Cesar A. Cancho

Back to work : growing with jobs in Europe and Central Asia

Creating more and better jobs is perhaps the most critical challenge to boosting shared prosperity in Europe and Central Asia (ECA). This report examines the role of reforms, firms, skills, incentives and barriers to work, and labor mobility through the lens of two contextual factors: the legacy of centralized planned economies and the mounting demographic pressures associated with rapid aging in some countries and soaring numbers of youth entering the workforce in others. The main findings of the report are: 1) market reforms pay off in terms of jobs and productivity, although with a lag; 2) a small fraction of superstar high-growth firms, largely young, account for most of new jobs created in the region; 3) skills gaps hinder employment prospects, especially of youth and older workers, due to the inadequate response of the education and training systems to changes in the demand for skills; 4) employment is hindered by high implicit taxes on work for those transitioning to formal jobs from inactivity or unemployment and barriers that affect especially women, minorities, youth, and older workers; and 5) low internal labor mobility prevents labor relocation to places with greater job creation potential.

South Caucasus in motion: economic and social mobility in Armenia, Azerbaijan and Georgia

This paper presents a comprehensive analysis of economic and social mobility in countries in the South Caucasus by complementing available household survey data in each of the countries in the subregion with other sources, such as the Life in Transition Survey (2016). The first part of the paper -- concentrated on intragenerational mobility -- finds that despite progress made in reducing poverty over the past decade, there appears to be a significant amount of churning around the poverty line. Moreover, in Georgia and Armenia, roughly one in eight individuals lived in a state of chronic poverty in 2015, and in the case of Georgia, chronic poverty is not an exclusive phenomenon for rural areas. In addition, although social programs have provided a lifeline for the chronic poor, the ability to tap into labor market opportunities has been the ticket out of poverty. The second part of the paper expands the analysis to intergenerational or social mobility. The main findings are that (1) a higher proportion of the population in this subregion considers their pre-transition family life and the lives of their parents when they were of similar age as appropriate benchmarks to evaluate their current economic situations in comparison with the other transition countries, and (2) over half of the Georgian and Armenian population disagreed with the statement that asked their views on having a better in life than their parents, aligning with the “growing but unhappy” trend that has been reported for the region.

Why so gloomy ? perceptions of economic mobility in Europe and Central Asia

Despite significant improvements in per capita expenditures and a marked decline in poverty over the 2000s, a large fraction of Eastern Europe and Central Asias population reports their economic situation in the late 2000s to be worse than in 1989. This paper uses data from the Life in Transition Survey to document the gap between objective and subjective economic mobility and investigate what may drive this apparent disconnection. The paper aims at identifying some of the drivers behind subjective perceptions of economic mobility, focusing on the role of perceptions of fairness and trust in shaping peoples perceptions of their upward or downward mobility. The results show that close to half of the households in the region perceive to have experienced downward economic mobility, that is, that their position in the income distribution has deteriorated. The results also show that perceptions of higher inequality, unfairness, and distrust in public institutions are associated with downward subjective economic mobility. The findings from this study confirm that factors beyond objective well-being are associated with the perceptions of mobility observed in Europe and Central Asia and may explain why the region has had such a pessimistic view of economic mobility during the past two decades. Understanding what drives peoples perceptions of their living standards and quality of life is important, because regardless of objective measures, perceptions could influence peoples behavior, including support for reforms and labor market decisions. For Eastern Europe and Central Asia, a region that has undergone substantive transformations and which is still going through a reform process, accounting for these aspects is critical.