Human Capital Formation during Communism and Transition: Evidence from Bulgaria

Is it true that communist countries had well-developed human capital, or is it just a myth? What were human capital stocks at the beginning of transition to market economy? What happened to human capital formation during the transition? We attempt to answer these questions using evidence from Bulgaria. This is also a story about how a communist government had coped with labour market problems in a small closed economy. Unfortunately, during communism, there had been quite insufficient public information on human capital. Therefore, in the first place, we collect, synthesize and analyze all available information from official statistical publications as well as internal reference books and administrative documents, which used to be classified during communism, and at present are available at the Central State Archives. Next, we construct human capital indicators based on educational data for the communist period and track the dynamics in human capital formation for both communism and transition. Finally, we identify key policy and political measures which have affected human capital formation. Main findings show that communism started with extremely underdeveloped human resources. During the entire period the government had tried to provide favorable conditions for human capital formation. Communist policy measures gave significant results in the 60s, but had been ineffective in sustaining better education in the long run. As a result, the start of transition was characterized by poor levels of human capital due to an educational crisis in the last decade of communism (then, about 60% of the population in Bulgaria was with primary or lower-level of education). We assume that lack of economic incentives at individual level had determined weak pursuit of better education.human capital, communism, transition, human capital formation, determinants of human capital, labour market policies in communism

Institutionally Induced Human Capital Vintages and Economic Growth in Transition

In this paper we introduce additional parameters of the economic environment related to some notion of “distance” to institutions in a simple formal model. This distance could be viewed as an uneven spatial distribution (or coverage) of institutions with respect to population distribution. We are led to conclude here that distance to institutions is an important determinant of the emergence of heterogeneous (vintage) human capital. Our modeling framework also shows, that the existence of uneven access (or distance) to institutions leads to important implications concerning economic growth.vintage human capital, distance to institutions, economic growth, transition economies

Effective exchange rates of the Bulgarian Lev 1879-1939

The paper constructs the first series of nominal and real effective exchange rates of the Bulgarian Lev from its establishment in 1879 until 1939. The dynamics of both indicators during the Classical Gold Standard fits the general picture of exchange rate development of other European countries while their movements in the Interwar years reflects the exchange rate policy of the monetary authority and the price effects of the Great Depression. The study also provides econometric estimation of the impact of the real effective exchange rates and foreign demand on Bulgaria’s real export performance allowing for some policy implications.

Human Capital, Leading Human Capital and Labour Incomes

What is the level of accumulated human capital in an economy in transition? Does education determine labour income in transition economies? In this study we try to answer these questions using data on 148,942 employees in 13 economic activities in Bulgaria. In the first place, we refer to the term "zero-skilled human capital". Secondly, we introduce and define the term "leading human capital" and measure the distance between each working individual and the leading human capital in respect with labour income. Then, we attempt to measure the accumulated human capital based on the methodology introduced by Mulligan and Sala-i-Martin (1995). In addition to previously existing approaches, we justify application of the distance between zero-skilled and leading human capital as an alternative measure of accumulated human capital. Finally, we evaluate the impact of education both on labor income as well as on distance to leading human capital.human capital, labour incomes, measuring human capital, zero-skilled human capital, leading human capital, distance to leading human capital, transition economies

Формиране на човешкия капитал през комунизма: България

The question raised in the present paper is: What is the human capital during the communism and which are the key political and economic determinants of its formation during this period? Firstly, a measurement of the human capital is conducted on the basis of quantitative educational indicators. The empirical analysis suggests twelve new time series on human capital, which are consistent with the modern approaches of human capital measurement. Secondly, key political and economic determinants are identified following a survey on relevant documents in the State Archives and social science research from the period. We observe a considerable improvement in human capital stocks over the period. Significant changes occur at the end of 50s and during the 60s. Later, at the end of the 70s and during the 80s of 20th century we observe decline in participation in the educational ysytem. In the beginning of the transition to market economy about 60% of the population in Bulgaria has attained basic or lower educational level. In spite of the fact that during the whole period the government has been trying to provide favorable conditions for human capital formation, its policies fail to improve the educational structure of the population in the long run. We assume that an explanation of the phenomenon is the lack of economic incentives for the individuals to pursue higher education

Human Capital Formation during Communism and Transition: Evidence from Bulgaria

Is it true that communist countries had well-developed human capital, or is it just a myth? What were human capital stocks at the beginning of transition to market economy? What happened to human capital formation during the transition? We attempt to answer these questions using evidence from Bulgaria. This is also a story about how a communist government had coped with labour market problems in a small closed economy. Unfortunately, during communism, there had been quite insufficient public information on human capital. Therefore, in the first place, we collect, synthesize and analyze all available information from official statistical publications as well as internal reference books and administrative documents, which used to be classified during communism, and at present are available at the Central State Archives. Next, we construct human capital indicators based on educational data for the communist period and track the dynamics in human capital formation for both communism and transition. Finally, we identify key policy and political measures which have affected human capital formation. Main findings show that communism started with extremely underdeveloped human resources. During the entire period the government had tried to provide favorable conditions for human capital formation. Communist policy measures gave significant results in the 60s, but had been ineffective in sustaining better education in the long run. As a result, the start of transition was characterized by poor levels of human capital due to an educational crisis in the last decade of communism (then, about 60% of the population in Bulgaria was with primary or lower-level of education). We assume that lack of economic incentives at individual level had determined weak pursuit of better education

