After the recent debt crisis governments of many developed and developing countries turned to the use of financial repression as a way of government spending financing along with explicit capital taxation. Financial repression can be considered as an implicit tax on capital, because it leads to the outflow of resources from investment to the government debt. We question what type of government spending financing is better: explicit or implicit tax on capital (financial repression). The criterion is the minimization of consumption crowding out effect in the steady-state where government spending can be of three types. We propose a Ramsey model modification with financial repression and three types of government expenditures: wasteful, productive and one in the utility. There are two instruments of financial repression: artificial increase in debt demand and lowered government debt yield. We find that regardless of government spending type, the choice of the government, which guarantees maximum level of consumption or minimum crowding out in the steady state, is explicit tax on capital in the absence of financial repression (in the form of artificial increase in debt demand). The higher is artificial debt demand the bigger is the direct outflow of capital to the government debt and less is the average interest of savings, while increase in the explicit capital tax rate affects only the savings yield. However, increase in the explicit tax on capital and lowering debt yield leads to the same crowding out effect.
The paper analyses the differences between firms with centralized model of decision-making and firms with decentralized model of decision-making, and studies the factors that affect choice of the decision-making model at the firm. The empirical analysis is based on the large survey “European Firms in a Global Economy” conducted in 2010 in 7 European countries: Germany, United Kingdom, France, Austria, Spain, Italy and Hungary.
It is shown that decentralized firms demonstrate better performance in a spectrum of different areas: they are more involved in the international trade (in particular, in the more complicated forms of international trade), innovative activities, R&D, training of employees. It is also shown that probability of centralization of firm management is significantly influenced by factors related to the distribution of property, as well as by individual characteristics of the CEO. In particular, concentration of property in the hands of individuals or families, belonging of the CEO to the family that controls the firm lead to a considerable increase in the probability of centralization. These results can reflect influence of personal (behavioral) motives of the firm owners or top managers on the choice of the governance model at the firm.
The results hold not only at the whole sample of the survey, but also for each of the countries in the sample. The influence of personal motives of individuals who run or control the firm on the probability of governance centralization at the firm is strong. For example, according to the predictions of proposed in the paper simple regression model, for the firms where CEO is an individual who controls the firm or a member of the family that controls it, probability of centralization of governance is on average 15 percentage points higher. In Austria, where the described effect is most prominent – 38 percentage points higher.
In our research we analyze main effects which accompany IPO on emerging markets. We focus the attention on such countries as Russia, India, China, Brazil, Poland, Singapore, Malaysia, Egypt and other emerging markets. There are 161 placements in our sample which took place in 11 emerging markets. The major interest involves the effects accompanying privatization of state companies through IPO and how much retail investors win from participating in IPOs of the companies from emerging markets. We estimate the dependence of underpicing or initial return IPO (the price change measured from the offering price to the market price on the first trading day) and long-run IPOs performance from such factors as ownership of shares before placing (a state ownership/private property), origin of the company, shares allocation (retail/institutional investors), etc. Our research has revealed that retail IPO have the greatest initial return, than usual IPO. The hypothesis about the lower long-term yield of such placements in comparison with yield of the market is thus confirmed. Surprisingly, IPOs of the state companies have bigger underpricing (allowing investors to earn more in the first days of the quotations), than private companies IPO. However long-run abnormal return is also positive (at usual IPO it is negative in average) which shows that privatization IPO is a separate phenomenon. Country specific characteristics matter in retail IPO and sometimes the differences are crucial. Most of the peculiarities depend on the distinctions in institutional environment of the countries and the level of retail investors' participation in IPO. Moreover, countries authorities set various purposes at privatization of the state companies which could also affect IPO performance.
The paper studies the evolution of inequality in the distribution of work between Russian households using data from RLMS HSE for 1994–2014. Following [Gregg, Wadsworth, 2008], I estimate disparities between individual and household-based measures of joblessness and compare actual household workless rates with counterfactuals based on a random distribution of work. My findings show that the Russian labor market is characterized by low extent of inequality between households in access to employment. There are fewer workless households than expected if employment were randomly allocated. Only 6–7 percent of working-age adults live in workless households. The workless household rate remained at approximately 10 percent for the whole period. Cyclical fluctuations are less pronounced for the household-based workless rates than for individual-based rates suggesting that households have internal resources to cope with macroeconomic shocks. Low inequality in distribution of work is explained largely by persistently high level of employment in two-adult households: the common pattern is that both adults work in such households and this household type makes up the largest share of households. The actual workless household rate hardly changed over the period, which masks various offsetting forces. Changes in the household structure (growing share of single-adult households) and labor market developments (increase in the individual workless rate) contributed to the rise of the predicted workless rate. This rise was offset by a falling polarization of work across Russian households. Expansion of higher education contributed to the concentration of employment in the better-educated households.
