Estimating the Income Gain of Seasonal Labor Migration

Male seasonal labor migration has become an increasing phenomenon globally and particularly for Armenia. This study finds that the monthly income gains for seasonal migrants from Armenia to Russia are about US$480 relative to only US$50 in the case of non‐migration. Individual panel data based on a novel household survey allow controlling for a variety of socio‐economic characteristics. Propensity score matching combined with difference‐in‐differences addresses potential endogenous self‐selection into migration. This paper finds negative selection based on education, employment, and pre‐migration income. This is reflected by a low premium for skills in Russia relative to Armenia, luring seasonal migrants into low‐skill jobs, mainly in the construction sector. The results identify seasonal labor migration as an attractive opportunity to escape unemployment, especially for the unskilled labor force. Therefore, seasonal migration has become an increasingly important source of income for households (through remittances) from low‐income countries and helps eradicate poverty.     

Job creation,job destruction,labour mobility and wages in Poland, 1988–19981

Longitudinal data from interviews with Poles of working age conducted in 1988, 1993 and 1998 combined with longitudinal firm‐level data present a detailed view of the transition from a state‐dominated to a market economy. Job losses in state firms and job creation in new private firms are the dominant employment changes, other than retirements from the labour force. In the Polish case, a significant proportion of this movement over the 1988–1998 period involves a spell of unemployment or exit from the labour force before obtaining a private sector job. This results in considerable job competition between workers leaving the state sector and those who are out of the labour force or unemployed. Income differences between the state sector and the de novo sector appear to have little association with mobility. These results suggest that movement to the new private sector is more likely to be the result of job loss than the result of people looking for better, higher paying jobs. Self‐employment plays an important role in the development of the private sector. People working on their own account have higher incomes than wageworkers and are likely to become owners employing additional workers. Incomes are higher in regions with high rates of job creation and depressed in regions with job destruction.     

A model of wage and employment effects of service offshoring

This paper develops a two‐sector model of trade in goods and intermediate tasks that differ in tradability and skill intensity. A skill‐abundant country with high productivity is shown to offshore more unskilled tasks than skilled tasks, without relying on a particular correlation structure between tradability and skill intensity. With putty‐clay technology that allows retraining in the long run, transition from the non‐offshoring to the offshoring equilibrium generates wage and employment effects that switch from negative to positive as tradability declines, with the switches occurring at a higher degree of tradability for skilled tasks. This is consistent with the empirical literature.     

Private sector employment in Russia: Scale, composition and performance

In Russia, as across Central and Eastern Europe, privatization and the establishmemt of new private firms have been viewed as key factors in labour market adjustment during the transition period. This paper considers the overall employment developments in the private sector in Russia and the extent to which the private sector employment performance is differentiated from that of other sectors in five Russian regions. The analysis is based on a fresh look at these issues using official statistics published by Goskomstat and drawing on microdata from the March 1996 Russian Labour Force Survey (LFS). A special questionnaire attached to the LFS in the study regions provides supplementary information.
The paper highlights shifts in the sectoral composition of employment, including growth in private sector employment. Compared to other forms of ownership, the analysis confirms a tendency for private sector ownership in the study regions to be associated with stronger employment performance with respect to hours worked and, in some cases, timely payment of wages. Private sector firms appear to have relatively flexible employment patterns, utilizing more fixed-term or part-time employment than other types of firms and experiencing greater labour turnover. Also, private sector employees tend to be somewhat younger and probably more adaptable people. However, there is significant variation across the study regions and substantial exceptions exist with respect to the above-mentioned tendencies. With respect to employment issues, the differentiation between sectors appears to be less pronounced than one might have expected.     

Understanding South Africa's economic puzzles*

South Africa has undergone a remarkable transformation since its democratic transition in 1994, but economic growth and employment generation have been disappointing. Most worryingly, unemployment is currently among the highest in the world. While the proximate cause of high unemployment is that prevailing wages levels are too high, the deeper cause lies elsewhere, and is intimately connected to the inability of the South African to generate much growth momentum in the past decade. High unemployment and low growth are both ultimately the result of the shrinkage of the non‐mineral tradable sector since the early‐1990s. The weakness in particular of export‐oriented manufacturing has deprived South Africa of growth opportunities as well as of job creation at the relatively low end of the skill distribution. Econometric analysis identifies the decline in the relative profitability of manufacturing in the 1990s as the most important contributor to the lack of vitality in that sector.     

