Transition welfare gaps: One closed,another to follow?

Respondents from post‐communist countries have been found to systematically report lower levels of happiness and self‐rated health. While the first welfare gap in happiness has closed recently, the second transition gap in self‐perceived health only started to close. Specifically, this paper shows that treating all transition countries as a homogeneous group may be misleading and therefore divides 28 transition countries into three groups. As a result, in the most recent 2016 round of the ‘Life in Transition’ survey, transition countries in Southern Europe are no longer found to be different from non‐transition nations in terms of their self‐rated health. Although the gap in self‐perceived health for transition nations in Eastern Europe is present in a basic model, it becomes less statistically and economically significant when subjective beliefs and macro‐level variables are added. Countries from the former Soviet Union and Mongolia remain the only group in which respondents report 16.5%–29.1% lower probability of ‘Good’ or ‘Very Good’ health compared to other transition and non‐transition countries. Controlling for communist party membership, ideological beliefs and macro‐level variables somewhat reduces the gap for the former Soviet Union and Mongolia but it remains significant in multiple robustness checks. Although the gap in self‐rated health now applies to only one group of transition countries, it remains an important empirical puzzle with far‐reaching implications for health policy, demand for healthcare and the process of transition.     

The determinants of entrepreneurship gender gaps: A cross‐country analysis

This paper uses aggregate data from the International Labor Organization and microeconomic data from the European Values Study to quantify gender gaps in entrepreneurship, distinguishing between gender gaps in employership and in self‐employment, and study their main empirical determinants. Our sample consists of 40 European countries and varies broadly in terms of institutional background since it includes several ex‐Communist countries. In the aggregate data we observe a gender gap in employers of 59% and a gender gap in self‐employment of 36%. These gaps have remained roughly constant in the 2000–2017 period, although there are wide differences in both their levels and evolution over time and across countries. Using microeconomic data, we find that the incidence of entrepreneurship, employership, and self‐employment among men is much larger than among women, consistent with the gaps estimated using aggregate data. Our regressions show that these gaps are still sizable even after controlling for a large set of control variables that include marital status, age, education, number of children, wealth, the participation of parents and spouse in entrepreneurship, values toward women, social capital, and prior unemployment. We identify important differences between the determinants of these gaps in ex‐Communist countries and in high‐income ones.     

New insights into the nonlinearity of Okun's law

We estimate Okun's relationship for four European countries (France, Germany, the Netherlands and Spain) with a nonparametric procedure, without imposing a previous specific functional form. We apply the non parametric MARS methodology that endogenously detects multiple thresholds and therefore is able to identify multiple possible regimes. In addition, we control for the Euro area crisis to capture possible effects of the economic activity of neighbour countries on domestic unemployment rate variations. Our results confirm the existence of two regimes in each country but significantly different thresholds across countries. The form of Okun's relationship for Germany, France and the Netherlands are similar and quite different from Spain where it is much steeper. Differences between Okun coefficients below and above the threshold are consistent with the “firm's risk aversion hypothesis”, but different thresholds across countries may be related to the “labour hoarding hypothesis”. The negative value of the threshold in Spain may reflect the “institutional rigidity hypothesis”. Finally, the fact that the Euro area crisis may affect the domestic Okun's law is consistent with decision makers with risk aversion who use information from the economic area they are operating in. These results not only potentially enrich Okun's law estimations but also open the debate over how the different theoretical hypothesis intervene and shape Okun's law for each country.     

Labor markets and cultural values: Evidence from Japanese and American views about caregiving immigrants

One overlooked reason for the persistence of distinct cultural values across rich democracies, we argue, is a country's labor market structure. Parents seeking to position their children for long‐term success would do well to instill values consistent with requirements of the labor market in the country where their children are likely to work. To the extent that labor markets are fluid, as in the United States, parents should teach their children to be resourceful and creative. In countries like Japan with relatively rigid labor markets, where workers have one chance to land a long‐term contract with a leading company, parents instead should instill the values of hard work and respect for authority. We find evidence consistent with this argument in survey experiments about attitudes in the United States and Japan about the desirability of employing immigrants for care work, and what values the immigrant care workers should hold. We also find evidence of indirect norm creation. American and Japanese respondents prefer immigrants—not just caregiving immigrants—whose values align with their country's type of valued human capital.     

