nep-cwa 2015-03-22 papers

on Central and Western Asia

Issue of 2015‒03‒22
four papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

Skill Acquisition in the Informal Economy and Schooling Decisions: Evidence from Emerging Economies

By:	Tumen, Semih
Abstract:	Informal jobs offer skill acquisition opportunities that may facilitate a future switch to formal employment for young workers. In this sense, informal training on the job may be a viable alternative to formal schooling in an economy with a large and diverse informal sector. In this paper, I investigate if these considerations are relevant for the schooling decisions of young individuals using panel data on 17 Latin American countries as well as micro-level data for Turkey. Specifically, I ask if the prevalence of informal jobs distort schooling attainment. I concentrate on three measures of schooling outcomes: (1) secondary education enrollment rate, (2) out-of-school rate for lower secondary school, and (3) tertiary education graduation rate. I find that the secondary education enrollment rate is negatively correlated with the size of the informal economy, while the out-of-school rate is positively correlated. This means that informal training on the job may be crowding out school education in developing countries. The tertiary education graduation rate, however, is positively correlated with the size of informal sector, which implies that a large informal economy induces college attendance for those who are more likely to succeed. Policies that can potentially affect the size of the informal sector should take into consideration these second-round effects on aggregate schooling outcomes.
Keywords:	Informal economy; skill acquisition; schooling outcomes; Latin America; Turkey.
JEL:	E26 I21 J24 O17
Date:	2015–03–16
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:62909&r=cwa

A Time of Moderate Expectations

By:	Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Serkan Çiçek (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
Abstract:	Growth in the CESEE region will follow the unimpressive pattern displayed by the euro area. The longer-term convergence of income levels in the CESEE countries can no longer be expected to be as rapid as was assumed a decade or so ago. Growth in the period 2015-2017 is not going to deviate substantially from the pace recorded in 2014. For the new EU Member States growth is expected to remain slightly below 3% in the years to come. This implies an average growth differential of about 1.5 percentage points as compared to the euro area – about half of what it was before the global financial crisis. On the other hand, most of the countries in the region are also expected to evade the dangers of runaway inflation, fiscal deficits or excessive foreign borrowing that often plagued them in the past. These are the main results of the newly released medium-term growth forecast for the region by the Vienna Institute for International Economic Studies (wiiw). Depressed aggregate domestic demand has been the major factor behind anaemic growth. This is evidenced by disinflation (or even mildly deflationary tendencies) across much of the region, as well as the persistence of fairly high unemployment. There is some evidence of a ‘race to the bottom’ in terms of wage setting. While wage moderation strengthens profitability and external competitiveness, it also weakens disposable household incomes and thus slows down growth in domestic demand. Apparently, there is a trade-off between improvements in the trade balance and more rapid growth in domestic demand. Overall, GDP growth is being held ‘on a short leash’. Growth in public investment may be supporting economic growth, especially in those new EU Member States (NMS) that have access to EU funds. However, a proper rebound in private-sector investment is still lacking. Weak private-sector investment cannot be attributed to a ‘profit squeeze’ in the corporate sector. On the contrary, the corporate sector has been doing very well, at least in those NMS for which relevant data are available. The corporate sector as a whole still tends to lend rather than borrow. The means available to the corporate sector appear to be plentiful at present – but the sector still prefers to lick its wounds inflicted by former excessive borrowing or extend loans (primarily to the public sector) rather than to invest productively. Loans are stagnant even in those instances where interest rates are relatively low. With a few exceptions (largely on the region’s periphery) the stocks of loans to the non-financial corporate sector increased marginally at best in 2014. This may reflect firms’ pessimistic assessment of future growth in demand, increased ‘liquidity preference’ or the relative abundance of the means at their disposal. Non-performing loans are linked to a high share of borrowing in foreign currencies. The recent strengthening of the Swiss franc will bear some negative consequences for those firms and households that borrowed heavily in that currency in the past. New evidence supports the claim that the countries with floating exchange rates fare better in the medium to long term. They tend to avoid irreversible currency overvaluation, whereas the countries with fixed exchange rates do not quite avert it. It is argued, however, that despite the rigidity of the exchange rates, overvaluation can be avoided – at least in the medium term. All the CESEE countries are running up fiscal deficits. Current account deficits are still depressed. Net national lending in the NMS tends to be positive. This is a consequence of current savings in the private sector in the NMS generally running ahead of gross fixed capital formation in that sector. On average, output growth across the NMS will become more uniform in 2015 – albeit not any faster. Average growth will remain at 2.7% in 2015. Some acceleration in marginal growth is to be expected in the biennium 2016-2017. Unemployment in the NMS will recede only gradually. Low inflation will prevail in 2015, but it will gradually return to more normal levels in 2016. Under sustained – albeit rather anaemic – growth, the current account balances will deteriorate (although they will still remain comparatively low). Growth is hardly accelerating in the (current and potential) EU candidate countries either. Output in those countries is not expected to grow faster than in the NMS. Turkey, Macedonia and Kosovo may fare slightly better than the rest of the group, with growth rates of above 3% in 2015. However, with the exception of Turkey, those countries seem to have put high inflation behind them. Nonetheless, their unemployment figures continue to be dismal (less so only in Turkey). They will also run high (or even very high) current account deficits. Most of the successor states to the Soviet Union will perform rather badly in 2015. Ukraine’s output will continue its free fall as many of the country’s industrial centres have become battlefields. A drop of 5% in economic growth is expected for 2015. The decline in world market prices for energy carriers will negatively affect both Kazakhstan and Russia, with real output in the latter country dropping sharply by almost 4% in 2015. A similar fate will befall Belarus a country that relies heavily on exports to Russia and Ukraine. However, assuming a peaceful resolution to the Ukrainian conflict in 2015, it is expected that all the successor states will resume moderate growth in 2016 or 2017.
Keywords:	Central and East European new EU Member States, Southeast Europe, Balkans, Russia, Ukraine, Kazakhstan, Turkey, economic forecasts, secular stagnation, functional distribution of income, wage-led growth, investment, deflation, sectoral financial balances, deleveraging, exchange rates, beta convergence
JEL:	C33 C50 E12 E20 E29 E65 E66 F02 F34 G01 G18 O52 P24 P27 P33 P52
Date:	2015–03
URL:	http://d.repec.org/n?u=RePEc:wii:fpaper:fc:spring2015&r=cwa

