Happiness in transition: the case of Kyrgyzstan

We analyse self-reported measures of satisfaction with life in a transition country, Kyrgyzstan, using 1993 household survey data. We test whether higher levels of satisfaction are associated with greater economic well-being. This hypothesis is strongly supported by the data. Unhappiness is prevalent among older people, the unemployed, and those who are divorced. There appears to be little correlation between happiness and either gender or education level. We find some evidence that income relativities, as measured by perceived position on the wealth ladder, also have a strong effect on life satisfaction

Earnings Inequality and the Informal Economy: Evidence from Serbia

We analyse the extent and evolution of informality and inequality in the Serbian labour market between 2002 and 2007, using data from the Living Standard Measurement Surveys (LSMS). Two surprising results emerge. First, the level of informal employment has risen significantly over the period, despite strong economic growth and the introduction of a range of market-oriented reforms. Second, the level of inequality in earnings seems to have remained more or less constant over the period, in contrast to the experience of other countries at a similar stage of transition. We show that informal employees earn significantly less than those in the formal sector, controlling for a range of other variables, and informality plays an increasingly important role in explaining earnings inequality.informal economy; inequality; Serbia

Happiness in Transition: The Case of Kyrgyzstan

We analyse self-reported measures of satisfaction with life in a transition country, Kyrgyzstan, using 1993 household survey data. We test whether higher levels of satisfaction are associated with greater economic well-being. This hypothesis is strongly supported by the data. Unhappiness is prevalent among older people, the unemployed, and those who are divorced. There appears to be little correlation between happiness and either gender or education level. We find some evidence that income relativities, as measured by perceived position on the wealth ladder, also have a strong effect on life satisfaction.Happiness, Kyrgyzstan, transition, welfare

Wages, profits and rent-sharing

The paper suggests a new test for rent-sharing in the U.S. labor market. Using an unbalanced panel from the manufacturing sector, it shows that a rise in a sector's profitability leads after some years to an increase in the long-run level of wages in that sector. The paper controls for workers' characteristics, for industry fixed-effects, and for unionism. Lester's range of wages is estimated, for rent-sharing reasons alone, at approximately 24 per cent of the mean wage

Private Sector and Labour Market Developments in Albania: Formal versus Informal

This paper examines the structure of the formal and informal sectors in Albania. The paper outlines the size and development of the formal private sector in Albania, and assesses the obstacles faced by businesses, especially in the SME sector, and how these have changed in recent years. Although the business climate appears to have improved since 1999, Albanian enterprises still face a variety of difficulties, which act as an inducement to operate in the informal sector instead. We attempt to estimate the size of the informal sector, using a variety of methods. None of them provides a very reliable method of estimation, but the results confirm previous work that shows that the informal sector accounts for between 30 and 60 per cent of official GDP. We also show that there is a significant gap between registered unemployment and the number of unemployed based on labour force surveys. Part of this gap is due to large-scale emigration flows.

Commodity Taxes, Wage Determination and Profits

We examine the effects of two different types of commodity taxation, specific and ad valorem, on wages and profits. We analyze two models of wage determination, one with efficiency wage setting and one with bargaining between a union and a firm. In the former, a (locally) revenue-neutral shift from specific to ad valorem taxation leads to an increase in both employment and wages, and a reduction in profitability. In the bargaining case however, the effect on wages and profits may be reversed: predominantly ad valorem taxation raises employment but lowers wages, and under certain circumstances, the net effect can lead to an increase in profits

Intention to Emigrate in Transition Countries: The Case of Albania

We analyse the profile of potential emigrants from Albania using data from the Central and Eastern Europe Eurobarometer in 1992. Respondents were asked to rate on a four-point scale the likelihood that they would go to Western Europe to live and work. Our results show that the intention to emigrate is positively correlated with males, education and certain occupations, and negatively correlated with age. There is little relation between emigration and income, but those who believe the country is going in the right direction are also more likely to emigrate than those who do not

European Transition at Twenty

This study gauges the status of transition in the formerly centrally planned economies of Eastern Europe and Central Asia, using a broad approach that compares countries with respect to their business environment, competition, and managerial practices; and assesses transition progress at the level of 13 economic sectors. The largest transition gaps remain in Central Asia and some Eastern European and Western Balkans countries. However, significant reform needs also remain in some Central European and Baltic countries, particularly in energy efficiency, transport, and in the financial sector where regulatory regimes require strengthening and local capital markets need to be developed.transition, economic reform, managerial practices, competition, business environment

Scarring: The Psychological Impact of Past Unemployment

This paper provides some of the first empirical evidence on the psychological impact of past unemployment. Using eleven waves of the German socio-economic panel (GSOEP) data set, we show, as is now standard, that those currently unemployed have far lower life satisfaction scores than do the currently employed. We also show that, over the whole sample, well-being is lower the greater has been the past experience of unemployment. In this sense, unemployment scars. However, an interaction term between current and past unemployment attracts a positive coefficient. This suggests a habituation effect whereby the negative well-being effect of unemployment is much lower for those who have been unemployed more often in the past. We also use the panel aspect of our data to present some evidence that those who suffer greater falls in well-being on entering unemployment are less likely to remain unemployed one year later. Together these findings offer a psychological explanation of persistent unemployment

Wages, Profits and Rent-Sharing

The paper uses CPS data from 1964 to 1985 to test for the existence of rent-sharing in US tabor markets, Using an unbalanced panel from the manufacturing sector, and random-effects and fixed-effects specifications, the paper finds that changes in wages are explained by movements in lagged levels of profitability and unemployment. The results appear to be consistent with rent-sharing theory (or a labor contract framework with risk-averse firms) and to be inconsistent with the competitive labor market model. The paper estimates the unemployment elasticity of pay at approximately -0.03, and the profit elasticity of pay at between 0.02 and 0.05.