The Impact of Privatization on the Earnings of Restructured Workers: Evidence From the Oil Industry

We study the long-term impact of job displacement from a big state owned enterprise as a result of its privatization in a developing country. Our results suggest large reductions in earnings, which persist throughout the years. However, we also find that the displaced worker’s post-displacement earnings are in line with competitive market wages, and unrelated to sector of employment or to tenure losses, indicating that the long-term reduction in earnings as a result of displacement because of privatization can be traced to the loss of wage rents. Our results indicate that job displacement in SOEs may have very large redistributive implications for the workers involved but that this loss does not necessarily reflect the loss of specific human capital associated to these jobs.

FINANCIAL CRISES,OUTPUT LOSSES,AND THE ROLE OF STRUCTURAL REFORMS

Financial crises take a heavy toll on output growth. We assess the role of structural reforms in reducing the output losses resulting from financial crises across advanced economies, emerging and developing economies, and low‐income developing economies. We also revisit the role of macroeconomic policies in this context. The impact of crises on output growth differs between types of crises and economies, thus warranting sample splits along these lines. Some but not all reforms and policies help to reduce the output losses of crises in the medium term, highlighting the need not to overgeneralize the effectiveness of reforms and policies. Further research is warranted to further explore the heterogeneity in the impact of financial crises on output growth and to better understand when and how specific structural reforms and macroeconomic policies can mitigate the output costs of financial crises. (JEL E32, E44, E63, G28, O47)     

International Financial Integration and Its Distinctions in Transition Economies

We discuss the main tendencies and forms of international financial integration in both developing and developed economies. Integration of financial markets is a topic of economic debates especially for developed and transition economies, particularly Armenia, because it is the most effective way of overcoming the main problems of financial-sector development of transition economies. But there are many problems on the way of financial integration, which are summarized into four groups: institutional problems, legislative problems, macroeconomic instability, and technical problems. All of these problems are analyzed in the article for Armenia, though they are quite relevant for most transition countries.      

Real Exchange Rates in Transition Countries

This paper discusses the ways in which real exchange rate changes have affected macroeconomic and structural developments in transition economies. More specifically, it deals with four issues: it analyzes the real exchange rate dynamics in transition economies; it provides a comparative evaluation of the exchange rate regimes adopted by transition countries; it focuses on the link between exchange rate movements and financial crises; and it discusses the applicability of the Balassa–Samuelson hypothesis to transition economies.     

Ecological Modernization,Environmental Policy and Employment. Can Environmental Protection and Employment be Reconciled?

The paper examines the relationship between environmental policy and employment. It argues that environmental policy probably has a positive effect on employment. To support this conclusion the following arguments will be made: polluting companies, and hence employment in these companies, can be, but is not always, negatively affected by environmental policy; polluting companies do not move to another country due to environmental policy; the ecosector is an important employment sector; and, the net balance between job losses and gains due to environmental policy is positive. This conclusion is conditional on certain assumptions concerning the functioning of labour markets, the improvement in environmental quality and the normative implications of the debate.     

以改革的思维调整宏观经济治理原则

从总体上看,中国的宏观经济已经由萧条进入了复苏,但从＂止跌-复苏＂四阶段理论来看,中国宏观经济还处于＂政策刺激性反弹阶段＂向＂市场需求反弹阶段＂的过渡期,经济全面复苏的基础还比较薄弱。本次刺激计划本质上是投资驱动型方案,而以投资为主体的短期刺激政策并不足以引领中国走出＂周期性＂与＂全局性＂的经济衰退。本文认为,＂扩内需＂与＂增长模式的转轨＂必须以＂改革＂为前提和先导;短期宏观刺激政策的效率不取决于刺激的大小,还在于宏观调控政策的微观传递机制的重塑。因此,以改革的思维调整宏观经济治理原则就显得非常重要。     

Privatization and Foreign investments: The Case of Serbia and Montenegro

The paper analyzes the privatization process with the participation of foreign investments in countries in transition. Privatization is a necessity in transition countries as a prerequisite of the move to a market economy. Foreign investments are of great importance for the economies of the transition countries, not only to inject necessary capital but also to provide access to new technologies, new markets, and organizational and marketing expertise. For the successful initiation and implementation of these processes, some basic requirements are to be met; namely, to assure more adequate protection of property rights and upgrade legislation related to privatization and foreign investments.     