Foreign direct investment and inequality in developing countries: Does sector matter?

Scholars have studied the relationship between inward foreign direct investment (FDI) and within‐country income inequality in cross‐national contexts, but have not empirically investigated how FDI in different sectors might affect inequality in different ways. We use error correction models to analyze sectoral FDI data compiled from UNCTAD investment reports in 60 middle‐income countries from 1989 to 2010, arguing that FDI in services is more likely to be associated with inequality than FDI in other sectors. We argue that skill biases and changes in employment patterns associated with service sector investments can help explain these findings.     

Spatial effects of open borders on the Czech labour market1

Using data from the Czech Microcensus, I investigate differences in the regional impact of open borders on different skill groups in the Czech labour market. According to my results, there are no indications of disproportionate shifts in the skill structure of employment in the districts neighbouring western Germany and Austria compared to non‐border districts. However, regarding spatial wage gaps, I find evidence that from 1996 until 2002 the workers in the border region with the lowest degree of skills have a positive wage differential compared to their counterparts in the non‐border region, while all other skill groups in the border region have negative values.     

Entrepreneurship in post‐conflict transition1

We examine new self‐employment entry and its viability in Bosnia and Herzegovina, using a rich household survey for the years 2001–2004. We find that wealthier households are more likely to engage in viable self‐employment and create employment suggesting an important role for financing constraints. Specifically, although having an existing bank relationship is not significantly related to the entry decision, it is positively related to the survival for new entrepreneurs and their employment creation. We also find a non‐linear relationship between remittances and entry in that individuals not receiving remittances are more likely to enter self‐employment; but, if they do receive them, the likelihood of starting a business increases in the fraction of wealth received from domestic remittances. Finally, people working in the informal sector are more likely to become viable entrepreneurs, particularly those provided with loans from micro‐credit organizations. These findings support the perception of the informal sector as an incubator for formal self‐employment in the early years of transition.     

中国城镇就业所有制结构的演变：1988-2000年

改革以来，国有部门在城镇就业中所占的比重有了大幅度下降，但在持有本地城市户口的居民中，国有部门就业的比重一直比较高。我们把职工在国有部门就业分解为两方面选择的结果，一个是职工对国有部门的偏好，另一个是国有部门的准入。使用1988年到2000年中国城镇居民住户调查6省的数据，我们联立地估计了这两方面的行为。估计结果表明，在20世纪90年代。城市居民对国有部门的偏好有所降低，但是平均而言仍然保持比较高的水平，国有部门的准入限制在20世纪90年代初期有一定程度的放松，虽然在90年代中期职工大规模下岗期间，这种趋势有些反复，但是下岗高峰期过后，国有部门又放松了准入。在90年代初期国有部门就业比例的上升，主要是国有部门准入放松的结果,在90年代后期国有部门就业比例的下降，则主要是居民对国有部门偏好有所下降的结果。进一步地对工资部门差别的分析，发现国有部门的工资持续地高于非国有部门的工资，这在一定程度上解释了90年代城镇居民与国有部门之间粘连的原因。本文的发现说明，降低国有部门的工资升水，可以使国有部门的改革更加顺利。     

Why has unemployment risen in the New South Africa?1

We document the rise in unemployment in South Africa since the transition in 1994. We describe how changes in labour supply interacted with stagnant labour demand to produce unemployment rates that peaked between 2001 and 2003. Meanwhile, compositional changes in employment at the sectoral level widened the gap between the skill‐level of the employed and the unemployed. Using nationally representative panel data, we show that stable unemployment rates mask high individual‐level transition rates in labour market status. Our analysis highlights several key constraints to addressing unemployment in South Africa. We conclude that unemployment is near equilibrium levels and is unlikely to self‐correct without policy intervention.     

