2017. Working papers
Katalin Bodnár, Ludmila Fadejeva, Stefania Iordache, Liina Malk, Desislava Paskaleva, Jurga Pesliakaitė, Nataša Todorović Jemec, Peter Tóth, Robert Wyszyński
ABSTRACT
We study the transmission channels for rises in the minimum wage using a unique firm-level dataset from eight Central and Eastern European countries. Representative samples of firms in each country were asked to evaluate the relevance of a wide range of adjustment channels following specific instances of rises in the minimum wage during the recent post-crisis period. The paper adds to the rest of literature by presenting the reactions of firms as a combination of strategies, and evaluates the relative importance of those strategies. Our findings suggest that the most popular adjustment channels are cuts in non-labour costs, rises in product prices, and improvements in productivity. Cuts in employment is less popular and occurs mostly through reduced hiring rather than direct layoffs. Our study also provides evidence of potential spillover effects that rises in the minimum wage can have on firms without minimum wage workers.
Keywords: minimum wage, adjustment channels, firm-level survey
JEL codes: D22, E23, J31
Oļegs Krasnopjorovs
ABSTRACT
This paper aims at identifying the school characteristics consistently associated with better performance of pupils on state exams. First, we find that exam scores are positively related to school size (the number of pupils in the respective school) and teacher salaries, but negatively – with teacher age. Meanwhile, quantitative inputs like the number of teachers and computers per pupil are not robust determinants of education performance. Second, we show that pupils in urban and rural schools would perform similarly if characteristics of these schools were the same. The Oaxaca–Ransom decomposition fully explains the urban-rural exam score gap by a greater number of pupils and higher teacher salaries in urban schools as well as by different pupil structure; in turn, pupils' ethnic origin plays in favour of rural schools. Finally, Stochastic Frontier Analysis models show that school size is a robust efficiency determinant, while school location in the Riga region or in another big city is not. The bottom line is that structural reforms involving school mergers and a rise in teacher salaries might bring non-negligible dividends in terms of education quality.
Keywords: education performance, school size, rural schools, Oaxaca–Ransom decomposition, Stochastic Frontier Analysis
JEL codes: I21, C1
Konstantīns Beņkovskis (Latvijas Banka and Stockholm School of Economics in Riga), Benjamin Bluhm (Goethe Universität Frankfurt and ADVISORI FTC GmbH), Elena Bobeica (European Central Bank), Chiara Osbat (European Central Bank), Stefan Zeugner (European Commission)
ABSTRACT
What drives external performance of countries? This is a recurring question in academia and policy. The factors underlying export growth are receiving great attention, as countries struggle to grow out of the crisis by increasing exports and as protectionist discourses take foot again. Despite decades of debates, it is still unclear what the drivers of external performance are and, importantly, which ones policy makers can influence. We use Bayesian Model Averaging in a panel setting to investigate the drivers of export market shares of 25 EU countries, considering a wide range of traditional indicators along with novel ones developed within the CompNet. We find that export market share growth is linked to different factors in the old and new EU Member States, with one exception: for both groups, competitive pressures from China have strongly affected export performance since the early 2000s. In the case of the old EU Member States, investment, the quality of institutions and liquidity available to firms also appear to play a role. For the new EU Member States, labour and total factor productivity are particularly important, while inward FDI matters more than domestic investment. Price competitiveness does not seem to play a very important role in either set of countries: relative export prices do show correlation with export performance for the new EU Member States, but only when they are adjusted for quality. Our results point to the importance of considering the "exporting stage" of a country when discussing export-enhancing policies.
Keywords: export shares, competitiveness, Bayesian Model Averaging
JEL codes: C23, C51, C55, F14, O52
Ginters Bušs
ABSTRACT
This paper integrates the alternating-offer wage bargaining (AOB) in a fully-fledged New Keynesian open economy model, and estimates it to the Latvian data. Further on, the paper studies the model's properties and compares them to alternative specifications for labour market modelling, i.e. the Nash wage bargaining with both Taylor-type wage rigidity and without exogenously imposed wage inertia, a reduced-form sharing rule, and a reduced-form wage rule. The goal of the paper is to choose a labour market modelling specification that suits best the needs of the central bank of Latvia in terms of macroeconomic modelling and forecasting. The results indicate that the AOB model suits the Latvian labour market well. The paper concludes with a simulation of economic effects from a permanent increase in the minimum-to-average wage ratio, as observed in Latvia, and finds potentially large losses of employment and output.
Keywords: alternating-offer bargaining, DSGE model, forecasting, minimum wage
JEL codes: E0, E2, E3, F4