PUBLICATIONS (since September 2000)

  • Earle, John, and Álmos Telegdy, “Ownership and Wages: New Evidence from Linked Employer-Employee Data in Hungary, 1986-2003,” forthcoming in Analysis of Firms and Employees - Qualitative and Quantitative Approaches (F. Andersson, S. Bender, J. Lane, K. Shaw, and T. Von Wachter, eds.), Cambridge: NBER, 2007.
    Abstract Paper
  • Fazekas, Károly, and Álmos Telegdy, “Labor Market Trends in Hungary,” forthcoming in The Hungarian Labor Market. Review and Analysis, 2007, (K. Fazekas and G. Kezdi, eds), Budapest: Institute of Economics of the Hungarian Academy of Sciences.
    Paper
  • Telegdy, Álmos, “The Wage Effects of the Public Sector Wage Increase in Hungary,” forthcoming in The Hungarian Labor Market. Review and Analysis, 2007, (K. Fazekas and G. Kezdi, eds), Budapest: Institute of Economics of the Hungarian Academy of Sciences.
    Paper
  • Earle, John, Ugo Pagano, and Maria Lesi, "Information Technology, Organizational Form, and Transition to the Market," Journal of Economic Behavior and Organization Vol. 60(4), 471-489, August 2006.
    Abstract Paper
  • Brown, David, and John Earle, "Job Reallocation and Productivity Growth in the Ukrainian Transition,"Comparative Economic Studies, Vol. 48(2), 229-251, June 2006. Working paper preprinted (in English and Ukrainian) in Labour Market Reforms and Economic Growth in Ukraine (L. Handrich, I. Burakovsky, and O. Betliy, eds.), Aachen: Shaker Verlag, 2006. Abstract Paper
  • Brown, David, John Earle, and Vladimir Vakhitov, “Wages, Layoffs, and Privatization: Evidence from Ukraine,”Journal of Comparative Economics, Vol. 34(2), 272-294, June 2006.
    Abstract Paper
  • Brown, David, John Earle, and Álmos Telegdy, “The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia and Ukraine,"Journal of Political Economy, Vol. 114(1), 61-99, February 2006.
    Abstract Paper
  • Brown, David, John Earle, Vladimir Gimpelson, Rostislav Kapeliushnikov, Hartmut Lehmann, Irina Vantu, Álmos Telegdy, Ruxandra Visan, and Alexandru Voicu, “Nonstandard Forms and Measures of Employment and Unemployment in Transition : A Comparative Study of Estonia, Romania, and Russia," Comparative Economic Studies, Vol. 48(3), 435-457, September 2006.
    Abstract Paper
  • Telegdy, Álmos, “The Wage Effects of the Public Sector Wage Increase in Hungary,” forthcoming in The Hungarian Labor Market. Review and Analysis, 2006 (K. Fazekas, and G. Kezdi, eds.), Budapest: Institute of Economics – HAS.
  • Brown, David, John Earle and Dana Lup, “What Makes Small Firms Grow? Finance, Human Capital, Technical Assistance, and the Business Environment in Romania,” Economic Development and Cultural Change, Vol. 54(1), 33-70, October 2005.
    Abstract Paper
  • Brown, David, John Earle and Álmos Telegdy, “The Productivity Effects of Privatizing Manufacturing Firms: Russia, Ukraine, Hungary, and Romania Compared,” (in Russian) in Competitiveness and Economic Modernization in Russia, (Y. Yasin, ed.), Higher School of Economics: Moscow, 2005.
  • Brown, David, John Earle, and Álmos Telegdy, “Does Privatization Raise Productivity? Russia, Ukraine, Hungary, and Romania Compared,” forthcoming (in Russian) in Competitiveness and Economic Modernization in Russia, (Y. Yasin, ed.), Higher School of Economics: Moscow, 2005.
  • Andren, Daniela, John Earle, and Dana Sapatoru, "The Wage Effects of Schooling under Socialism and in Transition:Evidence from Romania," Journal of Comparative Economics, Vol. 33(2), 300-323, June 2005.
