WAGE DETERMINATION: PRIVATISED, NEW PRIVATE AND STATE OWNED COMPANIES. EMPIRICAL EVIDENCE FROM PANEL DATA

This paper examines the determinants of wage pressure in large companies, including ownership characteristics and the impact of regional labour markets. By using a panel of 329 Polish largest firms during the period 1997- 2001, we find evidence of rent sharing activities, however there is also asymmetry in quasi rent elasticity of wages. The wage setting mechanism seems to differ between new private companies, privatised companies, state firms and mixed ownership. In particular, wages in state firms are highly responsive to regional labour market conditions, while firms in other sectors are not. Rent sharing is visible in both the state sector and new private companies, yet several specific characteristics differ. On the other hand, quasi rent elasticity appears to be suppressed in privatised companies.http://deepblue.lib.umich.edu/bitstream/2027.42/39970/2/wp584.pd

Deindustrialisation. Lessons from the StructuralOutcomes of Post-Communist Transition

Theoretical and empirical studies show that deindustrialisation, broadly observed in developed countries, is an inherent part of the economic development pattern. However, post-communist countries, while being only middle-income economies, have also experienced deindustrialisation. Building on the model developed by Rowthorn and Wells (1987) we explain this phenomenon and show that there is a strong negative relationship between the magnitude of deindustrialisation and the efficiency and consistency of market reforms. We also demonstrate that reforms of the agricultural sector play a significant role in placing a transition country on a development path that guarantees convergence to EU employment structures.http://deepblue.lib.umich.edu/bitstream/2027.42/39847/3/wp463.pd

Ownership Characteristics and Access to Finance: Evidence from a Survey of Large Privatised Companies in Hungary and Poland

We examine financial constraints and forms of finance used for investment, by analysing survey data on 157 large privatised companies in Hungary and Poland for the period 1998 – 2000. The Bayesian analysis using Gibbs sampling is carried out to obtain inferences about the sample companies’ access to finance from a model for categorical outcome. By applying alternative measures of financial constraints we find that foreign companies, companies that are part of domestic industrial groups and enterprises with concentrated ownership are all less constrained in their access to finance. Moreover, we identify alternative modes of finance since different corporate control and past performance characteristics influence the sample firms’ choice of finance source. In particular, while being industry-specific, the access to domestic credit is positively associated with company size and past profitability. Industrial group members tend to favour bond issues as well as sells-offs of assets as appropriate types of finance for their investment programmes. Preferences for raising finance in the form of equity are associated with share concentration in a non-monotonic way, being most prevalent in those companies where the dominant owner holds 25%-49% of shares. Close links with a leading bank not only increase the possibility of bond issues but also appear to facilitate access to non-banking sources of funds, in particular, to finance supplied by industrial partners. Finally, reliance on state finance is less likely for the companies whose profiles resemble the case of unconstrained finance, namely, for companies with foreign partners, companies that are part of domestic industrial groups and companies with a strategic investor. Model implications also include that the use of state funds is less likely for Polish than for Hungarian companies.http://deepblue.lib.umich.edu/bitstream/2027.42/40052/3/wp666.pd

WHILE LABOUR HOARDING MAY BE OVER, INSIDERS’ CONTROL IS NOT. DETERMINANTS OF EMPLOYMENT GROWTH IN POLISH LARGE FIRMS, 1996-2001.

This paper examines the determinants of employment changes using a panel of Polish large firms during the period 1996-2001. We investigate the impact of wages, output growth, investment, firm size and sectors upon employment, focusing on the asymmetry hypothesis. We find that investment plays an important role in enhancing employment growth. We also notice that employment dynamics is not affected by alternative wages and therefore appears consistent with the ‘right to manage’ model. Furthermore, unlike the early transition period, we can confirm that employment adjusts to positive sales growth, not just to decline as found in studies on earlier periods (K?ll?, 1998). This reflects that labour hoarding can no longer be a factor, which decreased employment elasticity in times of positive demand shocks. Interestingly, large state companies appear to cut employment in response to output growth, when one controls for investment. A result, which may be consistent with the insiders (employee) control model.http://deepblue.lib.umich.edu/bitstream/2027.42/39979/3/wp593.pd

Which entrepreneurs expect to expand their businesses? Evidence from survey data in Lithuania

This paper presents an empirical study based on a survey of 399 small and medium size companies in Lithuania. Applying bivariate and ordered probit estimators, we investigate why some business owners intend to expand their firms, while others do not. Our main findings provide evidence that the characteristics of the owners matter. Those with higher education and ‘learning by doing’ attributes either through previous job experience or additional entrepreneurial experience are more likely to expand their businesses. In addition, the model implications include that the intentions to expand are correlated with exporting and with size of the enterprise: medium and small size companies are more likely to grow than micro enterprises and self-employed entrepreneurs. We also analyse the link between the main perceptions of constraints to business activities and growth expectations and find that the factors, which are perceived as main business barriers, are not necessary those, which are associated with low growth expectations. In particular, perceptions of both corruption and of inadequate tax systems are main barriers to growth.http://deepblue.lib.umich.edu/bitstream/2027.42/40109/3/wp723.pd