Beliefs, Bailouts and Spread of Bank Panics

This article highlights the spread of bank panics across countries, as the public reassesses governments' propensity to bailouts. Policymakers decide whether to save collapsing banking systems by weighing social costs of crises against the costs associated with raising taxes to finance rescue packages. Policymakers know those social costs of bank liquidation whereas the public does not. In this setup, financial crises may result from the public's self‐fulfilling prophecies about equilibrium outcomes, as lenders' expectations impinge on the taxation cost of bailouts. It follows that a banking crisis in a country leads creditors to reexamine policymakers' willingness to bailouts in other countries, which eventually makes their banks more vulnerable to self‐confirming depositors' runs.     

Redistributive preferences in Europe and Central Asia, 2006–2016*

This paper analyses support for reducing inequality and for redistribution to specific groups in Europe and Central Asia. Using the Life in Transition Surveys, it examines differences in redistributive preferences across countries and time, as well as determinants of individual preferences, testing for motivations such as self‐interest, past and expected future social mobility, beliefs about fairness, as well as ideology and risk preferences. The extent to which different groups are perceived as deserving of government support is found to vary considerably, with the disabled, the elderly and families with children being the most favoured groups. The motives for redistribution towards different groups are also not uniform – self‐interest appears to be a basis for assistance to the elderly and families with children, whereas values and beliefs are associated with support for the working poor and the unemployed.     

The Productivity Slowdown Puzzle. Technological and Non-technological Shocks in the Labor Market

Abstract

In this paper we examine the relationships between business cycles in the G7 countries. We focus on whether recessionary periods in one country are independent of the timing of recessions in other countries in the G7, using three different methods for dating recessions. We find that the evidence is mixed on whether phases of the business cycle in North America and in European countries are independent, or whether there is a common phase structure in the business cycle across all the G7 economies. NBER dates suggest that business cycles are synchronised, while other methods for generating business cycle chronologies are more consistent with regional, rather than international cycles. We also find mixed evidence on whether the UK is synchronised with European countries, while Japan quite clearly has the cycle that is most independent of other G7 countries.     

Who Exports Better Quality Products to Smaller or More Distant Markets?

The role of across‐firm differences in product quality and firms' competitiveness in determining the spatial patterns of within‐product export unit values across destinations is examined in this paper. Using product level export data, it is shown that the average export unit value of a product shipped from the USA or Korea increases with distance and decreases with destination market's size. However, within‐product average unit values for products exported from China and India decrease with distance and increase with market size. To interpret these different spatial patterns of unit values across exporting countries, model of quality heterogeneity is developed in which firms differ in their workers' skill level and higher‐skilled workers show greater productivity in performing tasks that improve product quality. The model predicts that in relatively skill‐abundant countries, exporting firms specialize in high‐quality products using relatively cheap skilled labor, whereas, in relatively skill‐scarce countries, firms that produce lower‐quality products are more competitive.     

Health spending in Italy: The impact of immigrants

The welfare impact of immigration is a highly debated issue especially for countries on the external borders of the European Union. This paper studies how immigrants affect public health expenditure across Italian regions during the period 2003–2016 using NUTS II level data. Identification strategy is based on shift–share instruments, which are made robust to pull factors that might attract immigrants in Italy and to internal migration of natives. We find that a 1 percentage point increase in immigrants over total resident population leads to a decrease in public health expenditure per capita by about 3.8% (i.e. around 69 euro per capita). Among possible channels, we find no support for any crowding out effect from public to private health services by natives due to increasing immigration or for any role played by different levels of efficiency across regional health systems. Our results are driven by immigrants' demographic structure: they are mostly males and younger workers that call for less health spending, according to a positive selection mechanism. Moreover, linguistic barriers contribute to limiting the immigrants' reliance on public healthcare, which is confirmed also by the use of the European Health Interview Survey microdata.     

EU Banks Rating Assignments: Is There Heterogeneity between New and Old Member Countries?

We model EU countries' bank ratings using financial variables and allowing for intercept and slope heterogeneity. Our aim is to assess whether “old” and “new” EU countries are rated differently and to determine whether “new” ones are assigned lower ratings, ceteris paribus, than “old” ones. We find that country‐specific factors (in the form of heterogeneous intercepts) are a crucial determinant of ratings. Whilst “new” EU countries typically have lower ratings than “old” ones, after controlling for financial variables we also discover that all countries have significantly different intercepts, confirming our prior belief. This intercept heterogeneity suggests that each country's rating is assigned uniquely, after controlling for differences in financial factors, which may reflect differences in country risk and the legal and regulatory framework that banks face (such as foreclosure laws). In addition, we find that ratings may respond differently to the liquidity and operating expenses to operating income variables across countries. Typically ratings are more responsive to the former and less sensitive to the latter for “new” EU countries compared with “old” EU countries.     