In this paper I study and compare the earnings distributions for formal and informal workers using the data from the RLMS HSE survey for 2000-2010. I find that during the whole period earnings inequality was significantly higher in the informal sector than in the formal sector. Informality has statistically significant impact on the distribution of earnings, but its contribution is much smaller than the effects of other variable such as gender, education, region, and settlement type. Earnings inequality dramatically decreased in both sectors over the 2000-2010 period. In the formal sector the changes in the earning distribution were mainly generated by the changes in the distribution of hourly earnings. In the informal sector the reduction of inequality went through two channels: differences in both hourly rates and hours of work were declining. This reflects several underlying forces: a declining share of workers without permanent job and low barriers between the sectors (as inequality decreased by similar amount in both sectors). In fact, one third of the overall decline in the variance of logs over the 2000-2010 period is due to workers without permanent employment.
The paper attempts to quantify the effect of employment discrimination on the basis of disability status in Russia. We use data from the Russian Longitudinal Monitoring Survey - Higher School of Economics (RLMS-HSE) for 2005. This round of the RLMS HSE included a question on the presence of limitations on usual activities. The question allows distinguishing the effect of unobservable differences in productivity from the effect of discrimination on the basis of disability status. Parametric and nonparametric methods of decomposition are used to solve a problem of non-comparability of disabled and able-bodied individuals and to control for unobserved differences in productivity. Our findings show that nonparametric methods are more applicable to disability discrimination studies due to “lack of common support” problem. The evidence suggests that individuals with poor health face substantial discrimination on the basis of disability status in Russia. The discrimination explains up to 25 percent points of the total gap in employment probabilities. This effect should be interpreted as an upper bound of the discrimination after control for differences in observed and unobserved productivity characteristics. The effect may still include the impact of cash and non-cash disability benefits, self-selection into disability, environmental barriers, and wage discrimination. Our findings imply that current policy measures are not efficient in facilitating employment of the disabled.
The paper discusses the composition and dynamics of low paid workers whose hourly wages do not exceed two thirds of the median value. Using RLMS-HSE data for 2002–2016, we analyze how the size and the composition of low-paid employment, and the likelihood of being low-paid have changed over time. Our findings suggest that the size of the group has decreased from 30 до 24% of the total employment over the study period, while the chances of being low paid are significantly higher for those who have lower level of education, who are employed in low skilled jobs, and who reside outside large cities. However, the main focus of the study is on the earnings mobility of low paid workers. The key question is whether the low paid state is a dead-end and a long-term trap or is it just a stepping stone towards the high pay group? In order to answer this question, we apply a dynamic random effects multinomial logit-model, which allows to control for unobserved heterogeneity and to account for initial conditions problem. The study demonstrates high degree of structural dependence: two out of three low paid workers cannot exit this state over the year. This trap effect is stronger for women than for men. Though the stepping stone effect is also present, it is much weaker and relates to only one out of four low paid workers.
The article explores the issue of capturing the value added in international trade flows using international input-output frameworks. We review the methodology employed by foreign researchers to develop an approach for a decomposition of gross trade flows into value added components of certain origin and destination and to comprehensively analyse global value chains. Two sets of inter-country input-output tables provide statistical input to derive new and easy-to-handle indicators that show Russia’s role in the global value chains as at 2005. Russia appears to be an active part of the European value chains thanks to its exports of raw energy resources. Demand for the latter is created by the direct importers, but is also indirectly fuelled by consumption of third countries, i.e. further downstream. We provide evidence that the value added originating in Russia’s oil and gas sector is hidden in other countries’ and other sectors’ exports. However, these multiplicative effects are significant for Russia’s total trade rather than its partners’ trade, with the exception of some Eastern European economies, primarily Baltic countries. This is perhaps a sub-optimal model of integration into the global value chains, but secures Russia’s position as a relatively large net exporter of value added alongside top contributors among developed and developing countries. We supplement our results with a brief description of the analytical capabilities of the international input-output frameworks, existing experience and prospects of their use for policy making.