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.     

The impact of public employment on labour market performance: evidence from African countries

Using census data for Ghana, Mali and Mozambique, we study the long-term impact of public sector employment on local labour markets. We find that the public sector crowds out private employment and induces skilled workers to queue for a public job, thus increasing their unemployment rate. In addition, a growing public sector fosters employment in the tradable and nontradable sectors, remarkably for the unskilled, and the reallocation of unskilled workers away from agriculture.     

Firm ownership and internal labour practices in a transition economy

One feature common to many post‐socialist transition economies is a relatively compressed wage structure in the state‐owned sector. We conjecture that this compressed wage structure creates weak incentives for work effort and worker skill acquisition and thus presents adverse consequences for the entire transition economy if a substantial portion of the labour force works in the state sector. We explore firm wage incentives and worker training, as well as other labour practices and outcomes, in a transition setting with matched firm and worker data collected in one of the largest provinces of Vietnam – Ho Chi Minh City. The Vietnamese state sector exhibits a compressed wage distribution in relation to privately owned firms with foreign ownership. State wage practices stress tenure over worker productivity and their wage policies result in flatter wage–experience profiles and lower returns to education. The state work force is in greater need of formal training, a need that is in part met through direct government financing. In spite of the opportunities for government financed training and at least partly due to inefficient worker incentives, state firms, by certain measures, exhibit lower levels of labour productivity. The private sector comparison group to state firms for all of these findings is foreign owned firms. The internal labour practices of foreign firms are more consistent with a view of profit‐maximizing firms operating with no political constraints. This is not the case for Vietnamese de novo private firms that exhibit much more idiosyncratic behaviour and whose labour practices are often indistinguishable from state firms. The exact reasons for this remain a topic of on‐going research yet we conjecture that various private sector constraints, including limited access to formal capital, play an important role.     

What policies to combat labour informality? Evidence from Mexico

Informality often concerns policymakers due to its negative implications on productivity and poverty. In recent years, the extent of informal employment has diverged across Mexican states. Varying informal employment dynamics within a comparable institutional environment offers scope to identify policies that can reduce informality. This paper uses cross-state panel and individual data to examine the determinants of informal employment, exploiting the diverging outcomes across states, industries and time. The results suggest that there is no ‘silver bullet’ to combat informality, yet a package of policies promoting labour skills, encouraging foreign investment, enhancing tax enforcement and deterring corruption can reduce informal employment. Intriguingly, reducing the cost to start a business is found to have a non-linear effect on informal employment, conditional on the prevalence of microenterprises.     

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.     

Corporate labour share of income and the shadow economy: a cross-country analysis

This article addresses a link between the size of the shadow economy and the corporate labour share of income in the European Union. Fixed individual and time effects models suggest that there is a negative link between these two indicators. The coefficients are statistically significant if we control for other variables related to labour markets, such as unemployment rates or strictness of employment protection (regular contracts). Depending on the exact model specification, our estimates suggest that an increase in the shadow economy by 1% of GDP results in a 0.5–1% decline in the labour share of income in the corporate sector.     

Career, experience and returns to human capital: is the dual labour market hypothesis relevant for the UK?

This paper investigates the relationship between career status, labour market experience and returns to human capital accumulation in the context of a two-tier, career and non-career labour market. Using micro data from the British Household Panel Survey (BHPS), this study detects wage and employment mechanisms that differ between these two tiers of workers. The paper finds no support for the hypothesis of strict duality, by which the returns to education are expected to differ across labour market segments, with the returns in career employment being high and positive and the returns in the non-career sector being close to zero. The paper, however, finds support for significant returns to current tenure only in the career sector and also for the scarring hypothesis, according to which part-time employment and unemployment experience have a negative effect on participation and earnings in the career sector. Finally, there is evidence that only non-career earnings are significantly affected by local demand conditions, in contrast to earnings in the career sector. Career status is modelled as an endogenous variable subject to an initial job choice.     

