The economic effects of health care systems on national economies: an input-output analysis of Slovenia

This paper estimates the size of the economic impact generated by the Slovenian health care sector on the national economy in the 2009–2014 period. The study separately calculates output, income, employment, value-added and import multipliers for the Slovenian health care sector based on input-output analysis covering 49 sectors. Initially, values of simple output multipliers for all years are estimated. When the re-circulation of final demand through households is added to the direct and indirect economic effects, the values of total output multipliers considerably exceeds 2. The results suggest that an additional million EUR of final demand in the health care sector will, based on different scenarios, increase the total employment by 20 to 30 units. Moreover, the type II employment multipliers imply that under the best-case scenario one employee in the health care sector creates an additional 0.7 unit of employment in remaining structures of the observed economy. Stability evaluation of the derived multipliers suggests that the domestic health care sector may reduce volatilities in production, income and employment and consequently act as an important shock absorber in the economy.     

Do Environmental Standards Harm Manufacturing Employment?

A major issue in the debate about imposing environmental standards on polluting firms is the possibility of negative effects on employment. We examine the impact of environmental regulations on employment in an empirical analysis. Norwegian data are used to study three manufacturing sectors with high shares of units under strict environmental regulations. We find that for two of these sectors, firms under strict environmental regulations had a higher tendency to increase employment and a lower tendency to exit than firms under weak or no environmental regulation. For the third sector, environmental regulations had no significant impact on employment.     

Agricultural Biotechnology in the European Union: Alternative Technologies and Economic Outcomes

All seed firms in six EU countries were surveyed in May 1999 to determine how seed development budgets were distributed across three crop development technologies and the effects of the type of technology in use on employment, sales and exports. The results indicate that an evaluation of the economic consequences of an emergent technology such as genetic engineering should both consider the effect of competitive alternative technologies and survey all firms within the sector, rather than focusing on a subset of high technology firms. Only about 10% of the combined 1999 research budget of European seed firms was spent on genetic engineering, although this should increase to about 15% by 2002. Alternative technologies to develop new plant varieties, such as conventional plant breeding and conventional breeding combined with techniques that were developed for genetic engineering, are considerably more important economically. In fact, there is no difference in expected employment and sales per development employee by the type of technology in use, while export rates are highest among firms that combine conventional plant breeding with advanced techniques.     

Agricultural Biotechnology in the European Union: Alternative Technologies and Economic Outcomes

All seed firms in six EU countries were surveyed in May 1999 to determine how seed development budgets were distributed across three crop development technologies and the effects of the type of technology in use on employment, sales and exports. The results indicate that an evaluation of the economic consequences of an emergent technology such as genetic engineering should both consider the effect of competitive alternative technologies and survey all firms within the sector, rather than focusing on a subset of high technology firms. Only about 10% of the combined 1999 research budget of European seed firms was spent on genetic engineering, although this should increase to about 15% by 2002. Alternative technologies to develop new plant varieties, such as conventional plant breeding and conventional breeding combined with techniques that were developed for genetic engineering, are considerably more important economically. In fact, there is no difference in expected employment and sales per development employee by the type of technology in use, while export rates are highest among firms that combine conventional plant breeding with advanced techniques.     

Multinational companies and indigenous development: An empirical analysis

This paper presents an empirical study of the effect of foreign multinational companies on the development of indigenous firms in the host country. Our starting point is a recent paper by Markusen and Venables (European Economic Review 43 (1999) 335-356) that shows formally that multinationals, through the creation of linkages with indigenous suppliers, can exert positive effects on the development of indigenous firms. Based on the literature on entry in industrial organisation, we estimate empirically a model describing the entry of indigenous firms using data for the Irish manufacturing sector. Our results indicate that there is a positive effect of multinational companies on the entry of indigenous firms for a variety of alternative specifications.     