    Abstract Paper
  • Earle, John, Csaba Kucsera, and Álmos Telegdy, "Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash?" Corporate Governance: An International Journal, Vol. 13(2), 254-264, March 2005.
    Abstract Paper
  • Brown, David, and John Earle, “The Reallocation of Workers and Jobs in Russian Industry: New Evidence on Measures and Determinants,” Economics of Transition, Vol. 11(2), 221-252, June 2003.
    Abstract Paper
  • Earle, John and Scott Gehlbach, “A Spoonful of Sugar: Privatization and Popular Support for Reform in the Czech Republic,” Economics and Politics, Vol. 15(1), 1-32, March 2003.
    Abstract Paper
  • Earle, John and Saul Estrin, “Privatization, Competition, and Budget Constraints: Disciplining Enterprises in Russia,” Economics of Planning, Vol. 36(1), 1-22, 2003.
    Abstract Paper
  • Hunya, Gábor, and Álmos Telegdy, “Hungarian – Romanian Cross-Border Economic Cooperation,” Région et Développment, Vol. 18, 2003.
  • Earle, John and Álmos Telegdy, “Privatization Methods and Productivity Effects in Romanian Industry,” Journal of Comparative Economics, Vol. 30(4), 657-682, December 2002. Also published in Romanian in Sociologia Romaneasca Vol. 1(4), 2003.
    Abstract Paper
  • Earle, John and Klara Sabirianova Peter, “How Late to Pay? Understanding Wage Arrears in Russia,” Journal of Labor Economics, Vol. 20(3), 661-707, July 2002.
    Abstract Paper
  • Earle, John, Victor Kaznovsky, Csaba Kucsera, and Álmos Telegdy, “Corporate Control of Listed Firms: The Bucharest Stock Exchange,” Eastern European Economics, Vol. 40(3), 6-27, May-June 2002.
  • Earle, John and Klara Sabirianova Peter, “Understanding Employment: Level, Composition, and Flows” (Chapter 1) and “Understanding Wages: Structure, Uncertainty, and Inequality” (Chapter 2) in M. Rashid (ed.), The Russian Labor Market: Moving from Crisis to Recovery, Washington: World Bank, 2002.
  • Brown, David and John Earle, “Gross Job Flows in Russian Industry Before and After Reforms: Has Destruction Become More Creative?” Journal of Comparative Economics, Vol. 30(1), 96-133, March 2002.
    Abstract Paper
  • Earle, John, and Hartmut Lehmann, “Microeconometric Studies of Russian Labor Markets: An Introduction to the Symposium,” Journal of Comparative Economics, Vol. 30(1), 91-95, March 2002.
  • Berger, Mark, John Earle, and Klara Sabirianova Peter, “Worker Training in a Restructuring Economy: Evidence from the Russian Transition,” Research in Labor Economics, Vol. 20, 159-90 (S.Polachek, ed.), 2001.
    Abstract Paper
  • Earle, John, and Ivan Komarov, “Measuring Defense Conversion in Russian Industry,” Defence and Peace Economics, Vol. 12(2), 103-44, March/April 2001.
    Abstract Paper
  • Earle, John, and Saul Estrin, “Privatization and the Structure of Enterprise Ownership,” in Russia's Post-Communist Economy (B. Granville and P. Oppenheimer, eds.), Oxford: Oxford University Press, 2001.
    Abstract Paper
  • Earle, John, “Corporate Governance and Restructuring: The Limits of Our Knowledge (Comments on the Paper by G. Roland),” in Annual World Bank Conference on Development Economics 2000 (B. Pleskovic and N. Stern, eds.), World Bank, 2001.
  • Earle, John, and Zuzana Sakova, “Business Start-ups or Disguised Unemployment? Evidence on the Nature of Self-Employment from Transition Economies,” Labour Economics, Vol. 7(5), 575-601, September 2000.
    Abstract Paper