Wage differentials and state‐private sector employment choice in Yugoslavia*

In this study we use the newly available Yugoslavian Labor Force Survey data to investigate wage differentials and employment decisions in the state and private sectors in Yugoslavia. For the analysis we use three empirical models that rely on different statistical assumptions. We extend the standard switching regression model to allow non‐normality in the joint distribution of the error terms. After correcting for the sector selection bias and controlling for workers’ characteristics we find a private sector wage advantage. The wage premium is largest for workers with low education levels and declining for workers with higher educational levels. Given the regulatory and tax policies that pushed the private sector into the informal sphere of the economy during the period covered by our data, we argue that the state/private wage gap is likely to grow in the future. This will make it increasingly difficult for the state sector to attract and retain highly skilled employees.     

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.     

How credit constraints affect small and medium enterprises' strategic employment decisions and employees' labour outcomes: Evidence from Vietnam1

This study makes use of rich firm-level and linked firm-employee datasets that span the 2009–2015 period in Vietnam to examine how SMEs' credit constraints affect their strategic employment decisions and employees' labour outcomes. Our results show that constrained SMEs enlarge total employment by employing relatively more temporary workers and paying their employees relatively lower wages than unconstrained borrowing firms. Meanwhile, discouraged firms, mostly informal businesses, do not behave differently from unconstrained counterparts. In order to maintain a stable employment portfolio, discouraged firms are relatively more willing to reward their employees with an overtime payment.     

A Reappraisal of the Virtues of Private Sector Employment Programmes*

This paper evaluates the employment effects of active labour market programmes for Danish welfare benefit recipients, focusing on private sector employment (PSE) programmes. Using a latent variable model that allows for heterogeneous treatment effects among observationally identical persons, we estimate commonly defined mean treatment effects and the distribution of treatment effects. We find no significant mean treatment effect of PSE programme participation as compared to participation in other programmes for PSE programme participants. However, we find substantial heterogeneity in the treatment effects, and those most likely to participate in PSE programmes are those who benefit the least from such programmes.     

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.     

ENVIRONMENTAL POLICY AND LABOUR MARKET IMPERFECTION

This paper will set up a general equilibrium model with a distorted labour market to explore the effects of an environmental tax and union bargaining power on formal employment and the informal competitive wage. We find that when the government raises the environmental tax, both formal employment and informal competitive wage would fall. In addition, we confirm that a policy of labour market reform would increase both formal employment and the informal competitive wage.     

The Use and Cost of Child Care in Australia

The use and cost of child care have become important policy issues with rising labour force participation for women responsible for young children. In this article it is shown that for children aged less than 2 informal care is much more important than formal care. For children aged 3 to 5 by far the most important, and cheapest, form of formal care is preschool. The category of formal care which has expanded most rapidly is child care centre places. However the recent expansion of female employment has been effected with no rise in the share of formal care in the total. Publicly supplied child care centre places are over 40 per cent more expensive to produce than private ones. It is argued that for those who do not receive a fee relief subsidy public care is more expensive than private care. The inference is drawn that people are willing to pay more for public than private care because public care is of higher quality. However those buying this higher quality care pay (at most) only 80 per cent of the cost of producing the care. The shortage of care in the public sector is not solved by private sector expansion because users of care are not willing to pay the price of producing high quality care.     

Labour market effects of public capital stock: evidence for the Spanish private sector

This paper provides a new rationale for the positive effect of public capital stock on employment and wages. We show that higher levels of public capital reduce wages along the wage equation and enhance employment due to the resulting larger elasticity of labour demand with respect to wages. The estimation of a structural model for the Spanish private sector reveals that this wage channel is empirically relevant. We use the estimated parameters to simulate the recent incidence of the ratio of public to private capital stock on the private sector economic performance. We find (i) sizeable effects on employment, capital stock and gross domestic product, and (ii) that the wage channel is particularly important for employment.     