Does paternity leave matter for female employment in developing economies? Evidence from firm-level data

Analysis using firm-level data for a sample of 33,302 firms in 53 developing countries shows that women’s employment among private firms is significantly higher in countries that mandate paternity leave versus those that do not. A conservative estimate suggests an increase of 6.8 percentage points in the proportion of women workers associated with mandating paternity leave. The empirical specification is immune to spurious correlations that affect the level of women and men employment equally and also robust to a large number of controls for country and firm characteristics.     

After work shopping? Employment effects of a deregulation of shop opening hours in the German retail sector

This study investigates the impact of a deregulation of shop opening laws on employment in the German retail sector. Exploiting the gradual change in the opening times of shops across states and using data from the German Socio-Economic Panel, difference-in-differences estimates indicate an average increase in the employment probability, driven by a rise in the likelihood of working marginal part-time hours. Workers in small firms are likely to experience a reduction of their propensity to work. For individuals facing high family-related, supply-side constraints, the change in shop opening hours has opposing effects on employment — positive on lower and negative on upper parts of the hours distribution. Overall, the deregulation is estimated to have raised the likelihood of working fewer hours than desired by the workers.     

Unemployment and Economic Integration for Developing Countries

While financial or trade integration between countries may increase the size of the market and aid the adoption of more advanced technologies, will it also increase the level of urban unemployment for a developing country? In this model, there is unemployment in the urban sector. Manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Financial firms provide capital to manufacturing firms and they also engage in oligopolistic competition. We show that an increase in the wage rate in the manufacturing sector changes neither the level of technology nor the level of employment in the manufacturing sector. While financial or trade integration between developing countries leads manufacturing firms to adopt more advanced technologies, the level and rate of employment in the manufacturing sector will not deteriorate.     

Domestic Jobs and Foreign Wages

It is plausible that the labour demand decisions of multinational corporations (MNCs) depend not only on domestic, but also on foreign labour costs. This hypothesis is tested by estimating labour demand equations for a sample of Swedish MNCs. Indeed, higher foreign costs increase an MNC's Swedish employment and reduce its foreign employment. As MNCs become more important in many OECD countries, the responsiveness of domestic output and employment to foreign labour costs is likely to increase.     

The future employment impacts of industrial robots : An input-output approach

An input-output framework is employed to estimate the indirect as well as direct effects of industrial robots on employment by industry sector and occupation. Net employment impacts are defined as the combined effects of the production and the use of industrial robots under the assumption that the demand for goods produced with this new technology is unaffected. These employment effects are estimated as the difference between a base economy (1977) and the same economy with an additional robot-producing sector and given (1990) stocks of robots installed in manufacturing industries. Six scenarios are defined by alternative levels of Robotics sector output and installed robots. The results show that job displacement is 4.5 to 6.2 times greater than job creation, that under the most extreme scenario the aggregate net job loss is 718,000, about 0.7 percent of total 1984 employment, and that the growth occupations (engineers) are highly skilled and white-collar while the declining occupations (welders, painters, machine operators, laborers) are relatively low skilled and blue-collar.     

POLITICAL SELECTION OF FIRMS INTO PRIVATIZATION PROGRAMS. EVIDENCE FROM ROMANIAN COMPREHENSIVE DATA

Exploiting a unique institutional feature of early Romanian privatization, when a group of firms was explicitly barred from privatization and another was partially privatized by management–employee buyouts, we test how politicians select firms into privatization programs. Using comprehensive firm data, we estimate the relation between preprivatization firm characteristics – the information known to politicians at the time of decision‐making – and the effect of privatization on employment, efficiency, and wages. With the estimated coefficients we simulate the effect of privatization on non‐privatizable and privatizable firms. We find that politicians expected privatization to increase employment in the privatizable group by 7%–10%, while to decrease it in the non‐privatizable group by 10%–30%, depending on the first‐stage estimation method, ordinary least squares with or without matching. We do not find such discrepancies in the expected change in firm efficiency; the simulated efficiency effect of privatization is large and positive for both groups of firms, and it is 52%–65% for non‐privatizable and 41%–43% for privatizable firms. The analysis does not support the hypothesis that wages played an important role in privatization decisions. Our study suggests that employment concerns played the key role in selecting firms for privatization, even if efficiency gains had to be sacrificed.     

