Joanna Tyrowicz

Unemployment Convergence in Transition

In this paper an attempt is made to inquire the dynamics of regional unemployment rates in transition economies. We use policy relevant NUTS4 unemployment rates for transition economies characterised by both relatively intense (Poland, Slovaka) and relatively mild labour market hardships (namely Czech Republic). We apply diverse analytical techniques to seek traces of convergence, including beta - and sigma-convergence as well as time-series approach. Results in each of the countries suggest no support in favour of beta-type convergence, i.e. convergence of levels. Even controlling for nation-wide labour market outlooks (conditional convergence) does not provide any support for this hypothesis. Further, regions with both very high and very low unemployment show signs of high persistence and low mobility in the national distribution, while the middle ones tend to demonstrate higher mobility and essentially no regional unemployment differentials persistence. This diagnosis is confirmed by sigma-convergence analysis which indicates no general divergence or convergence patterns. Transitions seem to be more frequent, but at the same time less sustainable for middle range districts, while movements up and down the ladder occur frequently for the same districts. Findings allow to define the patterns of local labour market dynamics, pointing to differentiated divergence paths. Importantly, these tendencies persist despite cohesion policies financing schemes, which allocate relatively more resources to deprived regions in all these countries.

Is the Effect Really so Large? Firm‐Level Evidence on the Role of FDI in a Transition Economy

Foreign subsidiaries usually perform better than domestic enterprises, but selection effects have been acknowledged in the literature. This article contributes by quantitatively evaluating the size of the selection effects and direct effects of FDI entry. We use a large panel of firm‐level data from Poland and match foreign‐owned firms to a control group of non‐foreign‐owned companies and analyse various performance indicators. In terms of efficiency measures, between 50 and 70 percent of the foreign affiliates advantage may be attributed to direct ownership effects. However, in the case of export intensity, the majority of the differential between the domestic companies and foreign subsidiaries is attributable to selection effects: MNEs choose export‐oriented companies and sectors.

Not All That Glitters

Although foreign subsidiaries usually perform better than the average of the hosting economies, empirical literature has also established that the selection effect is statistically significant. In this paper we attempt to evaluate its economic relevance, using a unique data set of annual financial reports by all medium and large Polish enterprises over the period 1995-2007. We match firms privatized with the use of foreign direct investment (FDI) to a control group of nonprivatized state-owned companies in order to disentangle the effect of self-selection and FDI entry. Evidence suggests that although FDI enters more frequently into companies that already participate in the international trading networks, roughly half the export intensity differential may be attributed to the entry of FDI. On the other hand, selection effects seem to dominate as far as efficiency is concerned, whereas only toward the end of the sample may the positive effect of FDI on profitability be confirmed.

EFFECTS OF LABOR REALLOCATION ON PRODUCTIVITY AND INEQUALITY—INSIGHTS FROM STUDIES ON TRANSITION

From a theoretical perspective the link between the speed and scope of rapid labor reallocation and productivity growth or income inequality is ambiguous. Do reallocations with more flows tend to produce higher productivity growth? Does such a link appear at the expense of higher income inequality? We explore the rich evidence from earlier studies on worker flows in the period of massive and rapid labor reallocation, i.e. the economic transition from a centrally planned to a market-oriented economy in Central and Eastern Europe. We have collected over 450 estimates of job flows from the literature and used these inputs to estimate the short-run and long-run relationship between labor market flows, labor productivity and income inequality. We apply the tools typical for a meta-analysis to verify the empirical regularities between labor flows and productivity growth as well as income inequality. Our findings suggest only weak and short term links with productivity, driven predominantly by business cycles. However, data reveal a strong pattern for income inequality in the short-run - more churning during reallocation is associated with a level effect towards increased Gini indices.

