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Charles University in Prague Faculty of Social Sciences Institute of Economic Studies Three Essays on Labor Market Institutional Environment Dissertation Thesis Kamila Fialová Prague 2012 Abstract This thesis consists of three papers about labor market institutional environment. The first paper "Labor Market Institutions and Their Effect on Labor Market Performance in the New EU Member Countries" estimates the effects of labor market institutions on various performance indicators (unemployment, long-term unemployment, employment, activity rate) in European countries. The results confirm that high taxes increase unemployment, whereas active labor market policies tend to reduce it. The paper also shows that stricter employment protection, higher taxes, and a larger economic burden represented by the minimum wage decrease employment and activity rates. The second paper "Labor Market Institutions and Their Impact on Shadow Economies in Europe" analyzes the role of labor market institutions in explaining developments of shadow economies in European countries using several alternative measures of the shadow sector. The results indicate that the one institution that unambiguously increases shadow production and employment is strict employment protection legislation. Other labor market institutions have less...

The aim of this technical note is to shed some light on relationship between labor market institutions and labor market outcomes in the member states of the Organization of Economic Cooperation and Development (OECD) in North America and East Asia; the New Member States of the European Union who are not members of the OECD (e.g. the Baltic states); countries in the European “Neighborhood” with aspire to accede to the EU (e.g. countries in the Western Balkans); and other European transitions countries (e.g. Ukraine, Moldova, and the Caucasus). Several estimation approaches for different data samples and explanatory variables were used to analyze the impact of labor market institutions on the labor market outcomes in European and OECD countries. This technical note, nevertheless, analyzes the impact of labor market institutions in above-mentioned regions and finds that they do affect major labor market indicators. The results show that the minimum wage tends to increase unemployment in non-European OECD sample, which is in accordance with the text-book pricing out effect. To examine the potential differences in the role of explanatory variables between the two OECD sub-samples the author applied modified Chow tests.The results of applied Chow tests examining the potential differences in the role of explanatory variables between the particular sub-samples are inconclusive. Generally, the author was not able to reject the hypothesis of stability of regression coefficients between the examined groups of countries in all tested models. While some of the estimated coefficients suggest different behavior, the available data did not allow to study this issue in detail.

This paper aims to quantify the impact of the minimum wage on labour market performance in the Czech Republic. Using regional data for 1995-2004, it estimates the effect of the minimum wage adjusted for regional wage differential on the regional unemployment. Consequently, using detail individual data from 2004/2005, we analyze the annual hikes in the minimum wage that allow us to estimate employment probabilities for workers with wage level at, or close to, the new minimum wage. The aim is to reveal whether the most endangered groups of workers exhibited significantly different employment probabilities. Our results reveal that the minimum wage has had a significant impact on increasing regional unemployment and reducing the employment probabilities of low-paid workers.

This paper aims to quantify the impact of social benefits on labor market participation in the Czech Republic. It applies the logistic regression to estimate the probability of labor market participation depending on social benefits related to net wage of the individuals, controlling for individual and household characteristics (age, presence of spouse and children etc.). The work disincentives via social benefits do exist and proved to be relatively strong. When trying to understand the reasons for recently decreasing participation rate in the Czech Republic, the often called generous Czech social benefit system appears to be relevant.

This paper concerns the labour market differences among the 77 districts of the Czech Republic. There was a remarkable trend of increasing regional labour market differentiation in the 1990's, however, the patterns of differentiation have stabilised since then. The first part of the paper aims to describe the regional differentiation in wages and unemployment on the descriptive method basis. The other part of the study attempts to explain the differences in wages by an econometric model. We focus on the effect of unemployment rate, representing an exogenous factor of the region itself. The model's specification arises out of the general concept of wage differentiation and the concept of the wage curve. According to our analysis there were several factors of influence on the regional wage differentiation in 2001: educational structure of the population, employment structure of the regional economy, degree of economic concentration, and district rate of unemployment. The coefficient of the unemployment elasticity of wages equals 0.08, which can be considered as evidence of the existence of the wage curve in the districts of the Czech Republic. Moreover, the relationship is stronger in the low-unemployment districts.

Minimum wage is a highly controversial instrument of labour market policies. Economic theorists have not reached a broad consensus regarding its consequences so far. The same situation applies to empirical research. Nevertheless, minimum wage is used in many developed countries and its utilization is recommended by different international organizations Advocates of minimum wage seek arguments mainly in decreasing poverty of low income individuals, reducing income disparities, motivation of low productive workers and making work pay. However noble these goals might be, minimum wage would not be an effective tool to promote them as it might increase only incomes of those individuals who work. Moreover, introducing and increasing minimum wage might represent a large burden for employers who might decide to fire workers, whose productivity would not reach the minimum wage. To the extent in which these negative consequences would occur, potential benefits for working poor would be limited. The thesis summarises the results of various economic concepts of minimum wage, empirical studies of its consequences and international trends in approaching of this issue. Consecutively, it presents an analysis of the minimum wage development in the Czech Republic since its introduction in 1991 and of the impact of...

1 Abstract The long-standing issue of the alcohol consumption level in Russia, remaining among the highest in the World, has resulted in the introduction of strict anti-alcohol regulations aiming to mitigate the negative aftermath. Substance abuse influences many spheres of life, including life satisfaction. Moreover, in the special case of Russia, hazardous drinking led to the increase in the probability of men's death. This thesis examines the relationships between the newly introduced anti-alcohol policies in Russia during the period from 2009 to 2014 and the life satisfaction of alcohol consumers. To perform the analysis, the Difference-in-Differences principle is applied to the sample derived from the two waves of the non-governmental survey conducted by The Russia Longitudinal Monitoring Survey - Higher School of Economics (RLMS-HSE). The respondents are divided into two groups: alcohol consumers (treatment group) and abstainers (control group). The analysis is firstly performed on the whole sample of the Russian population, then on the masculine subsample. The results of both parts of the analysis show no evidence of an increase in the life satisfaction of alcohol consumers following the implementation of the anti-alcohol regulations over the period under review. Keywords: taxes, life satisfaction,...

This dissertation analyzes two presently widely discussed topics in Public Finance: relationship between the shadow economy and tax policy, and the effect of financial transaction taxes on the functioning of financial markets. The first chapter describes presently used estimators of the size of the shadow economy, with a focus on microeconomic estimators. It illustrates problems with assumptions that a vast majority of recent studies use to identify underreporting (mainly the comparison of employed and self-employed) using data from four transition economies as an example. It shows that the most common assumption, that self-employed evade whereas employees do not is probably too strict in less compliant economies, where even employees have opportunities to evade through e.g. under-the-table wages or by moonlighting at unreported jobs. The second chapter develops an estimator of unreported income that relaxes some of these strict assumptions. Assuming only that tax-evading households have a higher consumption- income gap than non-evaders in surveys, an endogenous switching model with unknown sample separation enables the estimation of both the probability of hiding income and the expected amount of unreported income for each household. Using data from Czech and Slovak household...

This master thesis analyzes the differences in the labor laws and their impacts on the development of the labor markets in large selection of OECD countries, including the Czech Republic. The thesis covers both historical and current data including the late-2000s recession. The labor market performance is measured by hours worked per person, which combines the extensive margin (employment rate) and the intensive margin (hours worked by employed individuals). Labor laws are represented by the average and marginal tax wedges, employment protection legislation, labor market policies and trade union density. The thesis contains an empirical model of the relationship between the labor market performance and labor laws for 24 OECD countries for the period 2000-2008. The thesis shows that the lower hours worked are associated with more strict employment protection legislation and lower trade union density. The effect of taxation (in terms of tax wedges) varies substantially among different subgroups of the population, but it is generally quite weak (elasticity around -0.15) and it cannot explain the overall differences in the development of the labor market performance among countries.

The aim of my bachelor thesis is to introduce the issues of migration from the economic point of view based on data focused on the Czech Republic. There is only the net immigration analyzed in this thesis due to the lack of relevant data available for the emigration ones. The net immigration is represented by the difference of number of foreigners working in the CR legally. There is a linear regression model used in this analysis and dependence of difference of number of foreigners working in CR on several economic variables is estimated by the ordinary least squares method. There are quarterly data collected in 2001-2009 used in the analysis. The results show that the largest impact on the growth of number of working foreigners has the growth of unemployment rate. This impact is negative, which corresponds to the economic theory presented in the theoretical part of this thesis. Other variables significant for the difference of number of foreigners are year-to-year difference of real wage and difference of real gross domestic income.

Active labour market policy is a widely used labour market intervention, which should increase the efficiency of labour market and help increase regular employment. However, its real impacts on labour market conditions are ambiguous. Although the literature concerning effectiveness of active labour market policy (ALMP) measures is extensive, there is no conclusive evidence regarding which ALMP measures are efficient and to what extent. The effectiveness of active labour market policy depends on many circumstances including characteristics of a given measure and conditions on a given labour market. Therefore, decisions regarding implementation of ALMP measures should be based on high-quality and systematic evaluation of impacts of these measures in the given labour market. In the Czech Republic there is no regular system of active labour market policy evaluation, but the need of evaluation is even more serious in the current economic crisis. The thesis offers both theoretical and empirical analysis of the active labour market policy effectiveness. Theoretical analysis introduces a comprehensive labour market model, which results from findings of existing literature and enables us to identify macroeconomic effects of ALMP measures on aggregate labour market situation. Second part of this thesis introduces an...

The bachelor thesis provides an overview of specific features of relevant market. Based on both empirical and theoretical findings it attempts to justify sufficiency of drug producers' incentives for an effective self-regulation of their (un)ethical conduct. The overview in the first part of the thesis includes brief description of R&D process, statutory interventions before and after a new drug is introduced to the market, area and tools of self-regulation enfocement. Subsequently, a model combining conclusions from previous chapters, additional relevant studies and practical experience from Czech market is drafted and tries to answer central question of the thesis whether sufficient incentives exist for the producers to monitor themselves effectively.

Workers with higher adjusted education are characterised by higher wages, higher participation rate and lower unemployment. The theory of human capital explains lower number of unemployed workers from this group primarily by stronger attachment of more qualified workers to an employer's company and also by more effective job searching, which result in a shorter duration of unemployment. This paper set itself a task to analyse the reasons of variations in unemployment and vacancy rates for groups with different adjusted education by using the model of the Beveridge curve and the matching function. The statistic tests confirmed the theoretical hypothesis about lower risk of unemployment for the group with higher adjusted education. Although unemployed more qualified workers demonstrate lower duration of unemployment as well, it was not positively proved on the model of matching function, that it is due to more effective job searching.