The Impact of Unionization Structures with Heterogeneous Firms and Rent‐Sharing Motives

How are unemployment and output affected if wages are set on the sector level rather than firm level? We take a new look at this question, allowing for heterogeneous firms and rent‐sharing motives. Without these motives, employment and output are lower under sector‐level wage‐setting due to higher wage markups. With rent‐sharing motives, however, firm selection is higher under sector‐level wage‐setting, which tends to increase employment and output, thus counteracting the markup effect. Simulations show that the firm‐selection effect decreases the difference between the two unionization structures substantially but it does not change the signs of the effects on output and employment.     

ESTIMATION ERROR IN SECTORAL EMPLOYMENT REQUIREMENTS IN THE ABSENCE OF A DOMESTIC COEFFICIENTS MATRIX IN THE INPUT-OUTPUT ANALYSIS

The objective of the paper is to develop various estimation methods for allocating imports according to their end-use and to make use of the derived domestic transactions for the estimation of gross domestic output and employment by sectors. The standard design in the construction of input-output tables is to provide imports of a sector in the form of a column. These imports are not allocated according to their final use and therefore, total intermediate inputs consist of both domestic and imported inputs. The input-output tables for 12 European countries distinguish three types of transactions: (a) domestically produced inputs; (b) imported inputs; and (c) total inputs. We have made use of these tables assuming that the information on import allocation by end-use and domestically produced and imported inputs separately are not available. The allocations of imports are made under various assumptions and a comparison is made of employment based on artificially generated domestic coefficients with employment based on actual coefficients. The sectors are ranked on the basis of both sets of results. In addition, the ratio of indirect to direct employment for the estimators and actual is derived. The sectors are ranked and the rank correlations between alternative estimators and actual are calculated. Although the ratios differ markedly from method to method, the ranks do not alter.     

The Choice of Technology and Rural-Urban Migration in Economic Development

This paper studies a general equilibrium model of rural-urban migration in which manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Urban residents incur commuting costs to work in the Central Business District. Surprisingly a change in the size of the population or an increase in the exogenously given wage rate will not affect a manufacturing firm’s choice of technology. This helps to explain why firms in developing countries may not adopt labor intensive technologies even under abundant labor supply. An increase in the number of manufacturing firms increases both the employment rate and the level of employment in the manufacturing sector. However, manufacturing firms choose less advanced technologies. Capital accumulation leads manufacturing firms to choose more advanced technologies, but may not increase employment in the manufacturing sector.     

Social economy and employment – the case of Sweden

Recent research has shown growing shares of employment in the social economy (or non-profit sector) both in the European Union and in the United States. In the EU, there seems to be growing hopes that the social economy will be capable of contributing to local progress on the unemployment issue in crisis regions. This paper analyses employment in certain entrepreneurial forms, usually considered belonging to the social economy, in Sweden during the 1990s. The results show considerable regional differences of employment in the social economy, but also that its share of the labor market is very limited. The effect of social-economic organizations on employment, therefore, is probably mainly indirect in as much as they function as platforms for cooperation between firms or else as embryos for enterprises by strengthening local entrepreneurship and helping to nurture a deposit of social capital which has visible effects on private business and jobs. However, these effects need more detailed examinations.     

HOW DID EXCHANGE RATES AFFECT EMPLOYMENT IN U.S. CITIES?

We estimate the effects of exchange rate on U.S. employment, exploiting differences in industrial composition across major cities. We find that a 1% depreciation of export‐weighted real exchange rate has a positive 0.98% direct effect on manufacturing employment. Its indirect effect on local nonmanufacturing employment rises with the size of the local manufacturing sector, consistent with the hypothesis that there exists a local spillover from the tradable to the nontradable sector. In cities with heavy concentration of manufacturing employment, the indirect effect is statistically significant and about 60% as large as the direct effect measured by the number of jobs. (JEL F3, F1, J2)     

Determinants of wage stickiness in a developing economy

We explore wage flexibility in a developing country and compare our results to what has been found in similar studies using European data. In particular, we conduct a survey of 1189 firms in Pakistan to analyze the determinants of wage rigidity. We find that the existence of competitive wages and an interaction with the informal economy are statistically significant determinants of wage stickiness. While the role of competitive wages is similar to what has been found in studies of European firms, the latter find a much larger role for turnover, collective bargaining and employment protection. In contrast, in Pakistan we find that firms hiring from the informal sector are significantly more flexible in changing their wages. This suggests that the informal sector adds to the wage flexibility of the formal sector.     

