Wage and employment decisions in the Russian economy : an analysis of developments in 1992

The authors analyze changes in the Russian labor market in 1992. They focus on the path of wages and employment in a context of partial price liberalization and considerable ambiguity about government and central bank policy. Under the former Soviet economy, the firm was the bedrock of the centrally planned system. The relaxation of centralized controls did not result in substantial employment losses partly because of the implicit moral economy of the system and partly because of continuing constraints on wages. In 1992, the wage structure and employment levels in the economy's state sector exhibited surprising stability, reflecting the system's immense inertia. Despite announced regime changes, at the end of 1992 the number of jobseekers was no more than 1.5 percent of the labor force. But significant changes have been made: wage and employment decisions have been widely liberalized; some restraints on labor mobility have been removed; changes have also been made in ownership title; and there has been some expansion in the private sector, as yet largely concentrated in services. These substantive changes are important for future expectations about entitlements to jobs and incomes, but the changes remain restricted and the sources of these restrictions imply significant economic costs. The underpinning of the current stagflation is the inability to break the soft budget constraint on state firms and to impose realistically a systematic, transparent set of constraints on the firms'financing demands. This has combined with the firms'continuing ability to exercise market power alongside weak controls on wage claims. Employment transitions have been dominated by high levels of quits at the base of the skill structure. Involuntary separations have been limited, involving mostly women and white collar workers. Firms commonly provide de facto unemployment compensation to workers in the form of minimum wage payments with little or no work requirement. There is evidence of some increase in the proportion of laid-off workers among the unemployed, but firms seem to prefer hoarding labor in light of uncertainty about policy, firm, or product-specific market prospects. Wages have been more volatile. Wages initially bore almost all of the adjustment costs, but have shown mild recovery thereafter. Lax monetary policy and decentralized insider power, giving rise to relative employment stability and real wage rigidity, are powerful ingredients for hyperinflation.Economic Theory&Research,Environmental Economics&Policies,Health Monitoring&Evaluation,Banks&Banking Reform,Municipal Financial Management

"Risk Reduction in the New Financial Architecture: Realities, Fallacies, and Proposals"

Five times in a decade not yet completed, financial markets have floated to the edge of a whirlpool; in October 1998 they were about to drown when Alan Greenspan threw them a piece of string that, surprisingly, turned out to be a lifeline. The causes for this financial instability lie deep--in the economic theory that urges easy and efficient substitution of one piece of paper for another, always and everywhere; in the technology-driven tight articulation of receipts and payments that Hyman Minsky warned against a generation ago; and in the growth of leverage that diminishes the creditworthiness of major institutions when an interruption in their receipts requires them to seek funds. Meanwhile, as decision-making in finance moves from banks to markets, and the creators of derivative instruments find ways to present uncertainties as risks that can be modeled, time horizons fall and spurious interrelations promote "dynamic hedging" that communicates financial disturbance anywhere to price volatility everywhere. Prevention should be sought in rules to control the creation of leverage in the repo and derivatives markets and in limits on banks' freedom to back away from borrowers' cross-border liabilities in currencies other than their own. Crisis management when prevention fails will require "standstill" agreements to encourage the continuation of something like normal economic life while the losses from merely financial failure are sorted out.

Unemployment and labor market dynamics in Russia

The past 15 months have seen the beginning of structural change in Russia but a failure of the economy to stabilize. The balance sheet, conclude the authors suggests that a return to centralized control remain almost impossible, but the dencentralization that has occurred contain many undesirable features. In framing their analysis, the authors draw on aggregate data and firm-level data from the first-round results of a 1992 survey covering 41 firms in the Moscow region. The survey results suggest that the greater autonomy of firms has facilitated the exploitation of market power while failing to dampen the demand for easy credit from the budget or banking system. For the most part, demand has been satisfied, enabling firms to meet current wage claims and, to a lesser degree, sustain output levels. Buoyant nominal profits can be traced either to pricing behavior derived from market power or to transfers or subsidies channeled through the fiscal monetary system. This in turn has artificially sustained the revenue side of the government accounts. Official employment was no more than 1 percent of the labor force by the end of 1992, but evidence on the importance of marginal unemployment indicates that the underlying pass-through into open unemployment will be great. By the third quarter of 1992, this"augmented"unemployment rate approached 4 percent of the labor force. Even so, the authors observe non-trivial outflows from unemployment to jobs and in some regions to jobs in the private or collective sector. In Russia, outflows to state sector jobs dominate. Survey evidence shows considerable turnover in the state sector and resilient hiring. Much of the churning in labor markets seems to be through voluntary separations and job transitions. Net changes to employment have been limited, and have involved mostly ancillary or clerical staff. The authors discern a core or membership rule dominating Russian firms'decisions which it would be dangerous to assume will be maintained. They interpret it as a holding strategy in a complex game the firms have been playing with government. Lack of a credible reform program has weakened any impulse toward large-scale restructuring of firms. Wages have been more volatile and have regional dispersion, but the authors predict no large consistent shift in relative wages. Rather the wage path has probably been governed by current streams and additional transfers, and then set consistent with the stable employment rule. The path of wages over 1992 is clearly associated with changes in Russia's monetary and fiscal stance and allied institutional features.Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Markets and Market Access,Access to Markets

