Examining the potential differences in the role of explanatory variables between the NMS and old European countries by the modified Chow tests, we were not able to reject the hypothesis of stability of regression coefficients between these two groups of countries in all the submodels of Models 3 and 4 but Model 4 on sample S1.

# **_Table 5. Results of Model 3 – dependent variable LESS10_**

||S1 – Mo<br>|del 3.1<br>||S2 – Model 3.2<br>|||S3 – Model 3.3<br>|<br>||
|---|---|---|---|---|---|---|---|---|---|
||Total|Old Europe|Total|Old Europe|NMS|Total|Old Europe|NMS||
|EPL|9.5992 ***|11.6807 ***|-14.3667|-2111.9680 **|-1044.6590 ***|6.1988 ***|16.9680 *|-5.3567|***|
|MW|-1.0595|-2.0185|-4.4364 ***|-4.3909 **|-3.4194 *|-3.1874 **|-4.0462 **|-5.7700|**|
|_TU_|-0.0164|0.0450||||-0.0516|0.1096|0.5342|***|
|TAX|-0.2569|-0.4995 **|-0.8584 ***|-2.8924 ***|0.2956|-0.7366 **|-2.1621 *|-0.1829||
|LMPA|43.2387|-0.3349|43.7352|-52.3072|-110.8614 **|-54.5490|-388.9695 *|-79.3016|***|
|LMPP|-43.4472 **|-20.1008|-32.9602|49.0924|74.2611|-2.2491|133.0819 *|455.4081|***|
|lnGDPPC|6.9031|13.9637|34.0757 ***|63.4543 ***|11.8531|19.0370 **|59.6104|-2.5173||
|_FISF_|-0.0524|-0.1028|0.0822|0.3677|0.1149|-0.2703 *|-1.1172|0.2014|**|
|BUSF|0.3234 ***|0.3345 ***|0.3385|1.5403 ***|0.1287|0.2060|0.6140|-0.1992|*|
|_CORR_|-5.9810|-8.3002 *|1.4953|36.7892 ***|4.5089|-4.9543|-9.8134|-9.3639|*|
|REGQUAL|4.5365|2.3194|-35.2486 **|-145.9063 ***|-10.5129 ***|-8.3761|-11.8015|28.4193|***|
|Constant|-20.0245|-31.3592|-32.0524|-46.7966|-6.9510|12.6085|-63.2875|8.6908||
|R sq. Within|0.1336|0.1257||||||||
|R sq. Between|0.5686|0.7480||||||||
|R sq.|0.3464|0.4208|0.4632|0.7259|0.8980|0.3497|0.3454|0.7602||
|N|143|112|53|31|22|48|30|18||
|Groups|19|15||||||||
|Method<br>|RE|RE|POOLED IV<br>2SLS|POOLED IV 2SLS|POOLED IV 2SLS|POOLED IV<br>2SLS|POOLED IV<br>2SLS|POOLED<br>2SLS|IV<br>|
|Wald test Chi<sup>2</sup><br>statistics p-<br>||||||||||
|value|0.0018|0.0001|0.0000|0.0000|0.0000|0.0009|0.0042|0.0000||
|Chow test F<br>statistics p-<br>value|0.9|479||0.9992|||0.9985|||

_Note: *** significant at 1% level, ** significant at 5% level, * significant at 10% level. RE - random effects generalized least squares estimation method, POOLED IV 2SLS - pooled two stage least squares procedure with instrumental variables on panel data; robust standard errors utilized. The detailed description of all the models applied in our analyses is given in Annex 4._ _Source: OECD, Eurostat, World Bank, Heritage Foundation, IZA, own calculations._

# **_Table 6. Results of Model 4 – dependent variable SELFEMPL_**

||S<br>|1 – Mo<br>|del 4.1<br>||S2 – Model 4.2<br>||<br>|S3 – Model<br> <br>|4.3<br>||
|---|---|---|---|---|---|---|---|---|---|---|
||Tota||Old Europe|Total|Old Europe|NMS|<br>Total|<br>Old Euro|pe|NMS|
|EPL|-0.5499||0.9708 *|83.5359 **|-339.8728 **|902.4133|***<br>2.1267|*<br>1.7783|**|2.0232|
|MW|-0.0558||0.2647|-0.7486|0.3260|1.9215|<br>0.0258|<br>-0.1448||1.2082|
|TU|-0.0967|**|-0.0381||||0.0723|*<br>0.0722|**|-0.1344|
|TAX|0.0083||-0.0633|-0.4235 ***|0.3509 ***|0.1803|<br>-0.3400|***<br>-0.1236|*|0.2239|
|LMPA|2.0591||4.5337|-56.0010 ***|78.0071 ***|-25.2625|<br>-81.4802|*** -10.0164||-37.7993|
|LMPP|-1.9254||-6.9724 **|28.6895 ***|-29.0602 ***|187.4907|***<br>35.6506|***<br>5.0697||15.1356|
|lnGDPPC|-3.6395|***|-8.6731 ***|4.7138 ***|-15.7035 ***|-5.8213|*<br>4.9850|**<br>-8.5828|***|1.4612|
|FISF|0.0545|***|0.0372|-0.2426 ***|0.4481 ***|0.2494|*<br>-0.1727|***<br>0.1274|**|0.0156|
|BUSF|0.0024||0.0275 **|0.0756 ***|-0.3247 ***|-0.2684|***<br>0.0160|<br>-0.0262||-0.0744|
|CORR|0.6946||-2.9335 ***|-6.8451 ***|-3.3139 *|-10.8332|***<br>-6.6594|***<br>-9.5263|***|-2.2346|
|REGQUAL|0.9451||0.6155|-2.1653|3.1040|5.7631|**<br>-0.6917|***<br>7.8841|**|-8.8696|
|constant|24.6757|***|45.8326 ***|32.9592 ***|63.2909 ***|-4.1078|<br>23.8789|***<br>41.8845|***|9.1444|
|R sq. Within|0.2055||0.0881||||||||
|R sq. Between|0.0666||0.7635||||||||

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