institutional determinants of labor reallocation in transition the transition process differed in the countries of the former soviet union fsu and those of central and eastern europe cee in terms of reallocation of labor real wage employment and output adjustment we sift through the theoretical and empirical literature to find an explanation for these diverging adjustment trajectories and conclude that they can be explained by the fact that the cee countries adopted social policies that upheld wages at the bottom of the distribution forcing the old sector to restructure or collapse while the fsu countries allowed wages to free fall not forcing the hand of the old sector

earnings schooling and economic reform earnings schooling and economic reform econometric evidence from hungary 1986 2004 nauro campos and dean jolliffe how does the relationship between earnings and schooling change with the introduction of comprehensive economic reform this article sheds light on this question using a unique data set and procedure to reduce sample selection bias the principal assumptions are that sample selection bias was minimal in 1986 and that the decision to participate in the wage market after 1986 is correlated with age gender and schooling demographics once corrected for sample selection on observables the increase in returns is smaller suggesting the existence of the positive correlation between education and the decision to participate in the wage sector that was discussed above 16 comparing the panels shows that sample selection bias is positive and quite large throughout the period of analysis an advantage of the wage and earnings survey design is that the sample was selected in a single stage and t

collective agreements wages and firms cohorts evidence from central europe using a large matched employer employee data set the authors investigate the impact of company and industry collective bargaining agreements on wages in the czech republic hungary and poland ce3 they also examine the changing characteristics of the union wage premium in different cohorts of establishments their results challenge the common idea of weak unions in the ce3 by revealing a union wage premium whose characteristics depend on the level at which collective bargaining occurs they find that industry agreements increase wages for low skilled workers while company agreements increase medium and high skilled wages their second finding is that the union wage premium is unevenly distributed between cohorts with substantial cross country variation wage premiums are concentrated in the transitional cohorts in the czech republic and poland and to a lesser extent in the pre transitional cohort in hungary

a federal voting mechanism to solve the fiscal externality problem abstract fiscal externalities arise whenever several countries choose independently some tax or regulation policy this results into a severe loss for everybody if the taxed or regulated factor is very mobile for example this implies a bias toward little or no capital taxation if capital can move easily toward the lowest tax rate federalism would induce voters to internalize these externalities but implies full harmonization which harms countries whose most preferred policy is too far from the federal median which may lead them not to enter the federation in the first place we study a natural intermediate mechanism between full independence and full federalism introducing flexible divisions of the surplus generated by the removal of these externalities in the first stage voting takes place in each country simultaneously in order to choose a federal policy in the second stage each country decides through voting whether to adopt the federal policy or to leave the federation in which case it chooses its own policy and possibly pays a fixed cost to the remaining federation even if the fixed cost is null the federal voting stage acts as a commitment device and softens the inefficiency of full independence by allowing voters to internalize the undesirable effects of federal break up in stage 2 moreover the fixed cost can be chosen so that situations where harmonization is desirable get self selected as a result every country always benefits from entering this mechanism combining the benefits of common decision making with those of flexibility

unemployment and the social safety net during transitions to a market economy evidence from the czech and slovak republics the authors investigate the remarkably short unemployment spells in the czech republic compared to slovakia and other central and east european economies they estimate hazard functions and find that 40 to 5o percent of the difference in unemployment durations between the two republics is accounted for by differences in demographics and demand conditions the remainder is explained by differences in coefficients proxying the behavior of firms individuals and institutions in both republics the unemployment compensation system has a moderately negative effect on the exit rate from unemployment policymakers hence have latitude in providing adequate social safety nets without jeopardizing efficiency copyright 1998 by american economic association

optimal patent breadth and length with costly imitation abstract patent breadth is defined using the number of potential entrants which enter an industry it is shown that optimal patent design may be broad and short lived or narrow and infinitely lived depending on the market structure assumed and the properties of the demand function in the presence of costly imitation and endogenous entry it is shown that optimal patent design may be either broad narrow or of intermediate breadth depending on the properties of the aggregate imitation cost function

