Daniel Munich

Worker-firm Matching and Unemployment in Transition to a Market Economy: (Why) Are the Czechs More Successful than Others?

In this paper we compare the nature and determinants of outflows from unemployment in the case of the Czech and Slovak Republics which in early 1990’s experienced a process close to a controlled experiment. Overall, our study suggests that the exceptionally low unemployment rate in the Czech Republic as compared to Slovakia and the other Central and East European economies has been brought about principally by (1) a rapid increase in vacancies along with unemployment, resulting in a balanced unemployment-vacancy situation at the aggregate as well as district level, (2) a major part played by vacancies and the newly unemployed in the outflow from unemployment, (3) a matching process with strongly increasing returns to scale throughout (rather than only in parts of) the transition period, and (4) ability to keep the long term unemployed at relatively low levels. Using the framework of matching functions we find that in many years the usual Cobb-Douglas specification and the hypothesis of constant returns to scale are rejected. A translog matching function with weak separability between the existing and newly unemployed is found to be the functional form best supported by the data. Our theoretical analysis also indicates that by not adjusting data for the varying size of districts or regions, previous studies may have generated estimates of the returns to scale of the matching function that were biased toward unity.

Responses of Private and Public Schools to Voucher Funding: The Czech and Hungarian Experience

A state monopoly in schooling followed the collapse of communism in Central Europe. The centrally planned system was abandoned. Systems comparable with educational voucher scheme, also known as school choice system, were introduced in the Czech Republic and Hungary in the early 1990s. The newly established system of school financing allocates public funds according to the number of students enrolled in a school. Accredited non-state schools, private and religious, are also eligible for public subsidies. The scope and the form of these reforms represent a unique opportunity to test conflicting hypotheses of proponents and opponents of the voucher scheme. In this empirical analysis, we test fundamental theoretical predictions of the voucher model. Specifically, we test: i) whether non-state schools are established at locations where the supply of educational opportunities provided by state schools is low or of low quality, ii) whether state and non-state schools in such a system respond to changes in demand for education, and iii) whether state schools respond to competition from non-state schools. We use detailed school level data on the whole population of schools and data on regional conditions. In our econometric model we estimate education value added, instead of relying on absolute quality of school graduates. We find that non-state schools emerge at locations with excess demand and lower quality state schools. We also find that greater competition from non-state schools creates incentives for state schools with the result that state schools slightly improve the quality of educational inputs used and significantly improve their output, quality of graduates. As concerns the technical schools, we find that non-state schools react to regional labor market conditions in terms of technical branch premium and unemployment rate. We do not find such reactions to market signals by state schools. We introduce this analysis with a review of non-state schools development in the Czech Republic and Hungary during the 1990s.

UNEMPLOYMENT AND WORKER-FIRM MATCHING: THEORY AND EVIDENCE FROM EAST AND WEST EUROPE +

The paper tests three hypotheses about the causes of unemployment in the Central-East European transition economies and in a benchmark market economy (Western part of Germany). The first hypothesis (H1) is that unemployment is caused by inefficient matching. Hypothesis 2 (H2) is that unemployment is caused by low demand. Hypothesis 3 (H3) is that restructuring is at work. Our estimates suggest that the west and east German parts of Germany, Czech Republic and Slovakia are consistent with H2 and H3. Hungary provides limited support to all three hypotheses. Poland is consistent with H1. The economies in question hence contain one broad group of countries and one or two special cases. The group comprises the Czech Republic, Hungary, Slovak Republic and (possibly) East Germany. These countries resemble West Germany in that they display increasing returns to scale in matching and unemployment appears to be driven by restructuring and low demand. The East German case is complex because of its major active labor market policies and a negative trend in efficiency in matching. In some sense, East Germany resembles more Poland, which in addition to restructuring and low demand for labor appears to suffer from a structural mismatch reflected in relatively low returns to scale in matching. Finally, our data provide evidence that goes counter to one of the main predictions of the theories of transition, namely that the turnover (inflow) rate in the transition countries would rise dramatically at the start of the transition, be temporarily very high and gradually decline and approach the level observed in otherwise similar market economies such as West Germany.