The Dynamics of Poverty and the Promotion of Transition from Non‐Regular to Regular Employment in Japan: Economic Effects of Minimum Wage Revision and Job Training Support

Comparison between Japan and other advanced countries shows that the relative poverty rate is high in Japan, and that many of the poor households are those with a non‐regular worker. As for mobility between income classes, the proportion of households remaining in the poor class for a long period of time in Japan is close to the average for EU countries. The panel estimation of its effect on wages shows that the raising of the minimum wage is statistically significantly associated with an increase in wages of non‐regular workers, in particular, female, but does not seem to decrease employment. The result shows that for male non‐regular workers, firm‐provided training promotes their transition to regular employment, and that for female non‐regular workers, occupational training promotes their transition to regular employment at different firms.     

Labour mobility during transitionEvidence from Georgia1

This article deals with labour mobility in Georgia during economic transition. We use quarterly 1998–99 panel data to examine mobility across six labour market statuses (inactivity, unemployment, formal wage employment, informal wage employment, self‐employment and farming). Our findings are consistent with the hypothesis of labour market segmentation. Formal employment is preferred to informal employment. Unemployment is largely a queuing device for individuals with higher education waiting for formal jobs. Some self‐employment is subsistence activities and consistent with a segmented labour market, while other is high risk and potentially high return activities. Age, gender and education are significant determinants of labour mobility. Finally, informal employment serves as a buffer in times of recession – with farming and informal wage employment absorbing labour shed by other statuses during the Russian financial crisis.     

Informality and mobility

Informality is a defining characteristic of labour markets in developing and transition countries. This paper analyzes patterns of mobility across different forms of formal and informal employment in Russia. Using the Russian Longitudinal Monitoring Survey household panel we estimate a dynamic multinomial logit model with individual heterogeneity and correct for the initial conditions problem. Simulations show that structural state dependence is weak and that transition rates from informal to formal employment are not lower than from non-employment. These results lend support to the integrated view of the labour market.     

Does high labour mobility always promote trade liberalization?

Labour immobility (high adjustment cost) has been regarded as a major obstacle to trade liberalization and it has been argued that higher labour mobility promotes trade liberalization. However, this is not the case when we take into account conflicts of interest between politicians and voters that are inevitable in representative democracy. I construct a simple two‐period model including both elections and sectoral adjustment. Then I show that the non‐monotonic relationship between labour mobility and the equilibrium degree of trade liberalization exists due to the principal–agent relationship. In representative democracy, higher labour mobility prevents trade liberalization in some cases.     

Tenures That Shook the World: Worker Turnover in Russia, Poland, and Britain

We study worker turnover to investigate to what extent the length of time a worker has been employed by a firm shapes the turnover process in a transition economy. Using survey data, we compare the pattern of turnover with a Western economy, Britain. We show that tenure-turnover rates are higher in Russia and lower in Poland than in Britain. The characteristics of workers hired in the state and private sectors do not look very different. State and private sector firms in Poland offer the same wages to new recruits, but new private sector jobs in Russia appear to offer wage premia relative to new state jobs. We argue that these observations are consistent with a framework in which the value of seniority in jobs begun under the old order may be small and the value of a continued job match unsure, offset, in Poland at least, by insider resistance to layoffs.J. Comp. Econom., December 2000, 28(4), pp. 639–664. Heriot-Watt University, Edinburgh, IZA, Bonn, The William Davidson Institute, University of Michigan Business School, Ann Arbor, and EERC, Kiev; Centre for Economic Performance, London School of Economics, Royal Holloway College, University of London, IZA, Bonn, and The William Davidson Institute, University of Michigan Business School, Ann Arbor.     

Does public‐sector employment fully crowd out private‐sector employment?