ABSTRACTS


Ownership and Wages: New Evidence from Linked Employer-Employee Data in Hungary, 1986-2003
(forthcoming in Analysis of Firms and Employees - Qualitative and Quantitative Approaches (F. Andersson, S. Bender, J. Lane, K. Shaw, and T. Von Wachter, eds.), Cambridge: NBER, 2007.)

John S. Earle and Álmos Telegdy


Studies of public-private and foreign-domestic wage differentials face difficulties distinguishing ownership effects from correlated characteristics of workers and firms. This paper estimates these ownership differentials using linked employer-employee data (LEED) from Hungary containing 1.35mln worker-year observations for 21,238 firms from 1986 to 2003. We find that ownership type is highly correlated with characteristics of both workers (education, experience, gender, and occupation) and firms (size, industry, and productivity), suggesting ownership type is systematically selected along these dimensions. The large unconditional wage gaps in the data, 0.24 for public-private and 0.40 for foreign-domestic, are little affected by conditioning on worker characteristics, but controlling for industry reduces the public and foreign premia to 0.16 and 0.34, respectively, and controlling for employment size further reduces them to 0.07 and 0.28. We also exploit the presence of 3,700 switches of ownership type in the data to estimate firm fixed-effects and random trend models, accounting for unobserved firm characteristics affecting the average level and trend growth of wages. These controls have little effect on the conditional public-private gap, but they reduce the estimated foreign premium to 0.07. The results imply that the substantial unconditional wage differentials are mostly, but not entirely, a function of differences in worker and firm characteristics, and they illustrate the value of analyzing LEED to take such correlated factors into account.

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Information Technology, Organizational Form, and Transition to the Market
(Published in Journal of Economic Behavior and Organization Vol. 60(4), 471-489, August 2006.)

John S. Earle, Ugo Pagano and Maria Lesi


The paper reviews theories of information technology adoption and organizational form and applies them to an empirical analysis of firm choices and characteristics in four transition economies: Czech Republic, Hungary, Romania, and Slovakia. We argue that two major structural changes have occurred, one concerning technology and another concerning firm ownership and boundaries, and we consider how each change may have affected the other. We estimate the impact of firm size, integration, and ownership on new information technology adoption and the impact of information technology on changes in firm boundaries and ownership, using a sample survey of 330 firms.

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Job Reallocation and Productivity Growth in the Ukrainian Transition
(Published in Comparative Economic Studies, Vol. 48(2), 229-251, June 2006.)

David Brown and John S. Earle


We analyze the pace and patterns of job reallocation in Ukraine using 1992-2000 panel data on nearly the surviving universe of manufacturing firms inherited from the Soviet Union. Employment growth displays substantial increase in heterogeneity during this transition period, with a corresponding rise in excess job reallocation. Unlike data for Soviet Russia in the 1980s, Ukrainian job reallocation in the 1990s was clearly productivity-enhancing, both within and across industries. The paper also estimates the effects of firm and market characteristics on the magnitude of reallocation and on the extent to which it has contributed to aggregate productivity growth.

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Wages, Layoffs, and Privatization: Evidence from Ukraine
(Published in Journal of Comparative Economics, Vol. 34(2), 272-294, June 2006.)

David Brown, John S. Earle and Vladimir Vakhitov


This paper estimates the effects of privatization on worker separations and wages using retrospective data from a national probability sample of Ukrainian households. Detailed worker characteristics are used to control for compositional differences and to assess types of observable "winners" and "losers" from privatization. Preprivatization worker-firm matches are used to control for unobservables in worker and firm selection. The results imply that privatization reduces wages by 5 percent and cuts the layoff probability in half. Outside investor ownership reduces separations but leaves wages unaffected. Winners from privatization tend to be higher-skilled employees of larger firms, but there is no discernable relationship with gender, education, or experience.

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The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia and Ukraine
(Published in Journal of Political Economy, Vol. 114(1), 61-99, February 2006.)

David Brown, John S. Earle and Álmos Telegdy


This paper estimates the effect of privatization on multifactor productivity (MFP) using long panel data for nearly the universe of initially state-owned manufacturing firms in four economies. We exploit the key longitudinal feature of our data to measure and control for pre-privatization selection bias and to estimate long-run impacts. We find that the magnitudes of our estimates are robust to alternative functional forms, but sensitive to how we control for selection. Our preferred random growth models imply that majority privatization raises MFP about 15% in Romania, 8% in Hungary, and 2% in Ukraine, while in Russia it lowers it 3%. Privatization to foreign rather than domestic investors has a larger impact, 18-35%, in all countries. Positive domestic effects appear within a year in Hungary, Romania, and Ukraine and continue growing thereafter, but take 5 years after privatization to emerge in Russia.

