The impact of innovation on employment: firm- and industry-level evidence from Estonia

This paper investigates the implication of innovation on employment at the firm and industry levels. The paper contributes to the literature in two respects. First, it proceeds from the data of a catch-up country undergoing a very rapid economic development. Most of the empirical investigations use data from developed and technologically leading countries. The second contribution concerns the nature of the data in use; we develop a unique database merging the data of the Estonian Commercial Register with two consecutive Estonian Community Innovation Surveys (CIS), the CISIII for 1998-2000 and CISIV for 2002-2004. Our results coincide with the results on developed economies in the respect that innovation activity has a positive effect on employment and that product innovation has a stronger and a more positive employment effect. Both of these effects are consistent over firm and industry levels. This result is also confirmed by the insignificance of the spillover effects of an industry\'s innovation on employment by firmsinnovation (technological change), employment, catch-up economy

Occupational Structures across 25 EU Countries: The Importance of Industry Structure and Technology in Old and New EU Countries

This paper analyzes the occupational structures of 25 European Union countries during the period 2000-2004. Shift-share analyses have been used to decompose cross-country differences in occupational structure into within industry and between industry effects. The static analysis for 2004 shows that the new Member States employ a lower share of skilled workers because their industry structure is biased towards less skill-intensive industries and because they use fewer skills within industries. The differences in the shares of (high-skilled) non-production workers are dominated by the between (industrial) effect. In contrast, the dynamic analysis of 2000-2004 shows that changes in the share of high-skilled non-production workers are mostly driven by within industry changes, which are probably related to skill-biased technological change. The results indicate the weakening of this process, at least for non-production workers. The diffusion of the increased demand for skills within sectors is witnessed for the higher income EU12 country group, but less strongly for the EU25 country group.education, training and the labour market;

The impact of firm financing constraints on R&D over the business cycle

The paper studies financing constraints for R&D over the latest boom and bust episode in Central and Eastern Europe (CEE). Given that financial and venture capital markets in CEE are thin in comparison to those in high-income economies and that many of CEE countries experienced a credit crunch during the last recession, it is proposed that financing constraints have a significant adverse effect on R&D activity in these countries. The paper uses two complementary firm-level data-sources from ten CEE countries. The results suggest that the role of financing constraints for R&D expenditures in CEE countries is substantial, as the probability of credit constrained firms undertaking R&D activities is around 70% lower and firms' R&D expenditure cash flow sensitivity is very high. Despite the severity of the crisis, the adverse effect of financing constraints for R&D did not increase in the financial crisis. It is also confirmed that, conditional on credit constraints, firms' R&D activity is higher in a recession

Language Skills and Social Integration: Ethnic Disparities in Bilingual Economy

We analyze the relationship between the local language skills and immigrant income in a largely bilingual economy, Estonia. We show that the official language matters little in the private sector, and at the upper end of the income distribution. This is in a striking contrast to what has been found in the literature for single-language dominated economies. Our results point toward importance of co-worker discrimination, possibly through the more subtle aspects of language, or through access to the social networks. This outcome stresses the need of social integration of minorities, and suggest that this does not necessarily happen through the labor market

The role of firms in the gender wage gap

Recent research suggests that firm-level factors play a significant role in the gender wage gap. This paper adds to this literature by analysing the role of sorting between firms and bargaining within firms using the methodology of Card et al. (2016). We employ linked employer-employee data for the whole population of firms and employees from Estonia for 2006–2017. Estonia is a country with the highest gender wage gap in the EU with about two-thirds of that unexplained by conventional factors. The results show that firm-level factors are important determinants of the gender wage gap, explaining as much as 35% of the gap. We find that within-firm bargaining plays a larger role in the gender wage gap than similar prior papers. This could be related to lenient labour market institutions, as reflected in low minimum wages and union power, and to lower bargaining skills of women. Further, the role of firm-level factors in the gender wage gap have increased over time, and these are especially important at the top of the wage distribution and among workers that are more skilled. There is a heavy penalty for motherhood in wages, 4–9 log points, but this is not related to firm-specific time-invariant productivity premiums

Minimum Wages and the Wage Distribution in Estonia

This article studies how changes in the statutory minimum wage have affected the wage distribution in Estonia, a post-transition country with little collective bargaining and relatively large wage inequality. The analyses show that the minimum wage has had substantial spillover effects on wages in the lower tail of the distribution; the effects are most pronounced up to the twentieth percentile and then decline markedly. The minimum wage has contributed to lower wage inequality and this has particularly benefitted low-wage segments of the labour market such as women and the elderly. Interestingly, the importance of the minimum wage for the wage distribution was smaller during the global financial crisis than before or after the crisis

Eesti puidusektori tööjõuvajaduse prognoos aastateks 2005-2015

Käesolev uurimus on jätkuks majandusteaduskonna ja haridus- ning teadusministeeriumi vahelisest koostööst, mille käigus on analüüsitud haridussüsteemi vastavust tööturu vajadustele. Käesoleva projekti raames vaadeldi majandust haru/majandusklastri tasandil - puidusektoris. Puidusektori kiire arengust viimase 10 aasta jooksul annab tunnistust nii kasvanud hõive kui suurenenud osakaal SKP-s. Käeolevas uurimuses me vaatame puidusektorit nelja valdkonna lõikes, need on metsamajandus, puidutöötlemine, paberitööstus ja mööblitööstus

Export characteristics and output volatility: comparative firm-level evidence for CEE countries

The literature shows that openness to trade improves long-term growth but also that it may increase exposure to high output volatility. In this vein, our paper investigates whether exporting and export diversification at the firm level have an effect on the output volatility of firms. We use large representative firm-level databases from Estonia, Hungary, Romania, Slovakia and Slovenia over the last boom-bust cycle in 2004-2012. The results confirm that exporting is related to higher volatility at the firm level. There is also evidence that this effect increased during the Great Recession due to the large negative shocks in export markets. In contrast to the literature and empirical findings for large or advanced countries we do not find a statistically significant and consistent mitigating effect from export diversification in the Central and Eastern European countries. In addition, exporting more products or serving more markets does not necessarily result in higher stability of firm sales

Minimum Wages and the Wage Distribution in Estonia

This article studies how changes in the statutory minimum wage have affected the wage distribution in Estonia, a post-transition country with little collective bargaining and relatively large wage inequality. The analyses show that the minimum wage has had substantial spillover effects on wages in the lower tail of the distribution; the effects are most pronounced up to the twentieth percentile and then decline markedly. The minimum wage has contributed to lower wage inequality and this has particularly benefitted low-wage segments of the labour market such as women and the elderly. Interestingly, the importance of the minimum wage for the wage distribution was smaller during the global financial crisis than before or after the crisis

Support for Evolution in the Knowledge-Based Economy: Demand for PhDs in Estonia

Abstract The doctoral workforce globally constitutes a rather small segment of the labour market. However, PhDs provide crucial input for educational and R&D activities, traditionally through employment in academia, and nowadays increasingly in the public and private sectors. This paper aims to estimate the need for new PhDs in the Estonian academic, public, and private sectors for the period 2007-2012. Need in the academic and public sectors is estimated by a survey of employers (e.g. universities, research institutes, ministries); private sector need is derived from forecasted R&D expenditure in the business sector. Results show that expected demand for PhDs is significantly lower in the public and private sectors than in academia. Total demand over all three sectors is rather high, annually more than 10% of the number of PhDs, caused both by high replacement demand from upcoming retirements and by growth demand. The policy implication of our results is that planned increase in PhDs should correspond with other developments in educational and R&D policy. JEL Classification: I2, J4, 0