Foreign Direct Investment and Institutional Environment in Transition Economies

We analysed the relation between foreign direct investment and the quality of the institutional environment in transition economies. The analysis confirmed a significant impact of various institutional aspects on the inflow of foreign capital. To isolate the importance of the institutional environment from the impact of other factors, a panel data analysis was performed using the data of 24 transition economies in the period 1995–2002. The results showed that in the observed period the quality of the institutional environment significantly influenced the level of foreign direct investment in transition economies. Other variables that proved to have a statistically significant influence were budget deficit, insider privatization, and labour cost per hour.     

Alternative rates of structural change in Norwegian dairy farming: impacts on costs of production and rural employment

The economies of size in Norwegian dairy farming are far from exploited. There is increasing pressure on cost savings through faster farm restructuring. Such a structural transition could have severe effects on other concerns (rural employment and social well being, landscape preservation, biodiversity, heritage values, etc.) valued by the society. A simulation model is developed to study effects of alternative rates of structural change on the social costs of milk production, farm employment and farm subsidies. The model is based on economic conditions at the farm level for various size groups and regions. Changes in the model's farm structure depend on the exit rate of existing farms in various size groups and the size of newly established farms. When new farms are substituted for existing farms, a rapid change in farm structure and a new herd size of 60 cows (the largest evaluated) results in the lowest costs. Approximately 60% of the cost savings achieved by larger farms can be attributed to lower labour input, resulting in considerable losses of employment. Job losses will have the greatest negative family and community impacts in areas located far from urban centres, because a large share of the milk is produced is such areas, farms are smaller and there are fewer non-farm employment opportunities. Government support is necessary to preserve small farms’ provision of multiple benefits. The balance between cost-saving pressures and the rationales for retaining small farms under increasingly liberalized market regimes is bound to be a complex issue.     

A longitudinal evaluation of government-sponsored job skills training and basic employment services among U.S. baby boomers with economic disadvantages

Job skills training is a cost-effective strategy for improving employment among individuals who have low income and employment barriers, but few U.S. government-sponsored employment program participants have received such training. To better understand long-term gains from job skills training, this study compared employment and earnings trajectories between program participants who received job skills training and those who received basic services only. Using data from the National Longitudinal Survey of Youth 1979, we estimated 33-year employment and earnings trajectories among U.S. baby-boomer cohorts while accounting for baseline group heterogeneity using inverse propensity score weighting. We found increases in employment rates over the life course, especially among Black women. Job skills training also increased earnings by up to 69.6 % compared to basic services only. Despite the long-term gains in employment and earnings, job skills training participation is not sufficient to address gender as well as racial and ethnic gaps in full-time employment. Findings reinforce the importance of incorporating job skills training as an essential service element of government-sponsored employment programs to improve long-term labor market outcomes among Americans with economic disadvantages.     

Privatization of Refuse Removal and Labor Costs*

We examine the labor-cost savings associated with privatization by comparing earnings and employment trends of public and private sector refuse workers. Findings suggest that high union earnings for workers in the public sector are a source of labor-cost savings in the refuse industry. Evidence on job changers does not indicate that earnings for this group of workers are a compensating differential. Metropolitan area employment findings suggest that municipalities are less likely to use union refuse workers in the public sector when a relatively small percentage of area residents belong to a union.     