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"Nonstandard Forms and Measures of Employment and Unemployment in Transition: A Comparative Study of Estonia, Romania, and Russia
(Published in Comparative Economic Studies, Vol. 48(3), 435-457, September 2006. )

David Brown, John S. Earle, Vladimir Gimpelson, Rostislav Kapeliushnikov, Hartmut Lehmann, Irina Vantu, Álmos Telegdy, Ruxandra Visan, and Alexandru Voicu


This paper looks behind the standard, publicly available employment and unemployment statistics that studies of transition economy labor markets have typically relied upon. We analyze microdata on detailed labor force survey responses in Russia, Romania, and Estonia to measure nonstandard, boundary forms and alternative definitions of labor force status. Our estimates show that measured employment and unemployment rates are quite sensitive to definition, particularly in the treatment of household production (subsistence agriculture), unpaid family helpers, and discouraged workers, while the categories of part-time work and other forms of marginal attachment are still relatively unimportant. We find that tweaking the official definitions in apparently minor ways can produce alternative employment rates that are sharply higher in Russia but much lower in Romania and slightly lower in Estonia, and alternative unemployment rates that are sharply higher in Romania and moderately higher in Estonia and Russia.

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"What Makes Small Firms Grow? Finance, Human Capital, Technical Assistance, and the Business Environment in Romania
(Published in Economic Development and Cultural Change, Vol. 54(1), 33-70, October 2005.)

David Brown, John S. Earle, and Dana Lup


Although the development of a new private sector is generally considered crucial to economic transition, there has been rather little empirical research on the determinants of startup firm growth. This paper uses panel data techniques to analyze a survey of 297 new small enterprises in Romania containing detailed information from the startup date through 2001. We find strong evidence that access to external credit increases the growth of both employment and sales. Taxes appear to constrain growth. The data suggest that entrepreneurial skills have little independent effect on growth, once demand conditions are taken into account. The evidence for the effectiveness of technical assistance is weak: only assistance provided by foreign partners yields a positive effect. A wide variety of alternative measures of the business environment (contract enforcement, property rights, and corruption) are tested, but none are found to have any clear association with firm growth.

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The Wage Effects of Schooling under Socialism and in Transition:
Evidence from Romania, 1950-2000

(Published in the Journal of Comparative Economics, Vol. 33(2), 300-323, June 2005.)

Daniela Andren, John S. Earle and Dana Sapatoru


We estimate the impact of schooling on monthly earnings from 1950 to 2000 in Romania. Nearly constant at about 3-4 percent during the socialist period, the coefficient on schooling in a conventional earnings regression rises steadily during the 1990s, reaching 8.5 percent by 2000. Our analysis finds little evidence for either the standard explanations of such an increase in the West (labor supply movements, product demand shifts, technical change) or the transition-specific accounts sometimes offered (wage liberalization, border opening, increased quality of education). But we find some support for institutional and organizational explanations, particularly the high productivity of education in restructuring and entrepreneurial activities in a disequilibrium environment.

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Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash?
(Published in Corporate Governance: An International Journal, Vol. 13(2), 254-264, March 2005.)

John S. Earle, Csaba Kucsera, and Álmos Telegdy


We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the largest block increases return on assets and operating efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks."

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The Reallocation of Workers and Jobs in Russian Industry: New Evidence on Measures and Determinants
(Published in Economics of Transition, Vol. 11(2), 221-252, June 2003.)

David Brown and John S. Earle


Gross job and worker flows in Russian industry are studied using panel data from a recent survey of 530 firms selected through national probability sampling. The data permit an examination of several important measurement issues; including the timing and definition of employment, the roles of split-ups and mergers, and the relative magnitudes of rehiring and new hiring and of quits and layoffs; and they contain a rich set of firm characteristics that may affect job and worker turnover. The results imply that job destruction and worker separation rates in industrial firms rose in the early 1990s, as did job flows as a fraction of worker flows and layoffs as a fraction of separations. By contrast, job creation and worker hiring rates were flat until 1999, the former low and the latter surprisingly high. Heterogeneity in individual firm behavior increased throughout. New firms and old enterprises that have been reorganized display much larger flows compared with unreorganized enterprises. Unions appear to reduce worker flows, but the structure of neither product nor labor markets shows a significant impact. Private ownership has ambiguous effects: insider ownership, particularly by managers, is associated with higher worker flows and excess job reallocation, while outsider ownership, particularly by blockholders, is associated with lower flow rates. A measure of adjustment costs constructed from the worktime necessary to hire and train a new employee is strongly related to variables usually associated with adjustment costs, including worker wage, education, firm size, capital intensity, and labor productivity, but only weakly to job and worker turnover. Little evidence is found that firms' employment adjustments have become more sensitive to adjustment costs during the transition, but worker and manager ownership are associated with more sensitivity than are other types of ownership.

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A Spoonful of Sugar: Privatization and Popular Support for Reform in the Czech Republic
(Published in Economics and Politics, Vol. 15(1), 1-32, March 2003.)

