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1. Stolen decades: the unfulfilled expectations of the Belarusian economic miracle

Author:
Aleś Alachnovič and Julia Korosteleva
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The case of the Belarusian economy has puzzled many academic scholars for years. Belarus has often been referred to as a transition outlier, given its relatively fast recovery in 1996 and spectacular growth prior to the global financial crisis without much transformation of its economy. Three decades after gaining its independence, the state control of the economy still remains considerably high. Subsidized financing of state-owned enterprises allowed to preserve production capabilities over the first decade, to achieve some productivity gains in the late 1990s–early 2000s, and to avoid social destabilization. However, with a delay in structural reforms, this economic model, also heavily dependent on the Russian subsidies and foreign debt, has become fatigue, driving the economy into stagnation in the 2010s. The Covid-19 pandemic, the 2020 post-presidential political crisis and Russia’s war in Ukraine in 2022 put further strains on the economy, calling for change. This working paper gives an overview of the Belarusian economic developments before the presidential elections to have a better understanding of how various rigidities of the Belarusian economic model have amplified the detrimental effect of the political unrest for the economy and the Belarusian society overall, and discusses the anticrisis and mid-term economic reforms Belarus will have to undergo.
Topic:
Demographics, Labor Issues, Economy, Social Policy, and Trade
Political Geography:
Eastern Europe and Belarus

2. Informal employment and wages in Poland

Author:
Jacek Liwiński
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland. Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force Survey (LFS) for the period 2009–2017 to estimate the wage gap between informal and formal workers, both at the means and along the wage distribution. I use two definitions of informal employment: a) employment without a written agreement and b) employment while officially registered as unemployed at a labour office. In order to reduce the bias resulting from the non-random selection of individuals into informal employment, I use a rich set of control variables representing several individual characteristics. Findings: After controlling for observed heterogeneity, I find that on average informal workers earn less than formal workers, both in terms of monthly earnings and hourly wage. This result is not sensitive to the definition of informal employment used and is stable over the analysed time period (2009–2017). However, the wage penalty to informal employment is substantially higher for individuals at the bottom of the wage distribution, which supports the hypothesis of the two-tier structure of the informal labour market in Poland. Originality/value: The main contribution of this study is that it identifies the two-tier structure of the informal labour market in Poland: informal workers in the first quartile of the wage distribution and those above the first quartile appear to be in two partially different segments of the labour market.
Topic:
Demographics, Labor Issues, Employment, Social Policy, and Informal Economy
Political Geography:
Europe and Poland

3. The Impact of the State on the Quality of an Economic System: A Cross-Country Analysis

Author:
Maciej Bałtowski and Piotr Kozarzewski
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The paper discusses the role of the state in shaping an economic system which is, in line with the welfare economics approach, capable of performing socially important functions and achieving socially desirable results. We describe this system through a set of indexes: the IHDI, the World Happiness Index, and the Satisfaction of Life index. The characteris-tics of the state are analyzed using a set of variables which describe both the quantitative (government size, various types of governmental expenditures, and regulatory burden) and qualitative (institutional setup and property rights protection) aspects of its functioning. The study examines the “old” and “new” member states of the European Union, the post-communist countries of Eastern Europe and Asia, and the economies of Latin America. The main conclusion of the research is that the institutional quality of the state seems to be the most important for creation of a socially effective economic system, while the level of state interventionism plays, at most, a secondary and often negligible role. Geographical differentiation is also discovered, as well as the lack of a direct correlation between the characteristics of an economic system and the subjective feeling of well-being. These re-sults may corroborate the neo-institutionalist hypothesis that noneconomic factors, such as historical, institutional, cultural, and even genetic factors, may play an important role in making the economic system capable to perform its tasks; this remains an area for future research.
Topic:
Demographics, Economy, Economic Growth, State, Economic Policy, Institutions, Trade, and Welfare
Political Geography:
Europe, Eastern Europe, Asia, Latin America, and European Union

4. Thinking about pension systems for the 21st century: A few remarks based on the Polish example

Author:
Marek Gora
Publication Date:
07-2018
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The end of 2018 will mark the 20th anniversary of the introduction of Poland’s current pension system. It has been subjected to constant modifications, in general dictated by either ideological or ad hoc goals, but it has resisted destruction, and in essence is working as it was designed. The need for its introduction, misleadingly called a reform, was dictated by a long-term shift in the age structure of the population. In essence, the earlier system was replaced by the current one. The essence of this switch is a shift from the quasi-tax financing suited to the population structure by age of the past, to quasi-savings financing suited to the structure in the 21st century. This text is not an overview of the 20-year history of the current system; it is a critical examination of the functioning of Poland’s pension system against the backdrop of the universal challenges that pension systems are facing in the 21st century. The text barely touches on many fundamental questions. A full discussion of them would require a longer discourse, for which there is no space here. The purpose of introducing the current system was to balance the interests of the working generation and the generation of retirees. The previous system worked only for the interests of retirees, while those of the working generation, expressed in the level of its net income, was treated as an afterthought. This kind of system could operate in the 20th century. But in the 21st, it turned out to be not so much immediately impossible, as socially harmful. A change of system was thus essential. The current system is now quite well suited to the current population structure. The biggest problem in its functioning is citizens’ negligible awareness of how it is actually structured and what that implies – both on the macro level and on the level of individual behaviors. Pension issues are counterintuitive. This results both from their combination of macro- and microeconomic issues and from the fact that their time horizon exceeds any other undertaking. For a pension system to work well, it has to be understood by its participants; meanwhile, pension education practically does not exist. What’s worse, the public debate concerning pensions tends to frighten people rather than helping them. Instead of knowledge, there are chaotic assumptions, often far removed from reality. They are adopted as axiomatic, or as a result of inertia in thinking, or unrealistic expectations. In the first case, the current system is perceived as if it were the previous one. Meanwhile, in reality they are fundamental opposites. In the second case, people expect that the system will miraculously multiply the funds available for pensions. But in reality each system can only divide up what has been created. Discussions partly concern side issues, partly consist of misunderstandings and partly are derivations of general views. Much harm was done by the discussion on changing the proportions of the division of contributions in the universal system (the so-called OFE discussion). Debate on pension questions requires that the issues be laid out in an orderly fashion; we need a critical view of basic concepts and how they are understood. Without that there is no chance to solve the problems of pensions systems, or even to understand what they’re about.
Topic:
Demographics, Labor Issues, Finance, and Social Policy
Political Geography:
Europe, Poland, and European Union