of the Romanian labor market, such as the social safety net. We take into account demographic characteristics, state dependence and individual unobserved heterogeneity by modeling the employment transitions with a dynamic mixed multinomial logit.