LONG‐RUN EFFECTS OF YOUTH TRAINING PROGRAMS: EXPERIMENTAL EVIDENCE FROM ARGENTINA

We study the effect of a job training program for low‐income youth in Cordoba, Argentina. The program included life‐skills and vocational training, as well as internships with private sector employers. Participants were allocated by means of a public lottery. We rely on administrative data on formal employment, employment spells, and earnings, to establish the effects of the program in the short term (18 months), but also—exceptionally for programs of this type in Latin America and in developing countries in general—in the medium term (33 months) and in the long term (48 months). The results indicate sizable gains of about 8 percentage points in formal employment in the short term (about 32% higher than the control group), although these effects dissipate in the medium and in the long term. Contrary to previous results for similar programs in the region, the effects are substantially larger for men, although they also seem to fade in the long run. Program participants also exhibit earnings about 40% higher than those in the control group, and an analysis of bounds indicates that these gains result from both higher employment levels and higher wages. The detailed administrative records also allow us to shed some light on the possible mechanisms underlying these effects. A dynamic analysis of employment transitions indicates that the program operated through an increase in the persistence of employment rather than from more frequent entries into employment. The earnings effect and the higher persistence of employment suggest that the program was successful in increasing the human capital of participants, although the transient nature of these results may also reflect better matches from a program‐induced increase in informal contacts or formal intermediation. (JEL J08, J24, J68, O15)     

Privatization of refuse removal and labor costs

We examine the labor-cost savings associated with privatization by comparing earnings and employment trends of public and private sector refuse workers. Findings suggest that high union earnings for workers in the public sector are a source of labor-cost savings in the refuse industry. Evidence on job changers does not indicate that earnings for this group of workers are a compensating differential. Metropolitan area employment findings suggest that municipalities are less likely to use union refuse workers in the public sector when a relatively small percentage of area residents belong to a union. The authors thank Jacqueline Agesa, Keith Bender, Maria Crawford, and Richard Perlman for valuable suggestions. Research assistance from Eric Blackburn is greatly appreciated.     

Material Flows Accounting: A Biophysical Approach to Macroeconomic Sustainability

The increasing dimension of socio-environmental problems make sustainability a macroeconomic issue and new methodological instruments are needed. In this paper, Material Flows Accounting is presented as a new statistical approach for an evaluation of macroeconomic sustainability. Based on the pre-analytic vision that economies are an open system embedded in the environment, it provides an overview in tonnes of annual material inputs and outputs of an economy. It quantifies the physical dimension of societies and analyses the “size” of the human economy in the geo-biosphere. As it provides information about efficiency and material requirements, it is a very important method for analysing whether a nation is moving towards sustainability or away from it. Used in many official statistics, it will become one of the most powerful tools in describing sustainability at the macroeconomic level. In this paper, after the presentation of the Material Flows Accounting approach, an Italian case study is considered.     

Rural Parentage and Labor Market Disadvantage in a Sub‐Saharan Setting: Sources and Trends

Abstract High unemployment in many developing countries is intensifying job competition and raising concern for the employment prospects of vulnerable groups, including children of rural parents. This paper examines the trends and sources in employment disadvantage associated with rural parentage in Cameroon. In documenting the sources of inequality, the study moves beyond a “consensus versus conflict” dichotomy, and instead uses regression decomposition to estimate the relative contributions of both perspectives. It also uses fixed‐effects methods to examine the importance of unobserved family influences that have been understudied in previous research. In documenting historical change in rural disadvantage, the study distinguishes between long‐term trends and shorter‐term economic fluctuations. Findings show that although rural parentage does not create a disadvantage in off‐farm employment as a whole, it does so within the formal sector. This disadvantage is predominantly due to rural‐urban differences in returns to schooling rather than levels of schooling. Disadvantage in schooling has been declining over time but, interestingly, these gains may stall during prosperous times, as these tend to inordinately benefit urban children.     

Privatization as a restructuring device: Can it substitute for industrial policy in the transforming economics? Some lessons from Poland

There is a broad consensus that in the long run, privatization offers the best solution to the efficiency problems of state-owned enterprises. However, many observers believe that some form of industrial policy is unavoidable during the transition period in order to stimulate restructuring before privatization has been completed. The main objective of this article is to analyze the compatibility and complementarity between privatization and industrial policy in the context of the systemic transformation in Poland.     

The relationship between foreign direct investment and economic growth: evidence from transition countries

This paper examines the importance of foreign direct investment on economic growth. Using a panel data set for 27 transition economies over the period 1991–2004 as well as the methodology of panel cointegration and causality tests, the empirical findings show that foreign direct investment does exhibit a significant relationship with economic growth, at least for those transition countries that are characterized by high levels of income and have implemented successful privatization programs.     

