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;

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

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

Tehnoloogilised muutused ja tööjõu nõudlus

The developed economies from Western Europe and Northern America have witnessed increased relative demand for skilled workers since the beginning of 20th century. This development has accelerated since 1970s, the relative demand for high-skilled labour and relative wages of high-skilled workers have increased regardless of the sometimes simultaneous increase in the supply of skilled labour. There have been many explanations for this development. The main explanation is the hypothesis of skill biased technological change (SBTC), but also the increased trade activity between developed and developing countries. The increase in relative skill demand from 1970s has often been related to development of information and communication technologies (ICT). Computers have caused reduction of demand for routine manual and cognitive tasks and expansion of demand for non-routine cognitive tasks within industries. Alternatively, high-income countries have witnessed relative increase for high-skilled workers, because they have displaced their low-skill intensive production to low-income countries. The trade effect is generally estimated to be much weaker than the SBTC effect. These developments are amply analysed on the data of developed countries, but there are not much studies on developing and/or on transition countries. The aim of this thesis was to complement this set of literature by investigating the effect of technological change on employment structure and labour demand in the Central and Eastern European (CEE) catching-up countries. The results indicated that compared to Western Europe these countries are rather characterised by similar technology within industries and differ in terms of their industry structure. Microeconometric analysis on Estonian data demonstrated that technological change (product or process innovations) has positive, but insignificant effect on employment. While, exporting to developed countries has from the one hand directly reduced the skill demand and from other hand acted as technology diffusion channel and increased the skill demand. The impact of technological change on overall employment estimated to be much more positive. The innovation activity has positive effect on employment at the firm and industry level. This thesis proposed also two novel empirical estimation strategies for the analysis of these issues. Alates 20. sajandi algusest on arenenud Lääne-Euroopa ja Põhja-Ameerika riikides suurenenud nõudlus kõrge kvalifikatsiooniga tööjõu järele võrreldes madalama kvalifikatsiooniga tööjõuga. Suhteline nõudluse kasv kõrgema kvalifikatsiooniga tööjõu järele on hüppeliselt suurenenud alates 1970ndatest, ülikooli lõpetanute palgad on kasvanud suhteliselt kiiremini ja seda vaatamata suurenenud ülikooli lõpetajate arvule. Selliseid arenguid on seletatud peamiselt oskuste suunas nihkega tehnoloogilise progressiga, aga ka suurenenud kaubandusaktiivsusega rikaste ja vaeste riikide vahel. 1970ndate ja edasist suhtelise nõudluse kasvu kõrge kvalifikatsiooniga tööjõu järele on seostatud informatsiooni- ja kommunikatsioonitehnoloogiatega (IKT); IKT areng on suurendanud nõudlust mitterutiinsete tööde järele, samas on arvutid asendanud nn rutiinseid töid. Rahvusvahelise kaubanduse liberaliseerimise tulemusel on vähenenud arenenud riikide nõudlus madala kvalifikatsiooniga tööjõu järele, kuna selle tootmisteguri mahukate toodete tootmine on viidud arenevatesse riikidesse. Neid arenguid on rohkelt analüüsitud rikaste riikide andmetel kuid vähe keskmise ja madala sissetulekuga riikide või üleminekuriikide andmetel. Antud doktoritöö eesmärgiks oli hinnata tehnoloogiliste muutuste mõju oskuste struktuurile ja tööjõu nõudlusele tervikuna Kesk- ja Ida-Euroopa (KIE) üleminekuriikide andmetel. Töös leiti, et KIE riikide Lääne-Euroopast madalamat nõudlust kõrge kvalifikatsiooniga tööjõu järele seletab peamiselt nende riikide tootmissektorite struktuur mitte tootmissektorites kasutatav tehnoloogia. Eesti ettevõtete andmetel läbi viidud mikroökonomeetriline analüüs näitas, et tehnoloogilised muutused (toote- või protsessiinnovatsioonid) ei oma statistiliselt olulist mõju ettevõtte hõive struktuurile, kuid on suurendanud nõudlust tööjõu järele tervikuna. Seega, olulisem roll tööjõu struktuuri kujunemisel on tootmissektorite vahelisel ümberstruktureerimisel ja/või väliskaubandusel. Samas on tehnoloogilised muutused suurendanud hõivet tervikuna, rohkelt tooteinnovatsioone tegevates majandusharudes on tööjõu nõudlus kasvanud enam. Töös pakutakse välja ka kaks uudset hindamisstrateegiat antud teemade empiiriliseks analüüsiks

Households borrowing during a creditless recovery

This paper investigates the contribution of households to the creditless recovery. We use Estonian cross-sectional microdata on households\' assets, liabilities, income, expectations and intention to use credit in 2001-2010. The results indicate that (1) there was a large-scale drop in households demand for credit during the recession and sluggish recovery after the recession. (2) One third of the sluggish recovery in credit demand is explained by changed household endowments such as income reduction and lower income expectations, while two thirds is explained by changed behavioural relations such as renters taking mortgages less often and employed individuals using credit less often. (3) Changed behavioural relations explain a higher proportion of the credit demand drop in longer-term credit such as loans than in shorter-term credit such as credit card purchases. (4) 44% of households who wanted to use credit were credit constrained during the recovery and households with lower credit worthiness were more likely to apply for credit.households borrowing, business cycles, micro-econometric evidence, Oaxaca-Blinder decomposition