Employment dynamics in foreign and domestic plants: Evidence from Irish manufacturing

In this paper we investigate the driving factors behind the diverse employment performances of indigenous and foreign‐owned (multinational) plants in Ireland. Examining aggregate job creation and job destruction rates we find that the net gain of the foreign sector in Irish manufacturing employment was due to a considerably lower rate of job destruction and a slightly higher job creation rate. An econometric investigation into the determinants of net employment growth at the plant level lends further credence to the argument that foreign plants performed better than domestic plants. Even after controlling for a number of plant and sector specific effects, multinationals experienced greater net employment growth rates than their indigenous counterparts.     

Informality,public employment and employment protection in developing countries

This paper proposes an equilibrium matching model for developing countries’ labor markets where the interaction between public, formal private and informal private sectors are taken into account. Theoretical analysis shows that gains from reforms aiming at liberalizing formal labor markets can be annulled by shifts in the public sector employment and wage policies. Since the public sector accounts for a substantial share of employment in developing countries, this approach is crucial to understand the main labor market outcomes of such economies. Wages offered by the public sector increase the outside option value of the workers during the bargaining processes in the formal and informal sectors. It becomes more profitable for workers to search on-the-job, in order to move to these more attractive and more stable types of jobs. The public sector therefore acts as an additional tax for the formal private firms. Using data on workers’ flows from Egypt, we show empirically and theoretically that the liberalization of labor markets plays against informal employment by increasing the profitability, and hence job creations, of formal jobs. The latter effect is however dampened or even sometimes nullified by the increase of the offered wages in the public sector observed at the same time.     

Integrating sustainable chain management with triple bottom line accounting

Triple Bottom Line accounting is widely advanced as a way in which firms can realise broader societal objectives in addition to increasing shareholder value. In our analysis of the Australian economy, we integrate financial input–output tables that describe the interdependencies between economic sectors, with national social and environmental accounts to construct numerate ‘triple bottom line’ accounts for 135 discrete sectors. The accounts are portrayed against the numeraire of ‘one dollar of GDP’. Thus, for a sector of the economy, financial aspects of performance can be expressed for example as dollars of export earnings per dollar of GDP. Social aspects such as employment can be portrayed as minutes of employment generated per dollar. Greenhouse issues can be portrayed as kilograms of carbon dioxide emitted per dollar.Since these indicators of ‘triple bottom line’ performance are referenced against financial units and are consistent with the system of national accounts, they can be applied to financial accounts of a firm, a service or a product, and allow a robust triple bottom line account to be developed across a range of scales. The critical advantage of this approach is that it includes both the direct or immediate effects as well as the indirect or diffuse effects associated with a large and distant chain of supply paths. The incorporation of most indirect or upstream effects therefore expands the range of issues and effects within the analytical boundary, and also includes imports and exports. Both products and firms can then be assessed properly in sustainable chain management (SCM) terms. Thus, a firm that uses a key intermediate input that requires a large amount of water for example cannot hide the environmental implications since they are revealed in the analysis of the full production chain. This revelation can also underpin progress when firms acknowledge both the direct and indirect effects, and improve their selection of key inputs on a wider range of criteria, rather than on price alone.Our analysis is well developed at the economic sector level for Australia and is also being applied to number of government institutions, firms, and individual products. Before the full benefits of numerate triple bottom line accounting can be applied to the equity issues of globalisation, trade interdependencies between groups of typical countries will have to be analysed using these whole economy approaches. This will allow country-specific intensities to be applied to important items in the international production chain.