Venture capital availability and labour market performance around the world

This article studies the effects of venture capital on the performance of the labour market. Using data from a much larger sample of countries than previous papers, it finds more readily available venture capital to favourably affect both the unemployment and the employment rate. The magnitude of the estimated effects is substantial. We control for both endogeneity of venture capital availability and most major determinants of labour market performance. The results are robust to variations in specification.     

Comparable worth in a decentralized labour market: the case of Ontario

Abstract.  We document the application of pro‐active pay equity legislation to the private sector of the Canadian province of Ontario in the early 1990s. We report substantial lapses in compliance among smaller firms where the majority of men and women work. We also find that the pay equity law had no effect on aggregate wages in female jobs or on the gender wage gap. This experience provides unique perspectives on (1) the tensions between the workings of a decentralized labour market and the principles of comparable worth and (2) the obstacles to its extension to the private sector. JEL classification: J7, J3     

Labour market transitions and unemployment duration: Evidence from Bulgarian and Polish micro-data1

The segmentation of the labour market is one of the most striking characteristics of the transition process in Central and Eastern European countries. Not only do the young, unskilled workers and women face a high risk of unemployment, but joblessness also varies significantly geographically. This paper sheds some light on labour market segmentation in transition countries by analysing individual records of individuals registered at the labour offices of two Polish regions (Warsaw and Ciechanov and two Bulgarian regions (Sofia and Botevgrad) over the initial three to four years of the transition to a market economy. The empirical results confirm the existence of highly selective firing and hiring processes in the Polish and Bulgarian labour markets. Overall, unskilled or poorly educated workers have the highest probability of becoming unemployed and remaining without a job for a long period of time. We also analysed the determinants of unemployment duration across regions and over time using a piece-wise constant hazard model with multiple destinations, i.e. employment and exit from the labour force. The results suggest that the unemployed with a high education and previous experience in the private sector have a higher probability of getting a new job, especially in the more dynamic labour markets, while those without previous work experience tend to stay unemployed for a longer period of time and often leave the labour market. The econometric results also suggest that the reforms of the unemployment benefit systems have produced important effects on unemployment flows.     

A structural VAR approach on labour taxation policies

This paper presents a Structural VAR analysis on the employment and output effects of labour tax policies in six European countries for the period 1974–1997. By considering impulse response functions, it turns out that, on average, a shock to the total personal income tax revenues is positively correlated to employment, whereas there is mixed evidence on the output effect. Moreover, the quantitative impact of these effects, especially those related to the output, appears to be quite small. However, by introducing explicitly four labour tax parameters (namely the marginal and average tax rates for the personal income tax and the payroll tax), it turns out that these effects are not negligible after all: for some countries it is possible to conceive labour taxes as policy instruments favouring more employment and a better economic performance. However, the empirical support on the sign of the output and employment effects is mixed, suggesting that the same domestic fiscal policy does not produce the same impact in all the European countries.     

Globalisation and Gender Inequality: Evidence from Labour Market in India

This paper examines quantitative and qualitative dimensions of employment issues in India from gender lens. Inequality in quantitative aspects have been analysed gender gap in work participation, composition and structure of employment. The study finds that female work participation in India has declined sharply despite faster economic growth and improvement in female literacy outcomes. The magnitude of decline is sharper in case of illiterate, women from less privileged class and rural backgrounds. Similarly, even after two decades of economic reform, female workers are highly concentrated in low productive, less remunerative and unpaid family labour category of self employment activities. Considering the qualitative dimension of jobs, the paper finds that the condition of female workers are more vulnerable as they are highly concentrated in informal sector and informal jobs with no employment security, no social security, and are being paid relatively lower wages compared to male workers in most of the sub-sector. The paper argues for an urgent policy intervention to ensure access to decent jobs and to provide protection to these vulnerably placed women workers.