Employment matters for development because it can raise household income, lower inequality, promote economic growth, and contribute to political stability. Many countries have high rates of public employment, but what effect does this have on overall employment and unemployment rates? This paper investigates if and to what extent public‐sector employment crowds out (reduces) private‐sector employment. In particular, we estimate regressions of unemployment or private‐sector employment on two measures of public‐sector employment. The study uses an especially assembled dataset, which is novel for its coverage of a large sample of developing countries as part of a panel of rich and poor countries. Our results point to full or just about full crowding‐out for the entire sample. Unlike previous cross‐country studies, which were restricted to advanced economies, we are able to show that these results also apply to developing countries, although crowding‐out may not be quite as high as in advanced economies. The results mean that high rates of public employment have an offsetting large negative impact on private employment rates and do not reduce overall unemployment rates. With the qualifier that government activities may help the economy in other ways, our results imply that, rather than creating public‐sector jobs, scarce fiscal resources could be better spent on other developmental needs.     

Job mobility of residents and migrants in urban China

The large-scale reform of the state-owned sector and the development of a private sector in the 1990s changed the nature of employment in urban China. The system of allocated, lifelong jobs, denoted the iron rice bowl, that had previously prevailed under state planning was eroded, permitting more labor turnover and mobility. Using an urban household survey for 1999 that has rich data on job duration and job change, we analyze inter-firm mobility in the urban labor market, its evolution, and its explanation. A distinction is made between the institutionally favored urban residents and the rural–urban migrants. The mobility rate of migrants greatly exceeds that of urban residents. The extent, patterns, determinants, and consequences of mobility for the two groups are explored and compared. Journal of Comparative Economics 32 (4) (2004) 637–660.     

Disentangling the Poverty Effects of Sectoral Output,Prices, and Policies in India

This paper attempts to disentangle the poverty effects of key policy variables that directly affect the poor (namely the government‐led channel of development spending and financing) in both agricultural and non‐agricultural sectors after accounting for the effect of respective sectoral per capita income and prices, using data from India over five decades. The paper emphasizes the sectoral composition of income and prices as mechanisms influencing the level of poverty and establishes empirically that it is the rise in non‐agricultural per capita income that reduces rural poverty via the channel of internal migration, after having controlled for the variation in key components of fiscal spending and monetary/financial policy via the availability of credit. Uneven sectoral growth pattern explains why urban poverty becomes a spill‐over of persistent rural poverty when the agricultural sector shrinks. While checking for robustness, there is evidence that the rise in non‐agricultural income alone may not reduce rural poverty, when measured in terms of rural infant mortality rate as a non‐income indicator of well‐being.     

OUTPUT–EMPLOYMENT RELATIONSHIP ACROSS SECTORS: A LONG‐ VERSUS SHORT‐RUN PERSPECTIVE

This paper investigates the nature of the output–employment relationship by using the Turkish quarterly data for the period 1988–2008. Even if we fail to find a long‐run relationship between aggregate output and total employment, there are long‐run relationships for the aggregate output with non‐agricultural employment and sectoral employment levels for seven of nine sectors that we consider. However, a further investigation for the output and employment relationship within a short‐run perspective does not reveal statistically significant relationships for either total employment or non‐agriculture employment, or eight of the nine sectors that we consider. Although there are various long‐run relationships between output and employment, the short‐run links between demand and employment are weak. The various implications of this for the economy and the labour market are discussed. As a result, maintaining high levels of output in the long‐run creating demand is essential for employment generation.     

Adult mortality in Russia

This paper studies the determinants of Russian adult mortality controlling for both individual and household heterogeneity. We employ survival analysis and utilize 12 rounds of the Russian Longitudinal Monitoring Survey spanning a 14‐year period. Although confirming the crucial role of excessive alcohol consumption in shaping adult mortality risks in Russia, the results are original in several other respects. We find empirical support for the importance of relative status measured in non‐income terms in shaping mortality hazards. We find evidence of the influence of labour market behaviour, and sectoral and occupational mobility in particular, on longevity. The detrimental role of smoking to health is found to be comparable with the role of excess alcohol consumption, which is novel in the Russian context where the influence of smoking is typically downplayed in comparison with alcoholism. Finally, we find no micro evidence in support of the political economy view based on a positive correlation between low alcohol prices and high mortality rates found in regional‐level data.