Women in the Labor Market (Volumes I and II), edited by Marianne A. Ferber

Abstract

European states vary in eldercare policies and in gendered norms of family care, and this study uses these variations to gain insight into the importance of macro-level factors for the work–care relationship. Using advanced panel data methods on European Community Household Panel (ECHP) data for 1994–2001, this study finds women's employment to be negatively associated with informal caregiving to the elderly across the European Union. For the countries included in the study, the effects of informal caregiving seem to be more negative in Southern Europe, less negative in Nordic countries, and in between these extremes in Central Europe. This study explains that since eldercare is a choice in countries with more formal care and less pronounced gendered care norms, the weaker impact of eldercare on women's employment in these countries has to do with the lesser degree of coercion in the caring decision.     

Mapping patterns of well-being and quality of life in extended Europe

In this paper, we have applied a powerful clustering procedure (the two-step cluster analysis or BIRCH algorithm) to a set of non-monetary indicators of well-being and quality of life taken from the first four waves of the European Social Survey. By employing this technique, we have identified nine clusters of people characterized by different forms of well-being and quality of life, while preserving as much as possible the multidimensional information contained in the preselected indicators. We then analyzed the distribution of the clusters among the various European countries, finding significant differences among the groups of Nordic countries, Continental European countries, Mediterranean European countries and Eastern European countries in the chances of belonging to the nine forms of well-being and quality of life previously identified. On average, citizens of the Nordic countries, but also those of Switzerland and Luxembourg, have a higher chance of belonging to cumulative clusters of well-being than countries in Continental Europe and Eastern Europe. In very concise terms, the former appear to be somewhat protected from the risk of incurring the more severe forms of material deprivation, distrust of others and of institutions, poor health and relational isolation. In contrast, Eastern Europeans are characterized by particularly pronounced levels of deprivation across multiple dimensions.     

MEASURING INEQUALITIES: DO HOUSEHOLD SURVEYS PAINT A REALISTIC PICTURE?

The paper addresses the issue of the accuracy of standard‐of‐living measurements using household survey data. First, it highlights the fact that lighter data collection processes in some developing countries have added to measurement errors in consumption and income aggregates measurement errors. The paper reasserts the need to apply reference guidelines to the measurement of household consumption in order to compute comparable distribution indicators across countries and over time. Second, it contends that it is hard to analyze inequality solely from consumption patterns without taking income and savings into account. Two solutions are proposed for the correction of income measurement errors: by using savings declarations and by implementing a multiple imputation procedure. The results are based on a careful analysis of the EPM93 survey of Madagascar whose design is quite close to the LSMS household surveys, and the ENV98 survey of Côte d'Ivoire representative of surveys conducted nowadays in most Sub‐Saharan African countries.     

Explaining International Differences in Genetically Modified Food Labeling Policies*

Many countries have adopted labeling policies for genetically modified (GM) food, and the regulations vary considerably across countries. We evaluate the importance of political‐economic factors implicit in the choice of GM food labeling regulations. Using an analytical model, we show that production and trade‐related interests play a prominent role in labeling decision‐making. This conclusion is validated by an empirical analysis of GM food labeling policy choices. We find that countries producing GM crops are more likely to have less stringent labeling policies. Food and feed exporters to the European Union (EU) and Japan are more likely to have adopted stricter labeling policies. Labeling regulations in Asia and Europe are similar to those of Japan and the EU. Countries with no labeling policies are less developed, with important rural sectors and are more likely to have ratified the Cartagena Protocol on Biosafety.     

Little Divergence: Evidence from Cotton Textiles in Japan and China 1868–1930

This paper looks at the role of textile exports in Japan and China's economic development in the period of 1868–1930 as a major explanation for the “Little Divergence” between the two countries in the context of the “Great Divergence” between Europe and Asia. Because of textiles' large weighting in proto‐industrialization gross domestic product (GDP), we postulate that China's initial 20‐year lag in textiles vis‐à‐vis Japan turns out to be fatal for its industry and that it eventually ordains totally different development patterns for the textile industry in the two countries, which ultimately led to different growth patterns for the overall economy. Although both countries saw rapid growth of textile exports, the nature of those exports and the entailed position of each country in the industry value chain of trade were quite different. We then use Granger causality tests to show that in one case (Japan) it is in support of the export‐led‐growth hypothesis (ELG) while in another (China) it is not. Our study then also explains why Japan's industrial revolution took place much earlier than China's.     