Shadow Economy and Entrepreneurial Entry

We analyze theoretically and empirically the impact of the shadow economy on entrepreneurial entry, utilising 1998-2005 individual-level Global Entrepreneurship Monitor data merged with macro level variables. A simple correlation coefficient suggests a positive linear link between the size of the shadow economy and entrepreneurial entry. However, this masks more complex relationships. With appropriate controls and instrumenting for potential endogeneity where required, the impact of the shadow economy on entry is found to be negative, based on a linear specification. Moreover, there is also evidence of nonlinearity: entrepreneurial entry is least likely when the shadow economy is of medium size. We attribute the negative effects of shadow economy on entry to perceived strong competition faced by new entrants when the shadow economy is widespread. At the individual level, an extensive shadow economy has a more negative impact on respondents who are risk averse. In addition, in the economies where property rights are strong, the negative impact of the shadow economy is weaker.shadow economy, entrepreneurship

WHILE LABOUR HOARDING MAY BE OVER, INSIDERS’ CONTROL IS NOT. DETERMINANTS OF EMPLOYMENT GROWTH IN POLISH LARGE FIRMS, 1996-2001.

This paper examines the determinants of employment changes using a panel of Polish large firms during the period 1996-2001. We investigate the impact of wages, output growth, investment, firm size and sectors upon employment, focusing on the asymmetry hypothesis. We find that investment plays an important role in enhancing employment growth. We also notice that employment dynamics is not affected by alternative wages and therefore appears consistent with the ‘right to manage’ model. Furthermore, unlike the early transition period, we can confirm that employment adjusts to positive sales growth, not just to decline as found in studies on earlier periods (K?ll?, 1998). This reflects that labour hoarding can no longer be a factor, which decreased employment elasticity in times of positive demand shocks. Interestingly, large state companies appear to cut employment in response to output growth, when one controls for investment. A result, which may be consistent with the insiders (employee) control model.EMPLOYMENT, TRANSITION, ASSYMETRY, PRIVATISATION, INSIDERS

Inequality, Fiscal Capacity and the Political Regime: Lessons from the Post-Communist Transition

Using panel data for twenty-seven post-communist economies between 1987-2003, we examine the nexus of relationships between inequality, fiscal capacity (defined as the ability to raise taxes efficiently) and the political regime. Investigating the impact of political reform we find that full political freedom is associated with lower levels of income inequality. Under more oligarchic (authoritarian) regimes, the level of inequality is conditioned by the state’s fiscal capacity. Specifically, oligarchic regimes with more developed fiscal systems are able to defend the prevailing vested interests at a lower cost in terms of social injustice. This empirical finding is consistent with the model developed by Acemoglu (2006). We also find that transition countries undertaking early macroeconomic stabilisation now enjoy lower levels of inequality; we confirm that education fosters equality and the suggestion of Commander et al (1999) that larger countries are prone to higher levels of inequality.income inequality, democracy, oligarchy, fiscal capacity, economic reform, transition

Do Institutions Have a Greater Effect on Female Entrepreneurs?

This paper compares the impact of institutions on individual decisions to become entrepreneurs in the form of new business start ups by males and females across 44 developed and developing economies between 1998 and 2004. We test four hypotheses; that women are less likely to undertake entrepreneurial activity in countries where the rule of law is weaker; where the state sector is larger; where the informal financial sector is weaker and where the formal financial sector is weaker. We use data from the Global Enterprise Monitor survey (GEM) which covers at least 2,000 individuals annually in each of up to 44 countries, merged with country-level data, from the WB WDI and Heritage Foundation. We start with a spectrum of institutional variables and by utilizing factor analysis prior to regression estimation models, we are able to obtain results that are more robust and address multicollinearity between the institutional measures. We find that women are less likely to undertake entrepreneurial activity in countries where the state sector is larger, and demonstrate that this result applies to both high aspiration and low aspiration entrepreneurship. We also find that women benefit more from the larger informal financial sector.female entrepreneurship, state sector, informal finance

Ownership Characteristics and Access to Finance: Evidence from a Survey of Large Privatised Companies in Hungary and Poland

We examine financial constraints and forms of finance used for investment, by analysing survey data on 157 large privatised companies in Hungary and Poland for the period 1998 – 2000. The Bayesian analysis using Gibbs sampling is carried out to obtain inferences about the sample companies’ access to finance from a model for categorical outcome. By applying alternative measures of financial constraints we find that foreign companies, companies that are part of domestic industrial groups and enterprises with concentrated ownership are all less constrained in their access to finance. Moreover, we identify alternative modes of finance since different corporate control and past performance characteristics influence the sample firms’ choice of finance source. In particular, while being industry-specific, the access to domestic credit is positively associated with company size and past profitability. Industrial group members tend to favour bond issues as well as sells-offs of assets as appropriate types of finance for their investment programmes. Preferences for raising finance in the form of equity are associated with share concentration in a non-monotonic way, being most prevalent in those companies where the dominant owner holds 25%-49% of shares. Close links with a leading bank not only increase the possibility of bond issues but also appear to facilitate access to non-banking sources of funds, in particular, to finance supplied by industrial partners. Finally, reliance on state finance is less likely for the companies whose profiles resemble the case of unconstrained finance, namely, for companies with foreign partners, companies that are part of domestic industrial groups and companies with a strategic investor. Model implications also include that the use of state funds is less likely for Polish than for Hungarian companies.financial constraints, investment, enterprises, foreign ownership, industrial groups, concentrated ownership, leading bank, proportional-odds model, Bayesian updating.