REGIONAL EMPLOYMENT VOLATILITY IN TURKEY: CAUSES AND CONSEQUENCES

By:	Hasan Engin Duran (TIzmir Institute of Technology,Department of City and Regional Planning, Urla-Izmir, Turkey)
Abstract:	Regional employment volatility is an undesirable phenomenon which describes a strongly fluctuating pattern of employment, thus, "instability" of a local economy. In the literature on this field, much of the attention has been paid to two main issues. First, a group studies has investigated the evolution of national economic volatility and searched for a tendency towards the moderation or amplification of economic cycles. Second, strand of scholars has analyzed the socio-economic and geographical determinants behind the cross-regional variation of volatility. However, far little attention has been devoted to understanding the causes and consequences of this phenomenon in developing countries So, aim of the present study is actually two fold. First, we analyze the cross-regional determinants of employment volatility in Turkey and decompose relative importance of the sources of employment growth shocks. Second, we examine the relationship between regional instability and economic convergence. In terms of methodology, we use a range of panel data, time series models and nonparametric tools such Random Effects Model; PANEL VAR model and Conditional Kernel Density Estimations. We adopt employment data and many other explanatory variables for NUTS-II level regions and over a period 2004-2013. Our analyses indicate three main results: First ,there are huge differences across regions in employment volatility. Second, volatility of regions is mostly related to demographic and market size characteristics of the regions. So, regions which have high rate of labor market participation (with active labor force) and moderated growth rates; the ones which constitute greater market area tend to experience relatively more smoothed employment pattern and, thus, enjoy a stable economy. Moreover, we have shown that regional economic shocks are mostly driven by region specific disturbances rather than purely nationwide or sectoral shocks. Third, regional instability is found as an important barrier against the fulfillment of economic convergence.
Date:	2015
URL:	http://d.repec.org/n?u=RePEc:tek:wpaper:2015/06&r=cwa

Land reforms and feminization of agricultural labor in Sughd province,Tajikistan.

By:	Mukhamedova, Nozilakhon.; Wegerich, Kai.
Keywords:	Case studies; Water user associations; Income; Poverty; Households; Farms; Agriculture sector; Employment; Female labor; Women; Gender; Feminization; Land reform
Date:	2014
URL:	http://d.repec.org/n?u=RePEc:iwt:rerpts:h046493&r=cwa

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