Saving less when there is more foreign lending? Foreign debt and savings in developing countries

Although literature has given considerable attention to the effects of foreign debt on growth, we still know little about its effects on the internal potential for capital formation. Literature suggests a number of channels through which the availability of foreign financing could affect domestic savings. We test empirically this relationship using data for Sub‐Saharan Africa and Latin America and the Caribbean over 1975–2004. Controlling for endogeneity, we find that foreign debt adversely influences domestic savings especially in the long run. The results are not susceptible to the choice of countries, although few outliers should be noted.

ANALYZING THE EFFICIENCY OF PENSION REFORM: THE ROLE OF THE WELFARE EFFECTS OF FISCAL CLOSURES

Replacing the pay-as-you-go defined benefit (PAYG DB) system with an at least partially funded defined contribution (DC) system generates fiscal costs that need financing. The fiscal closures at hand differ by the channel and the extent of distortions. The main contribution of this paper is a thorough comparison of the welfare effects of the various fiscal closures of the pension system reform. In addition, we decompose the welfare effects to the parts attributable to changing the way pensions are financed (PAYG ⇒ prefunding) and to changing the way pensions are computed (DB ⇒ DC). We show that depending on the fiscal closure, the welfare effects differ substantially for the same pension system reform. The financing of the the pension system gap with public debt allows more intergenerational redistribution.

Cyclical trend of labor reallocation in Poland: transition and structural change

Two main features of the reallocation process that took place in Eastern European and Former Soviet Union countries should be distinguished. The first feature was the decline in public sector employment as a result of the collapse of state-owned enterprises, linked with an increase in private sector employment as new private firms emerged and old public companies were privatized. The second feature was, and still is, the reallocation of labor from manufacturing to the service sector. Data from the Polish Labor Force Survey for the period 1995–2015 were used to construct measures of worker flows, gross and net, and their cyclical properties were used as a way to test the predictions of structural change and transition theories. It was found that labor market adjustments tend to amplify in upturns of the business cycle, while worker flows contribute only a fraction to the changing structure of employment. The policy implications of these findings are discussed.

Do pirates play fair? Testing copyright awareness of sports viewers

ABSTRACT Ethical norms are believed to be followed more loosely on the Internet than in the ‘real world’. This proposition is often evoked to explain the prevalence of so-called digital piracy. In this study, we provide evidence from a vignette experiment that contradicts this claim. Analysing the case of sports broadcast, we compare explicitly the ethical judgement of legal and illegal sharing in the offline and online contexts. We find that the norms concerning legality, availability of alternatives and deriving material benefits from sharing content do not differ substantially between the virtual and real worlds. We also test explicitly for the role of legal awareness and find that emphasising what is prohibited (copyright infringement) is less effective than focusing on what is permitted (fair use) in reducing the disparity between legal and ethical norms.

Unprivatizing the pension system: the case of Poland

In many countries, the fiscal tension associated with the global financial crisis brings about the discussion about unprivatizing the social security system. This article employs an Overlapping Generations model to assess ex ante the effects of such changes to the pension reform in Poland from 1999 as implemented in 2011 and in 2013. We simulate the behaviour of the economy without the implemented/proposed changes and compare it to a status quo defined by the reform from 1999. We find that the changes implemented in 2011 and in 2013 are detrimental to welfare. The effects on capital and output are small and depend on the selected fiscal closure. Implied effective replacement rates are lower. These findings are robust to time inconsistency. The shortsightedness of the governments imposes welfare costs.

Age-productivity patterns in talent occupations for men and women: a decomposition

One could expect that in the so-called talent occupations, while access to these professions may differ between men and women, the gender wage gap should actually be smaller owing to the high relevance of human capital quality. Wage regressions typically suggest an inverted U-shaped age–productivity pattern. However, such analyses confuse age, cohort and year effects. Deaton decomposition allows us to disentangle these effects. We apply this method to investigate the age–productivity pattern for the so-called ‘talent’ occupations. Using data from a transition economy (Poland) we find that talent occupations indeed have a steeper age–productivity pattern. However, gender differences are larger for talent occupations than for general occupations.