China's Way of Economic Transition

China started economic transition in 1978 to implement a Chinese type of socialist market economy system, i.e., a market-oriented economy consisting of collectively community-owned enterprises (CCOE) and state-owned enterprises (SOE) in a totalitarian political system with the Communist Party of China as the ruling power. The main contents of the economic transition can be briefly described as follows: (1) gradual decentralization of economic decision from central economic planning to market-oriented decision by delegating competence to managers of SOE and CCOE without privatization of public ownership, (2) liberalization of cross border economic activities (open-door policy), (3) allowance for Chinese to erect private enterprises (PE) on the one side and foreigners to set up foreign invested enterprises (FIE) on the other side, as well as (4) reorganization of SOE and CCOE. In comparison to the former Soviet Union and the Central and Eastern European countries, the following points of China's way of economic transition are of special interest. First, China's way of transition is a ``gradual trial and error' approach without a transition program set for long term but flexible and gradual way which is called a ``touch stones to cross river' approach. Field experiments have been carried out at first. A reform will be implemented after successful experiments. Second, the rural community becomes reorganized by breaking down communes, implementing a ``household responsibility system' in the agricultural sector and setting CCOE in the rural areas to carry out industrialization without movement out of rural labor (the slogan for this kind of transition is lee tuh puh lee shian [``move out from agriculture but not out of rural area']. Third, China's economic development is characterized by a huge expansion of CCOE in the eighties and newly founded PE consisting of FIE since the nineties, while only a very limited share of SOE has been privatized via the reorganization of the sector. China's way of economic transition has been a process of decentralization of the economic system from a central planning economy to one of decentralized market-oriented decision by delegating competence to management of SOE and CCOE without privatization of the ownership to increase efficiency. Fourth, China has been heavily loaded by a fragile banking system with a huge amount of nonperformance loan which implies a high risk of banking system crisis. Fifth, China's economic transition has been seen as a tool to keep the power of the Communist Party China with a periodically instable totalitarian political system and has permanently been confronted with risk of a political collapse. Human rights have not been protected in China. The FIE have crucially contributed to the growth of industrial production, export, and also the economic growth in China since 1979, especially since 1992. Economic special zones have significantly induced the rapid growth inflow of FDI which has financed the establishment of new enterprises instead of financing privatization of the SOE in China. Thus, it is not exaggerated to say that the FDI inflow has mainly contributed to the performance of the Chinese economic transition and the FIE have been the engine of the Chinese economic development.     

The relationship between inequality and labor market performance: Evidence from U.S. states

A central issue facing society is the equity/growth trade-off. Conventional economic theory suggests enhanced incentives associated with income inequality should increase growth, but at the expense of “fairness.” Recent theories challenge this notion by contending that inequality reduces human-capital investment and increases instability. Nevertheless, empirical evidence from U.S. states and across countries suggests an ambiguous relationship between inequality and income growth. Yet, at the state level, because inequality is related to many disamenities including crime, it can lead to lower utility and out-migration. The disamenities may produce compensating differentials that increase income. Given the inconsistencies regarding income, this study extends the literature by instead examining employment growth. Namely, long-run job growth is closely associated with net migration and any utility gains from migration. Thus, examining relative employment growth indicates whether inequality is associated with netutility gains from a vibrant economy or net-losses from disamenities. The results suggest that state-level inequality is associated with greater long-run job growth, or enhanced incentives appear to be the dominant factor.     

Better Off Jobless? Scarring Effects of Contingent Employment in Japan

Previous research fails to address whether contingent employment benefits individuals' careers more than the alternative they often face: being without a job. Using work history data from Japan, this study shows that accepting a contingent job delays individuals' transition to standard employment more than remaining jobless. Moreover, having a contingent job, rather than having no job, leads Japanese men to have lower occupational status after they transition back to standard employment. I argue that in a highly segmented labor market like Japan's, the strict separation of labor pools for standard and contingent jobs makes being labeled as a contingent worker particularly detrimental. Meanwhile, the legacy of Japan's welfare corporatism alleviates the stigma of unemployment, making individuals better off jobless than having a contingent job. This research thus demonstrates the importance of labor-market contexts in shaping the scarring effects of contingent work arrangements.