John S. Earle and Scott Gehlbach


We analyze the role of privatization in creating a constituency for economic reform, markets, and democratic institutions, focusing on the Czech Republic. Drawing on a 1996 survey, we examine the 1459 respondents' opinions on reforms, economic policies and systems, the legitimacy of transition, and democratic values. Using ordered probit estimation, we find that receiving property through restitution is strongly associated with support for reform and markets. Concerning voucher privatization, we find positive effects for participants retaining shares, but little impact of participation alone. Our simulations suggest that policy designs have substantial consequences for citizens' support of reforms, markets, and democracy.

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Privatization, Competition, and Budget Constraints: Disciplining Enterprises in Russia
(Published in Economics of Planning, Vol. 36(1), 1-22, 2003.)

John S. Earle and Saul Estrin


We investigate whether privatization, competitive forces, and hardening of budget constraints have yet begun to play efficiency-enhancing roles in Russia. The empirical work is based on information from a 1994 survey of privatized and state-owned Russian firms, together representing around 10 percent of Russian manufacturing output. We find robust evidence of a positive impact of privatization on labor productivity: in our basic specifications, we estimate that a ten percentage point increase in private share ownership raises real sales per employee by three to five percent. The evidence for the effect of product market competition is much weaker, depending on measurement and model specification: in some equations, domestic sales concentration is estimated to have a negative impact and the geographic scope of markets a positive effect on productivity, but the results are sensitive to minor changes in specification, and import penetration is never estimated to play a positive disciplinary role. While subsidies (soft budget constraints) are estimated to reduce the pace of restructuring in most of our models, the effect is usually small and rarely precisely estimated. We find some evidence that privatization and subsidy reduction are substitutes, that privatization and competition are complements when the latter is measured as the geographic scope of markets, and that competition and subsidy reduction are independent, in their impacts on Russian enterprise productivity.

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Privatization Methods and Productivity Effects in Romanian Industry
(Published in thr Journal of Comparative Economics, Vol. 30(4), 657-682, December 2002.)

John S. Earle and Álmos Telegdy


We construct and analyze a unique database with 1992-99 information on privatization transactions and labor productivity for the entire surviving population of initially state-owned industrial corporations in Romania. The data permits us to describe the post-privatization ownership structure and to test the effect of alternative privatization policies on firm performance in a panel framework. The results of OLS, LAD, and fixed-effects estimations consistently show a positive, highly significant effect of private ownership share on the level and growth of labor productivity, the estimates ranging from 13 to 32 log points for the level, and 9 to 16 for productivity growth. The strongest estimated impacts arise from sales to foreign and domestic blockholders, but insider and mass privatization are also estimated to have positive, although smaller, impacts on firm performance.

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How Late to Pay? Understanding Wage Arrears in Russia
(Published in the Journal of Labor Economics, Vol. 20(3), 661-707, July 2002.)

John S. Earle and Klara Sabirianova Peter


We organize an empirical analysis of Russian wage arrears around hypotheses concerning factors that create incentives for firms to pay late and for workers to tolerate late payment, both reinforced by a prevalent environment of overdue wages. Our analysis draws upon nationally representative household panel data matched with employer data to show substantial interfirm variation with the probability of arrears positively related to firm age, size, state ownership, and declining performance. Estimation of a constrained multinomial logit model also reveals intrafirm variation related to job tenure and small shareholdings in the firm. Workers tend to have higher arrears in rural regions with low hiring rates, concentrated labor markets, and more prevalent arrears in the past. We argue that wage arrears, unlike wage cuts, have a theoretically ambiguous effect on workers' quit behavior, and we show empirically that the effect varies negatively with the extent of the practice in the local labor market.

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Gross Job Flows in Russian Industry Before and After Reforms: Has Destruction Become More Creative?
(Published in the Journal of Comparative Economics, Vol. 30(1), 96-133, March 2002.)

David Brown and John S. Earle


This paper uses 1985-1999 manufacturing census data for old Russian enterprises to calculate the magnitude and productivity effects of gross job flow rates before and after reforms. Job creation was low throughout the period in this sector, but increased slightly during the transition, while job destruction rose markedly. Heterogeneity in firm employment change also increased significantly. Intra- and inter-sectoral job reallocation had no effect on aggregate labor productivity during the socialist period, while they have made a strong positive contribution during the transition. Privatization and product market competition have not led to greater job destruction overall, but rather have helped to focus the destruction in the firms with the lowest productivity.