how can safety nets contribute to economic growth the paper provides an up to date and selective review of the literature on how social safety nets contribute to growth the evidence is carefully chosen to show how safety nets have the potential to overcome constraints on growth linked to market failures and is organized into 4 distinct pathways i encouraging asset accumulation by changing incentives and by addressing imperfections in financial markets caused by constraints in obtaining credit and from information asymmetries overcoming such failures helps households to invest into their human capital or productive assets ii failures in insurance markets especially in low income setting safety nets are assisting in managing risk both ex post and ex ante iii safety nets are overcoming failure to create assets and other local economy complementary factors to household level investments iv safety nets are shown to relax political constraints on policy safety nets have a dual objective of directly alleviating poverty through transfers to the poor and of triggering higher growth for the poor however the trade off between the dual objectives of equity and growth is not eliminated by the potential for productive safety nets this remains critical for designing social policies

winners and losers in russia s economic transition the transition to a market economy has produced a substantial and rapid change in the wage structure in russia household surveys taken before and after the transition indicate that overall wage inequality nearly doubled from 1991 to 1994 and has reached a level higher than that in the united states returns to both measured skills education occupation and unmeasured skills within groups have increased considerably skill premiums across experience groups however have become more compressed and relative wages of older workers have declined in addition female wages have declined relative to male wages across all percentiles of the wage distribution copyright 1998 by american economic association

quality undersupply and oversupply abstract i analyze a market in which a price taking buyer buys a variable quality good from a population of sellers contrasting the case where quality is a seller s private information to that where it is public information average quality traded under private information can be either higher quality oversupply or lower quality undersupply than under public information depending on sellers preferences we are likely to see quality undersupply if i sellers preferences exhibit substitutability between the variable quality good and the numeraire good and or ii sellers view the numeraire good as a luxury good relative to the variable quality good reverse arguments hold for quality oversupply

active labor market policies job matching and the czech miracle abstract a common explanation of low unemployment rates in the czech republic cr is the stance of active labor market policies almps in particular the extensive use of almp instruments and an effective delivery system using a large panel of quarterly data from employment office districts we estimate the effects of almps on the job matching process in the cr in doing so we address potential endogeneity in the provision of resources to district labor offices we continue to find a small but statistically significant effect of almp expenditures job creation and program intakes on outflows from unemployment into employment

earnings schooling and economic reform econometric evidence from hungary 1986 2004 how does the relationship between earnings and schooling change with the introduction of comprehensive economic reform this article sheds light on this question using a unique data set and procedure to reduce sample selection bias the evidence is from consistently coded nonretrospective data for about 4 million hungarian wage earners returns to skill increased 75 percent from 1986 to 2004 that is during the period stretching from communism to full membership in the european union the winners were those with a college or university education and those employed in the services sector which here excludes those in public services the reform losers were those in construction and agriculture those with only a primary or vocational education who experienced a decline in returns to their education and younger workers who acquired most of their education after the main reforms were in place

value of human capital in transition to market evidence from slovenia abstract the paper summarizes existing hard evidence concerning the changing value of human capital in slovenia s transition to a market system it investigates changes in patterns of job mobility via estimating multinomial logit and hazard models and changes in the structure of wages via earnings functions associated with education experience gender and ethnicity data are drawn from unusually rich administrative data sets that include personal characteristics work history and earnings for virtually all labor force participants all evidence points to rapidly increasing marginal returns to human capital in transition economies

immigration globalization and unemployment benefits in developed eu states at a time of mounting concern about how traditional welfare states will react to globalization there has been increasing interest in specifying how global economic forces affect welfare policies in industrialized states building on theories from the political economy and comparative institutional literatures we analyze the influence of an important aspect of globalization the flow of immigration focusing on states in the european union we present a theoretical model that illustrates the interactive relationships between immigration eu labor market integration and domestic institutions our findings highlight how immigration in conjunction with domestic political institutions affects unemployment provisions while labor market integrative forces remain in the background the story of immigration and unemployment compensation in the eu is less about the opening of borders and the market forces of integration and more about the domestic political pressures