Human Capital Formation during Communism and Transition: Evidence from Bulgaria

Is it true that communist countries had well-developed human capital, or is it just a myth? What were human capital stocks at the beginning of transition to market economy? What happened to human capital formation during the transition? We attempt to answer these questions using evidence from Bulgaria. This is also a story about how a communist government had coped with labour market problems in a small closed economy. Unfortunately, during communism, there had been quite insufficient public information on human capital. Therefore, in the first place, we collect, synthesize and analyze all available information from official statistical publications as well as internal reference books and administrative documents, which used to be classified during communism, and at present are available at the Central State Archives. Next, we construct human capital indicators based on educational data for the communist period and track the dynamics in human capital formation for both communism and transition. Finally, we identify key policy and political measures which have affected human capital formation. Main findings show that communism started with extremely underdeveloped human resources. During the entire period the government had tried to provide favorable conditions for human capital formation. Communist policy measures gave significant results in the 60s, but had been ineffective in sustaining better education in the long run. As a result, the start of transition was characterized by poor levels of human capital due to an educational crisis in the last decade of communism (then, about 60% of the population in Bulgaria was with primary or lower-level of education). We assume that lack of economic incentives at individual level had determined weak pursuit of better education

Измерване на човешкия капитал в икономиката. Приложения за България.

This article has two main objectives: The first one is to review the most commonly used methods of measuring human capital in the macroeconomic analysis. Here, a summary of methods considering educational characteristics of population and labour force is presented, such as usage of literacy rate, enrollment rates, educational attainment, labor income and quality of education. A challenge in front of human capital measuring is solving the problems related to its depreciation as well as those relating to the quality of education. Another disadvantage of the discussed approaches stems from a key assumption (imposed due to objective reasons) that the education leads to equal accumulation of human capital in all students. The inclusion of individual factors in measuring the stock of human capital is still an unsolved problem in economics. The second objective of the paper is to apply some of these approaches to the economy of Bulgaria in the years of communism (for which there are no human capital estimates yet). As a result, the research provides annual data measuring the level of human capital in the country for future empirical analysis

Влияние на човешкия капитал върху икономическия растеж (България, 1949-2005 г.)

In Bulgaria, during the transition to market-oriented economy, many analyzes are based on the widely held view that one of the positive legacies of the economies in transition (particularly that of Bulgaria) is the high level of human capital. The high degree of development of education and science is considered one of the few highly valued achievements of the socialist economy. Discussions focused on policies to stimulate economic growth indicate that the proper education of the workforce is an essential prerequisite to achieve positive macroeconomic results. Despite these opinions, however, the economic literature still lacks comprehensive empirical studies based on quantitative analysis on the relationship between human capital and economic growth in Bulgaria for the years of socialism and the transition. The purpose of the thesis is to analyze the impact of human capital on economic growth in Bulgaria during the years of socialism and the transition using the concepts of the modern theory of economic growth. The successful study is based on the following research tasks: 1. Study, systematization and classification of theoretical and empirical models of growth, dealing with the impact of human capital on macroeconomic growth; 2. Study of different approaches to measuring human capital in growth theory and analysis of their possible application to the measurement of human capital in Bulgaria; 3. Investigation of sources of information and the processes of formation of human capital in the years of socialism; 4. Construction of statistical series for human capital in Bulgaria for the period 1948-2005, based on quantitative educational statistics of population and employment; 5. Analysis of the dynamics of human capital in the period of socialism and the transition; 6. Identification, investigation and analysis of certain key administrative and economic factors affecting the formation of human capital in Bulgaria; 7. Investigation of the influence the efficiency of investment in human capital on growth through the modification of patterns of R. Lucas and G. Mankiw, D. Romer and D. Wilde; 8. Study the impact of human capital on economic growth for the period 1949-1989, the analysis based on causation and assessment of long and short term relationships; 9. Study the impact of human capital on economic growth from 1990-2005, based on neoclassical and endogenous growth model

Ефекти от политиките, финансирани от европейските фондове: оценяване на въздействието на инвестициите в образование и наука в България

The main objective of the paper is to provide an estimation of the impact of the investments in education and science in Bulgaria, financed by the European structural instruments. It provides net impact assessment as of end of 2012 as well as projections of potential effect until 2020. The methodology used is based on application of SIBILA model (Vasilev, Ganev, Simeonova-Ganeva, Chobanov & Tsvetkov, 2011)