Admission to Selective Schools, Alphabetically

Ones position in an alphabetically sorted list may be important in determining access to rationed goods or oversubscribed public services. Motivated by anecdotal evidence, we investigate the importance of the position in the alphabet of the last name initial of Czech students for their admission chances into oversubscribed schools. Empirical evidence based on the population of students applying to universities in 1999 suggests that, among marginal applicants, moving from the top to the bottom of the alphabet decreases admission chances by over 2%. The implication of such admission procedures for student ability sorting across differently oversubscribed schools is then confirmed by evidence based on a national survey of secondary students test scores.

Gender Gap in Admission Performance Under Competitive Pressure

Do women perform worse than equally able men in stressful competitive settings? We ask this question for competitions with a high payoff---admissions to tuition-free selective universities. With data on an entire cohort of Czech students graduating from secondary schools and applying to universities, we show that, compared to men of similar general skills and subject-of-study preferences, women do not shy away from applying to more competitive programs and perform similarly well when competition is less intense, but perform substantially worse (are less likely to be admitted) when applying to very selective universities. This comparison holds even when controlling for unobservable skills

Understanding Czech Long-Term Unemployment

One potential impact of the looming EU accession of Central European economies is unemployment hysteresis working through long-term unemployment (LTU). In this paper, we explore the mechanisms of LTU by providing a detailed description of the recent rise in Czech LTU following the recession of 1997. We place the Czech evidence in international perspective using, e.g., VAR-based simulations, and focus on the role of welfare benefits in driving LTU.

Mothers and Daughters: Heterogeneity of German Direct Investments in the Czech Republic

Much has been written on the distinction between vertical and horizontal foreign direct investment. However, most of the empirical literature relies on indirect and aggregated measures only. The aim of this paper is to help fill this gap by examining the differences between German affiliates in the Czech Republic and their mother companies in Germany on the basis of direct evidence on factor requirements. Using a cluster analysis on firm-level data from the unique ReLoc survey, we identify four main groups of firms that partition the sample by broad sectoral lines and by technological, educational and skill intensity of their operations within each of them. More detailed analysis of the clustering reveals that the vertical model dominates in manufacturing, while the horizontal model of investment prevails in the service sector.

Measuring Economics Research in the Czech Republic: A Comment

Turnovec (2005) represents the first rigorous attempt to quantify and compare research of economists affiliated with Czech institutions as well as total output by these institutions. In this comment, I reconsider some of his results. My key finding is that a research-accounting methodology that closely reflects the widely differing quality of publications in economics leads to notably different results from those presented by Turnovec, who used an accounting scheme favoring quantity of publications over their quality.

Candidate Ballot Information and Election Outcomes: The Czech Case

We measure the importance of candidate characteristics listed on ballots for a candidates position on a slate, for preferential votes received by a candidate, and, ultimately, for getting elected. We focus on the effects of gender, various types of academic titles, and also several novel properties of candidates names. Using data on over 200 thousand candidates competing in recent Czech municipal board and regional legislature elections, and conditioning on slate fixed effects, we find ballot cues to play a stronger role in small municipalities than in large cities and regions, despite the general agreement on higher candidate salience in small municipalities. We also quantify the election advantage of a slate being randomly listed first on a ballot.

Alphabetical Order Effects in School Admissions

If school admission committees use alphabetically sorted lists of applicants in their evaluations, ones position in the alphabet according to last name initial may be important in determining access to selective schools. In Jurajda and Munich (2010) we provided evidence consistent with this hypothesis based on graduation exams taken in grade 13 in the Czech Republic: Z students in selective schools had higher exam scores than A.students. In this paper, we use the TIMSS&PIRLS test scores of 4th graders and the PISA test scores of 8th and 9th graders in the Czech Republic to provide evidence on how the alphabetical sorting outcome we uncovered earlier arises during early tracking into selective schools. Using the PISA data, we also provide similar evidence for Denmark.