wage effects of the move toward free markets in east germany this analysis of data from the german socio economic panel soep for the years 1989 91 illuminates important changes in the structure of wages that were occurring in the former east germany during its transition toward a capitalist economy and changes that are probably occurring in other countries in eastern europe as well under the new capitalist wage regime workers realized significant returns to schooling gained under socialism but no significant returns to work experience because work experience is the largest element in the human capital of older workers their wages fell under the new system and the results suggest that their wages will continue to fall relative to those of younger workers generous transfer payments from western germany may prevent an absolute decline in living standards of these workers older workers in other eastern countries however will have no such social assistance and their living standards will probably fall

the optimal speed of transition a general equilibrium analysis we present a benchmark model for the optimal speed of transition from a state owned to a private market economy based on the consumption savings decision in a closed economy we abstract from frictions to focus on the macroeconomic conditions for accumulation of private capital and closure or restructuring of state owned enterprises it is shown that hard budget constraints compensate for too slow speed of enterprise closure but that an excess speed of closure may slow down transition because of output contraction effects this will especially be the case if such a deviation occurs at early stages of transition

gender segregation and wage gap an east west comparison this paper discusses the implication of recent results on the structure of gender wage gaps in transition economies for the literature on gender segregation differences in employment rates of low wage women driven by initial transition policies may be responsible for different wage penalties to predominantly female occupations new evidence presented here also suggests that the introduction of western type anti discrimination policies has had little immediate effect on the structure of female male wage differences jel j3 j7 p3

wage policies of a russian firm and the financial crisis of 1998 evidence from personnel data 1997 to 2002 the authors use a rich personnel data set from a russian firm for the years 1997 to 2002 to analyze how the firm adjusts wages and employment during this period in which local labor market conditions changed in the aftermath of the financial crisis in 1998 they relate the development of turnover and wages for various employment categories to alternative models of wage and employment determination the authors argue that the firm s behavior is consistent with the predictions of efficiency wage models of the shirking and turnover type

are labour markets in the new member states sufficiently flexible for emu abstract new member states nms coming from central planning are often advised against early euro adoption because of their rigid labour markets but are labour markets so rigid in these countries we argue in this paper that this is not the case labour market institutions are no more rigid than among current emu members whilst wage bargaining institutions are actually better equipped for microeconomic wage flexibility than in the eu 15 nms also achieved substantial reallocation of jobs and workers in the transition to markets display relatively large job turnover rates and are reducing their regional mismatch the view that nms have rigid labour markets is fuelled by the low job content of growth in the region but there is evidence that the latter is related to productivity enhancing job destruction in the aftermath of prolonged labour hoarding reduced form employment equations estimated in this paper also suggest that tight fiscal policies rather than being harmful to job creation may actually improve the employment performance of the region our interpretation of this result is that loose fiscal policies weaken the confidence of investors and crowd out private employment growth through generous pay rises to civil servants

the attitudinal legacy of communist labor relations this study of workers attitudes compares data from international social survey programme issp surveys for former communist countries in europe with issp data for western countries over the perio

markets for communist human capital returns to education and experience in the czech republic and slovakia this research examines how the earnings structure in the czech republic and slovakia changed after the collapse of those countries communist governments tests of four similar micro data sets show that returns to education rose significantly with the transition to non communist governments for example returns to education rose from 2 4 to 5 2 for czech men between 1984 and 1993 though women had in general higher returns to education than men did returns for men increased more with the regime change among both sexes those with academic secondary education experienced particularly large earnings increases returns to experience on the other hand fell earnings structure changes appear to have been larger in the czech republic than in slovakia probably because transition occurred more rapidly and deeply in the former

labour market policy and the unemployed in hungary abstract we investigate passive and active labour market policy towards the hungarian unemployed using large samples of mierodata first we consider the income support role of unemployment benefits showing how coverage of unemployed searchers by different benefits and ui replacement rates have changed over 1992 94 second we analyse disincentive effects of ui non parametrically exploiting a natural experiment provided by a major change in rules applied only to new claims third we use a parametric model to comment on the degree to which active labour market schemes are targeted on those who find it hardest to get jobs

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded