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Employment protection legislation aims to shield employees against unfair dismissal and earning reductions at the time of job loss. Theory suggests that employment protection stabilizes employment over cyclical upturns and downturns without necessarily increasing general unemployment. However, recent evidence from transition and emerging economies shows that employment protection legislation tends to raise unemployment among disadvantaged groups, particularly youth, and may increase informal work. Employment protection policies thus require careful consideration of their unintended effects.

This paper presents and discusses new data on employment protection legislation (EPL) in the successor states of the former USSR - the CIS and Baltic states - over 25 years from 1985 to 2009. We use the OECD methodology (OECD EPL, version II) for assessing the strictness of national labor laws with respect to employers' firing costs. In addition to the overall OECD EPL index, we present detailed statistics for 18(22) sub-indicators used for its computation. The new data allow us to make several important observations. In particular, the data do not support the widely held view that labor regulations in the former USSR with respect to firing costs were extremely rigid and were subsequently liberalized by the 15 successor states over the course of transition to a market economy. Rather, the dynamics of the EPL index in the region resembles an inverted U-shaped pattern with the peak of labor market rigidity occurring in the mid-1990s in the CIS countries and a decade later in the Baltic States. In terms of major sub-indicators, we observe a rather unusual pattern: gradual liberalization of permanent contracts on the background of increasing regulation of temporary contracts and collective dismissals. This is in sharp contrast with the OECD economies, where liberalization of temporary contracts has been the major trend in the recent decades. By now, the ex-USSR states as a group do not differ that much from the EU-15 and OECD countries in terms of the overall EPL index, although they differ considerably in terms of contributions to the overall EPL of its thee major components, namely, regulation of permanent contracts, temporary contracts, and collective dismissals. We also show that our EPL data are correlated with a number of variables characterizing economic development, progress in market-oriented reforms, and political regimes prevailing in the countries studied, which suggests potential of using the new dataset in further politico-economic research.

In this paper we examine the labour quality explanation of the employer size–wage gap: larger firms pay higher wages because they employ more skilled workers. Most previous studies control for unobserved skills of workers by applying the fixed‐effects estimator to longitudinal data, thus assuming time‐invariant unobserved individual heterogeneity. We release this assumption by using a sample of moonlighters; hence, identification is achieved by differencing across two jobs held simultaneously rather than sequentially. Using the UK Quarterly Labour Force Survey, we find that controlling for unobserved skills in the sample of moonlighters does not reduce the estimate of the wage gap.

This paper uses a quasi-experimental framework provided by recent changes in Russian corporate law to study the effect of investor protection on the value of shares. The legal change analyzed involves the empowerment of preferred (non-voting) shareholders to veto unfavorable changes in their class rights. Based on a novel hand-collected dataset of dual class stock companies in Russia and using the difference-in-difference estimator, the study finds a statistically and economically significant effect of improved protection of preferred shareholders on the value of their shares. The result is robust to several changes in the empirical specification.

AbstractThe paper tests for the existence of human capital externalities using a micro‐level approach: the Mincerian wage regression augmented with the average level of education in cities. To solve identification problems arising from the endogeneity of average education, the study exploits a natural experiment provided by the process of economic transition: average education at the end of communism can be seen as exogenous in respect of wages prevailing after the start of transition. Our empirical results based on the RLMS data show that a 1 percentage point increase in the share of city residents with a university degree results in an increase of wages of city residents by about 1 percent.

The paper tests for the existence of human capital externalities, more precisely those stemming from higher education, using a micro-level approach: the Mincerian wage regression augmented with the average level of education in a local geographical area (city). To solve identification problems arising due to endogeneity of average education the study exploits a natural experiment provided by the process of economic transition in the former communist economies. We argue that the educational structure of cities under the central planning was determined by the government rather than the market; thus the average educational attainment in cities at the end of communism can be regarded as exogenous with respect to the wages prevailing after the start of transition. The identification strategy based on the use of the pre-transition average education is applied to data from the Russia Longitudinal Monitoring Survey, RLMS. Empirical results are consistent with the presence of significant human capital (educational) externalities in the Russian economy. According to the estimates, one percent increase in the college share in a city results in the increase of city residents? wages by about 1.5 percent. The result proves to be robust to several changes in the empirical specification.

This paper studies the impact of federal state shareholdings on the performance of Russian companies.It differs from most similar studies in two respects.Firstly, it focuses on mixed ownership companies rather than conventional state enterprises.Secondly, it distinguishes between several types of federal state shareholdings, namely elected blocks, residual blocks (which may be held by two bodies with different functions - the Ministry for State Property and the Russian Fund for Federal Property) and golden shares.The paper describes the origin of federal state shareholdings and discusses their possible implications for company performance. Econometric analysis shows that companies with state ownership generally perform worse than the average firm in terms of labour productivity and profitability.However, there are remarkable differences in the performance of companies with different types of state shareholdings.Companies with residual blocks held by the Property Fund are the worst performers, followed by companies with residual blocks held by the Ministry for State Property.Companies with elected shareholdings as well as with golden shares do not differ from the average enterprises in the respective industries. These differences in performance are explained by the different degrees of control the federal state has over enterprises with various types of shareholdings - greater control is associated with better performance.The paper concludes that the government should avoid keeping equity stakes in companies unless there is a good reason to retain them.If the state wants to keep an ownership stake in a company, reliable control structures must be created. Finally, the issue of golden shares in strategically important companies seems to be a reasonable alternative to retaining some control over them through equity ownership.