nep-tra New Economics Papers
on Transition Economics
Issue of 2005‒02‒06
two papers chosen by
Toño Sanchez
Universidad de Valencia

  1. Unemployment and the Earnings Structure in Latvia By Mihails Hazans
  2. Are Foreign Investors Attracted to Weak Environmental Regulations? Evaluating the Evidence from China By Judith M. Dean; Mary E. Lovely; Hua Wang

  1. By: Mihails Hazans
    Abstract: Latvia has recorded sustained GDP and productivity growth since 1997. Yet unemployment rates, despite gradual decrease, have remained high. Hazans explores the mysteries of unemployment in Latvia. He analyzes labor flows between employment, unemployment, and nonparticipation and finds the following results: • The type of education and the region of residence appear to be the most important determinants of success in finding jobs by the unemployed. • The unemployed from ethnic minorities have lower chances to find a job within a year, other things equal, while the difference between genders is not significant. However, neither ethnicity nor gender seems to matter as far as the transition from employment to unemployment is concerned. • Regional disparities in job destruction seem to be less sizable than disparities in job creation. • The analysis of job search methods by the unemployed indicates that two target groups of state employment policy (young unemployed and long-term unemployed) appear to make relatively little use of the public employment service. The author also looks at the impact of education, age, gender, ethnicity, and regional factors on individual earnings. The relative position of youth and women in Latvian labor market, compared with prime?age men, is less unfavorable than in many other countries. Yet the gender wage gap has increased recently, and the same is true for regional disparities. Beneficiaries of the so-called “new” education system have a relatively high market value, especially with graduates from universities and general secondary schools. Finally, returns to experience seem to be nonexistent for many adult workers without higher education. This paper—a product of the Poverty Reduction and Economic Management Division, Europe and Central Asia Region—is part of a larger effort in the region to understand labor market dynamics.
    Keywords: Labor & Employment; Transition Economies
    Date: 2005–01–31
  2. By: Judith M. Dean; Mary E. Lovely; Hua Wang (World Bank)
    Abstract: One of the most contentious debates today is whether pollution-intensive industries from rich countries relocate to poor countries with weaker environmental standards, turning them into “pollution havens.” Empirical studies to date show little evidence to support the pollution haven hypothesis, but suffer potentially from omitted variable bias, specification, and measurement errors. Dean, Lovely, and Wang estimate the strength of pollution-haven behavior by examining the location choices of equity joint venture (EJV) projects in China. They derive a location choice model from a theoretical framework that incorporates the firm’s production and abatement decision, agglomeration, and factor abundance. The authors estimate conditional logit and nested logit models using new data sets containing information on a sample of EJV projects, effective environmental levies on water pollution, and estimates of Chinese pollution-intensity for 3-digit ISIC (International Standard Industrial Classification) industries. Results from 2,886 manufacturing joint venture projects from 1993–96 show that EJVs from all source countries go into provinces with high concentrations of foreign investment, relatively abundant stocks of skilled workers, concentrations of potential local suppliers, special incentives, and less state ownership. Environmental stringency does affect location choice, but not as expected. Low environmental levies are a significant attraction only for joint ventures in highly-polluting industries with partners from Hong Kong, Macao, and Taiwan (China). In contrast, joint ventures with partners from OECD sources are not attracted by low environmental levies, regardless of the pollution intensity of the industry. The authors discuss the likely role of technological differences in explaining these results. This paper—a product of the Infrastructure and Environment Team, Development Research Group—is part of a larger effort in the group to understand the impact of environmental policies in developing countries.
    Keywords: Environment; Industry; International Economics; Private Sector Development; Globalization
    Date: 2005–01–31

This nep-tra issue is ©2005 by Toño Sanchez. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.