Catching Up and Convergence: Long-run Growth in East Asia

The paper attempts to combine the traditional learning model with the recent theory of economic growth using Maddison's long‐run real GDP per capita data of the three fastest growing countries in East Asia: Korea, Taiwan, and Japan. The authors first explain games of catching‐up among nations, and then explain the learning coefficients of Taiwan and Korea with Japan and the United States through periods before and after World War II. The model of leaning leads to the logistic model of economic growth of convergence between two countries. Using time‐series data, the coefficients of a logistic model are estimated to confirm that the real GDP per capita of Taiwan and Korea are converging to that of Japan and the United States, respectively. Similarly, Japan's GDP per capita converges to that of the United States. The time required for finite convergence for these countries is also estimated.     

Married women's labor supply and economic development: Evidence from Sri Lankan household data

Women's labor supply in Sri Lanka has increased steadily since the early 1990s following economic reforms, but remains well below the level predicted by national income, a feature shared by a number of Asian and Latin American countries that have undergone similar reforms and economic growth. To understand the microeconomic determinants of women's work in Sri Lanka's growing economy, this paper estimates a binary‐choice model of married women's labor supply using household survey data spanning a 23‐year period. Decomposition and cohort analysis reveal that women have been drawn into the workforce through falling fertility rates, rising tertiary education, and declining income effects among younger generations, but other factors have undermined this positive trend. Educational attainment reduces married women's labor supply except at the tertiary level, consistent with social stigmas associated with married women in non‐white‐collar employment. The strict sectoral segregation of married women by education level supports this hypothesis. In addition, growth has been concentrated in low‐skilled sectors with self‐employment more prevalent, reducing employment prospects of educated women and prompting their labor force withdrawal. This suggests it is the structure of economic development, rather than speed, that matters for women's labor force activity.     

TAXES,HEALTH INSURANCE,AND WOMEN'S SELF‐EMPLOYMENT

I examine whether the availability of health coverage through the spouse's health plan influences a married woman's decision to become self‐employed. The Tax Reform Act of 1986 (TRA86) introduced a tax subsidy for the self‐employed to purchase their own health insurance. I test whether this “natural” experiment induced more women without spousal health insurance coverage to select into self‐employment. The most conservative difference‐in‐difference estimates based on an analysis of employed women indicate that the incidence of self‐employment among single women rose by 10% in the post‐TRA86 period, while a multinomial specification based on a sample of both employed and nonemployed women suggests that the increase was about 13%. (JEL J0, J3, I1)     

Happiness,religion and economic transition

In an important paper, Lelkes (2006) examines the impact of transition on happiness in Hungary using two Hungarian household survey datasets for the years 1992 and 1998. In particular, Lelkes examines the impact of religious behaviour on self‐reported well‐being. Using ordered logit models, Lelkes estimates and presents the marginal effect associated with membership in the highest ‘fully satisfied’ category, and finds that religious people have a consistently higher probability of being ‘fully satisfied’ than others. This effect is stable in the 1992 and 1998 samples. The goal of this article is to expand and extend Lelkes' earlier work in several ways. First, we use a different dataset. Second, we examine the effect of religious behaviour on well‐being after transition not only for Hungary, but also for Bulgaria, the Czech Republic, Poland and Slovakia. Third, unlike Lelkes, we have access to information indicating whether respondents report being financially better off after transition. With a different dataset, additional country samples, and a measure of financial well‐being, we are able to confirm and extend Lelkes' finding that religious behaviour is associated with improved well‐being after transition in all countries we examine.     

Does aging affect preferences for welfare spending? A study of peoples' spending preferences in 22 countries, 1985–2006

A recurrent assertion is that aging will intensify age-related conflict over public budget allocation. If people are led by their self-interest, the young will prioritize public education services, while the elderly will demand better pensions and health-care services. Addressing this issue requires longitudinal survey data and estimation of age (life-cycle), period and cohort effects. Except for a few of studies based on US data, such analyses are non-existent.We use repeated cross-section survey-data for 22 countries. Respondents are classified into ten-year age-groups and birth decades, and we estimate a regression model explaining respondents' public spending preferences. When period and cohort effects are taken into account, elderly people want less education spending, and more health care and pension spending. These life-cycle effects vary considerably between countries, but are generally quite small. Preferences also appear mostly unrelated to left–right party choice.