An integrated model for asset reliability, risk and production efficiency management in subsea oil and gas operations

PhD ThesisThe global demand for energy has been predicted to rise by 56% between 2010 and 2040 due to industrialization and population growth. This continuous rise in energy demand has consequently prompted oil and gas firms to shift activities from onshore oil fields to tougher terrains such as shallow, deep, ultra-deep and arctic fields. Operations in these domains often require deployment of unconventional subsea assets and technology. Subsea assets when installed offshore are super-bombarded by marine elements and human factors which increase the risk of failure. Whilst many risk standards, asset integrity and reliability analysis models have been suggested by many previous researchers, there is a gap on the capability of predictive reliability models to simultaneously address the impact of corrosion inducing elements such as temperature, pressure, pH corrosion on material wear-out and failure. There is also a gap in the methodology for evaluation of capital expenditure, human factor risk elements and use of historical data to evaluate risk. This thesis aims to contribute original knowledge to help improve production assurance by developing an integrated model which addresses pump-pipe capital expenditure, asset risk and reliability in subsea systems. The key contributions of this research is the development of a practical model which links four sub-models on reliability analysis, asset capital cost, event risk severity analysis and subsea risk management implementation. Firstly, an accelerated reliability analysis model was developed by incorporating a corrosion covariate stress on Weibull model of OREDA data. This was applied on a subsea compression system to predict failure times. A second methodology was developed by enhancing Hubbert oil production forecast model, and using nodal analysis for asset capital cost analysis of a pump-pipe system and optimal selection of best option based on physical parameters such as pipeline diameter, power needs, pressure drop and velocity of fluid. Thirdly, a risk evaluation method based on the mathematical determinant of historical event magnitude, frequency and influencing factors was developed for estimating the severity of risk in a system. Finally, a survey is conducted on subsea engineers and the results along with the previous models were developed into an integrated assurance model for ensuring asset reliability and risk management in subsea operations. A guide is provided for subsea asset management with due consideration to both technical and operational perspectives. The operational requirements of a subsea system can be measured, analysed and improved using the mix of mathematical, computational, stochastic and logical frameworks recommended in this work

Challenges in the Better, Faster, Cheaper Era of Aeronautical Design, Engineering and Manufacturing

Starting in the 1990s, the aerospace industry was challenged to produce products and systems Better, faster, Cheaper. In this paper, we examine some of the underlying reasons for BFC and offer some thoughts to help frame the thinking and action of aerospace industry professionals in this new era.Lean Aerospace Initiativ

Challenges in the Better, Faster, Cheaper Era of Aeronautical Design, Engineering and Manufacturing

“Better, Faster, Cheaper” (BFC) emerged in the 1990s as a new paradigm for aerospace products. In this paper, we examine some of the underlying reasons for BFC and offer some thoughts to help frame the thinking and action of aerospace industry professionals in this new era. Examination of literature on industrial innovation indicates that aeronautical products have evolved to a “dominant design” and entered the “specific phase” of their product life cycle. Innovation in this phase centers on: incremental product improvement, especially for productivity and quality; process technology; technological innovations that offer superior substitutes. The first two of these are aligned with BFC objectives

Microeconomic Aspects of Economic Growth in Eastern Europe and the Former Soviet Union, 1950-2000

The theme of this paper is the microeconomics of economic growth in Central and Eastern Europe (CEE) and the Newly Independent States (NIS) over the period 1950-2000. The key structural change in this region is the end of the socialist regime in 1989 and 1992, and the subsequent attempt at transition to a market economy. We begin the paper with an examination of the key legacies from the socialist period. We then examine the key microeconomic actors in transition economies: households, enterprises, and government officials. Although there are many common processes at work, differences in economic performance tend to coincide with the geographical divide. Legacies play an important part. We also argue that differences in openness also plays an important role in generating different outcomes. These factors, combined with defects in the political and legal system, have given rise to a vicious circle of resistance to reform in the NIS.http://deepblue.lib.umich.edu/bitstream/2027.42/39732/3/wp348.pd

Theorizing the relationship between the digital economy and firm productivity: The idiosyncrasies of firm-specific contexts

With the rise of emerging economies such as China, the research environment for the digital economy (DE) has changed significantly. However, our understanding of the productivity impact of DE development in Chinese firms remains in its infancy. The idiosyncrasies of the firm-specific contexts are closely related to further research on the this topic. As a baseline, we hypothesize a U-shaped DE-firm productivity (FP) relationship. We analyze the idiosyncratic influences of firm size and locality on the DE–FP relationship. The findings, which are based on a sample of Chinese firms from 2016 to 2019, show that (a) the U-shaped DE–FP relationship applies to Chinese firms; (b) this relationship is moderate for large firms, substantially steeper for medium firms, and inverted for small firms; (c) the U-shaped DE–FP relationship for eastern region firms is moderate, while the U-shaped relationship for central region firms is steep, but the transition is incomplete, and western region firms have experienced increasing productivity since the early stage of DE development. This study offers an alternative approach to understanding Chinese firms' strategic choices in DE development and provides a more nuanced explanation for the productivity paradox by emphasizing the significance of the firm-specific context. In this way, the study captures the sophisticated and constantly evolving relationships between DE and FP for heterogeneous Chinese firms