The Influence of Trade with the EU-15 on Wages in the Czech Republic, Hungary, Poland, and Slovakia between 1997 and 2005

I use the STAN database of the OECD and different econometric methods to investigate the effects of exports towards the EU-15 on wages in the Visegrad countries (CEEC-4; Czech Republic, Hungary, Poland, and Slovakia). The results do not allow to draw any definite statements about this effect. While the impact of exports towards the EU-15 on wages in the countries investigated is likely to be negative in the short run (1-2 years), it seems to be positive in the medium and long run, at least for Hungary and Poland. Nevertheless, it is clear that the pattern of the CEEC-4 exports towards the EU-15 does not correspond with the predictions of the Heckscher-Ohlin model. Therefore, also the theorems of Stolper and Samuelson (1941) and concerning the equalization of factor prices, which are based on the Heckscher-Ohlin model, do not seem accurate to describe the underlying forces linking trade with factor prices. I argue that missing regional and related inter-sectoral labor mobility might be a potential factor preventing employees from taking advantage of trade liberalization. To substantiate this suspicion, however, analysis of more disaggregated data is necessary.panel data, EU enlargement, trade, wages, factor prices, income distribution, Central and Eastern Europe, Visegrad Countries

Estimating interaction effects with panel data

A common task in empirical economics is to estimate \emph{interaction effects} that measure how the effect of one variable $X$ on another variable $Y$ depends on a third variable $H$. This paper considers the estimation of interaction effects in linear panel models with a fixed number of time periods. There are at least two ways to estimate interaction effects in this setting, both common in applied work. Our theoretical results show that these two approaches are distinct, and only coincide under strong conditions on unobserved effect heterogeneity. Our empirical results show that the difference between the two approaches is large, leading to conflicting conclusions about the sign of the interaction effect. Taken together, our findings may guide the choice between the two approaches in empirical work

Poverty decompositions with counterfactual income and inequality dynamics

Traditional poverty accounting decomposes changes in a country's poverty headcount ratio into changes in income and inequality. We argue that this approach is unsatisfactory from the perspective of policy analysis because it compares a country in two points of time without taking the country's initial situation, and hence its potential for poverty reduction, into account. We thus suggest comparing traditional poverty decompositions with a counterfactual situation. This counterfactual indicates what a country starting from its initial situation could be expected to achieve in terms of income, inequality, and, hence, poverty developments. We construct those counterfactuals by modeling income and inequality trends characterized by convergence and a “Kuznets” relationship between inequality and development. Parameters in those relationships are estimated using PovcalNet survey data from 144 countries and we construct our counterfactual poverty predictions for 71 developing countries. While there is overall a tight relationship between actual developments and counterfactuals, we identify several cases, where both deviate from each other and discuss the policy implications. We also check for commonalities in differently performing countries and find that those who fell particularly short of expectations often underwent political transition and state fragility

Financial globalisation and the labour share in developing countries:The type of capital matters

In this paper, we investigate how de facto financial globalisation has influenced the labour share in developing countries. Our main argument is the need to distinguish between different types of capital in this context as they differ in their effect on the host countries' production process and vary concerning their bargaining power vis-a-vis labour. Our econometric analysis of the impact of foreign direct versus portfolio investment in a sample of about 40 developing and transition countries after 1992 supports this claim. Using different panel data techniques to address potential endogeneity problems, we find that foreign direct investment has a positive effect on the labour share in developing countries, while the impact of portfolio investment is significantly smaller and potentially negative. Our results also highlight that de facto foreign investment cannot explain the decline of the labour share in developing countries over the investigated period

Drivers of growth accelerations:What role for capital accumulation?

Economic growth is often episodic but the ultimate drivers of such growth accelerations are not understood very well. We therefore take a different perspective and investigate what happens to production factors and productivity before, during, and after 156 growth accelerations that we identify for 148 countries between 1950 and 2019. We are particularly interested in the role that physical capital accumulation can play in this context, given recent interest in investment surges and several investment-led growth models.Our results show that physical capital accumulation accounts on average for 9% of the increase in the growth rate during an acceleration, with heterogeneity across regions, time periods, and the economies’ capital-output ratio. While growth accelerations are mainly driven by improvements in total factor productivity, we find that physical capital accumulation is an important factor for the sustainability of accelerations. Those findings are robust to various techniques for identifying growth accelerations and growth decompositions. They suggest that large “investment-led” growth accelerations are unlikely but also confirm that growth episodes that are not accompanied by solid investment patterns are likely to run out of steam

The influence of trade with the EU-15 on wages in the Czech Republic, Hungary, Poland, and Slovakia between 1997 and 2005

Ich verwende die STAN-Datenbank der OECD sowie verschiedene ökonometrische Verfahren, um in dieser Diplomarbeit die Auswirkungen der Exporte in die Länder der EU-15 auf Löhne in den Visegrad Staaten (Polen, Slowakei, Tschechien und Ungarn) zu untersuchen. Die Ergebnisse lassen keine klaren Schlussfolgerungen über diesen Zusammenhang zu. Während letzterer über einen kurzen Zeitraum durchaus negativ sein kann, scheint er zumindest in Polen und Ungarn langfristig positiv zu sein. Klar ersichtlich ist hingegen, dass die Entwicklung der Exporte der untersuchten zentral- und osteuropäischen Staaten nicht den Vorhersagen des Heckscher-Ohlin Modells folgt und somit die darauf aufbauenden Theoreme von Stolper und Samuelson (1941) und bezüglich des internationalen Ausgleichs von Faktorpreisen die zugrundeliegenden Faktoren des Einflusses von Handel auf Faktorpreise nicht hinlänglich beschreiben.For this thesis, I used the STAN database of the OECD and different econometric methods to investigate the effects of exports towards the EU-15 on wages in the Visegrad countries (Czech Republic, Hungary, Poland, and Slovakia). The results do not allow to draw any definite statements about this effect. While the impact of exports towards the EU-15 on wages in the countries investigated is likely to be negative in the short run, it seems to be positive in the long run, at least for Hungary and Poland. Nevertheless, it is clear that the pattern of CEEC-4 exports towards the EU-15 does not correspond with the predictions of the Heckscher-Ohlin model. Therefore, also the theorems of Stolper and Samuelson (1941) and concerning the equalization of factor prices, which are based on the Heckscher-Ohlin model, do not seem accurate to describe the underlying forces linking trade with factor prices