nep-tra New Economics Papers
on Transition Economics
Issue of 2005‒07‒18
four papers chosen by
Tono Sanchez
Universitat de Valencia

  1. Do External Knowledge Spillovers Induce Firms’Innovations? Evidence from Slovenia By Jože P. Damijan; Andreja Jaklic; Matija Rojec
  2. Human Capital, Market Imperfections, Poverty, and Migration: Evidence from Albania By Etleva Germenji; Johan Swinnen
  3. Price Liberalization and Output Decline in Transition By Saso Polanec
  4. Looking for the Workforce: the Elderly, Discouraged Workers, Minorities, and Students in the Baltic Labour Markets By Mihails Hazans

  1. By: Jože P. Damijan; Andreja Jaklic; Matija Rojec
    Abstract: The paper analyses whether, and to what extent, firm’s ability to innovate is induced by firm’s own R&D activity and to what extent by factors external to firm. It first estimates the impact of firms' internal R&D capital and external R&D spillovers on firms' innovation activity within an integrated dynamic model. In the second step, we then estimate the impact of firms'innovations on firms’ productivity growth. Using the firm level data on innovation activity combined with firms' financial data for a large sample of Slovenian firms in the period 1996-2002, the paper produces three main findings. First, firm’s own R&D expenditures as well as external knowledge spillovers, such as national and international public R&D subsidies, foreign ownership and intra-sector innovation spillovers do enhance firm’s ability to innovate. Second, innovations as a result of firm’s R&D do contribute substantially to firm’s total factor productivity growth. And third, foreign ownership has a double impact on firm’s TFP growth - it first enhances firm’s ability to innovate and then it additionally contributes to firm’s TFP growth via superior organization techniques and other channels of knowledge diffusion.
    Keywords: innovation, external knowledge spillovers, FDI, Slovenia
    JEL: D24 F14 F21
  2. By: Etleva Germenji; Johan Swinnen
    Abstract: The most dramatic recent immigration in Europe is the influx of more than 700,000 Albanians, about a quarter of the total Albanian workforce, in the 1990s. The vast majority migrated illegally. This paper analyses the determinants of Albanian migration based on a unique representative survey of rural households. The study confirms that migrants are mostly young, male, and single. Regional variations in migration reflect a combination of cultural and economic factors, including migration costs. However, we find that migrants do not come from the poorest rural households. Moreover, education has a positive, albeit non-linear, effect on the likelihood of migration. Migration is negatively related with household access to alternative income sources and reduced financial constraints but positively related with the presence and household’s access to migration networks. Policy implications are that aid programs and government initiatives to invest in rural infrastructure and rural education may have mixed effects on migration. A key policy target to reduce migration should be the creation of non-farm rural employment and rural households’ access to finance.
    Keywords: Albania, migration, rural household
    JEL: F22 O52 P20
  3. By: Saso Polanec
    Abstract: In this paper, we attempt to fill the gap in theoretical explanations of a large output decline that took place in the early years of transition process. The prevalent explanations, commonly found under the title of disorganisation, are succesful in explaining output decline in countries of former Soviet Union, but less so for Central and Eastern European countries. The model we develop shares the cause of output decline with disorganisation - price liberalisation, however, the decline takes place only under a set of plausible assumptions: adjustment costs to labor mobility across economic sectors and large benefits to inactivity in a form of either government transfers or reservation wage earned in informal economy. Liberalisation of prices in a form of removal of distortionary taxes creates incentives for labor mobility from a declining sector to inactivity. The decline takes place only in a part of the economy, while the rest of the economy stagnates or slowly grows. Since the model does not have a closed-form solution, we analyze the equilibrium allocation using simulation methods. We also discuss the political economy of reforms and identify the conditions under which rational voters under majoritarian voting rule would support the price liberalisation.
    Keywords: liberalization, transition, recession, adjustment cost, government transfers, reservation wage, heterogeneity
    JEL: F11 J21 J60 O11 O17
  4. By: Mihails Hazans (University of Latvia & BICEPS)
    Abstract: This paper looks at the evolution of the labour markets in Estonia, Latvia, and Lithuania since the beginning of transition (in some respects since 1996/1998) until 2003, with a particular focus on labour force participation. How did labour supply in the Baltic countries respond to changes in minimum wages, unemployment benefits and retirement regulation? Do the marked differences in labour market policies between the countries result in different patterns of participation? What are the obstacles to and driving forces of participation? We find that relative contribution of participation and demographic trends to the dynamics of the labour force varied substantially both over the years and across the three countries. Participation, in turn, has been shaped by sometimes complicated interaction between educational choices, retirement, policy changes, and external shocks. Resulting differences in trends and patterns are quite substantial, indicating that there is a room for increasing participation in each of the countries. Recent rates of transition from unemployment to employment and to inactivity are similar to those found in EU-15. Panel data analysis of determinants of participation and discouragement suggests that increasing after-tax real minimum wage has significant positive effect on participation and reduces discouragement in Lithuania. In Estonia, by contrast, positive effect of minimum wage on participation is found only for teenagers of both genders and for young males. Ethnic minorities, especially females, in all three Baltic countries are less likely to be in the labour force, other things equal.
    Keywords: Labour supply; discouraged workers; labour market flows; minimum wages; ethnic minorities.
    JEL: J14 J15 J22 P52
    Date: 2005–07–13

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