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Worker Training in a Restructuring Economy: Evidence from the Russian Transition
(Published in the Research in Labor Economics, Vol. 20, 159-90 (S.Polachek, ed.), 2001.)

Mark Berger, John S. Earle and Klara Sabirianova Peter


We use 1994-1998 data from the Russian Longitudinal Monitoring Survey (RLMS) to measure the incidence and determinants of several types of worker training and to estimate the effects of training on workers' interindustry, interfirm, and occupational mobility, their labor force transitions, and their wage growth in Russia compared to the U.S. We hypothesize that the shock of economic liberalization in Russia may raise the benefits of training, particularly retraining for new jobs, but uncertainty concerning the revaluation of skills may raise the costs, with an overall ambiguous effect on the amount of training undertaken. The RLMS indicates a lower rate of formal training than studies have found for the U.S., suggesting that the second effect dominates. Previous schooling is estimated to affect the probability of training positively, but the relationship is much stronger for additional training in the same field than for retraining for new fields, consistent with the hypothesis that schooling and training are complementary but become more substitutable in a restructuring environment. Additional training in workers' current fields is estimated to reduce mobility and earnings, suggesting inertial programs from the pre-transition era. Retraining in new fields increases all types of worker mobility and has higher returns than those typically observed for training in the U.S., but it also raises the variance of earnings and the probability of unemployment, consistent with a search view of such retraining. Given the large returns to retraining, the efforts of Russian workers to learn new skills may increase as uncertainty is resolved and restructuring proceeds.

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Measuring Defence Conversion in Russian Industry
(Published in Defence and Peace Economics, Vol. 12(2), 103-44, March/April 2001.)

John S. Earle and Ivan Komarov


This paper develops and implements a methodology for quantifying defense conversion in Russian manufacturing in the early 1990s. A two-sector, three-good model is employed to analyze the flows of resources from military to non-military uses and applied to firm-level survey data under alternative definitions of military production and the MIC. An aggregation framework is constructed to estimate the total quantity and change in Russian military production, the latter decomposed into intrafirm and intersectoral resource reallocation and overall industrial decline. Although there is evidence of substantial decline in military production, the data show little reallocation to productive civilian uses, neither within the MIC nor to other manufacturing sectors.

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Privatization and the Structure of Enterprise Ownership
(Published in Russia's Post-Communist Economy (B. Granville and P. Oppenheimer, eds.), Oxford: Oxford University Press, 2001.)

John S. Earle and Saul Estrin


We investigate whether privatization, competitive forces, and hardening of budget constraints have yet begun to play efficiency-enhancing roles in Russia. The empirical work is based on information from a 1994 survey of privatized and state-owned Russian firms, together representing around 10 percent of Russian manufacturing output. We find robust evidence of a positive impact of privatization on labor productivity: in our basic specifications, we estimate that a ten percentage point increase in private share ownership raises real sales per employee by three to five percent. The evidence for the effect of product market competition is much weaker, depending on measurement and model specification: in some equations, domestic sales concentration is estimated to have a negative impact and the geographic scope of markets a positive effect on productivity, but the results are sensitive to minor changes in specification, and import penetration is never estimated to play a positive disciplinary role. While subsidies (soft budget constraints) are estimated to reduce the pace of restructuring in most of our models, the effect is usually small and rarely precisely estimated. We find some evidence that privatization and subsidy reduction are substitutes, that privatization and competition are complements when the latter is measured as the geographic scope of markets, and that competition and subsidy reduction are independent, in their impacts on Russian enterprise productivity.

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Business Start-ups or Disguised Unemployment? Evidence on the Nature of Self-Employment from Transition Economies
(Published in Labour Economics, Vol. 7(5), 575-601, September 2000.)

John S. Earle and Zuzana Sakova


We study the character of self-employment, drawing upon household survey evidence from six transition economies. Multinomial-logit analysis distinguishing employers from own-account self-employed and comparing both groups to employees and unemployed finds that own-account status is intermediate in most characteristics; tests reject the pooling of any of these categories. Selection-bias-corrected earnings premia are large for employers and smaller for own-account. A structural polychotomous model shows that employers respond strongly to predicted earnings premia in all countries, while the own-account response is estimated to be negative, supporting the interpretation that individuals may be pushed into own-account status by lack of work opportunities.

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