Location: Europe

BICEPS/SSE Riga Research Seminar. Income and well-being in old age: the role of local contextual factors

You are kindly invited to a BICEPS/SSE Riga research seminar, which will take place on Thursday, March 28, at 17:00 at SSE Riga, room 411.

 

We are delighted to welcome Monika Oczkowska as the speaker. Monika is a research economist at CenEA (Poland). Her research interests lie in the fields of aging, the labor market, social exclusion, and gender equality.

 Title: Income and well-being in old age: the role of local contextual factors (co-authored with Ellam Kulati and Michal Myck)

Time: Thursday, March 28, 17:00

Venue: SSE Riga, room 411

Abstract

While the role of local contextual factors as determinants of well-being has been broadly acknowledged, the literature has focused primarily on identification of individual level determinants. Using a unique dataset linking regional and individual-level information we investigate the association of well-being and local conditions among a sample of Polish individuals aged 50 and over. The results confirm a high correlation of well-being with income, and we show that this correlation grows with the quality of local conditions. Similarly, a change in the composite measure of the latter is positively associated with well-being only for high income respondents. The analysis is set in the context of policy challenges related to population ageing with the need to combine direct financial support and provision of public services. The findings offer support for targeted financial transfers and call for improvements in accessibility to public services for low-income older individuals.

VoxEU column: Minimum Wage Policy and Labour Tax Evasion

Read a VoxEU column by Nicolas Gavoille and Anna Zasova: ‘Minimum Wage Policy and Labour Tax Evasion.’ Their analysis shows that increasing the minimum wage has a positive effect on tax rules enforcement. However, this comes at the cost of negatively affecting employment in tax-compliant firms exposed to the minimum wage hike.

The column is based on an article forthcoming in the Journal of Public Economics, written under the EEA-Norway grant project No S-BMT-21-8 (LT08-2- LMT-K-01-073). Access the full paper via this link:  What we pay in the shadows: Labor tax evasion, minimum wage hike and employment

BICEPS/SSE Riga Research Seminar: Automation in an Open, Catching-Up Economy: Aggregate and Microeconometric Evidence

We are happy to invite you to a BICEPS/SSE Riga research seminar, which will take place on Thursday, December 7th, at 17:00 at SSE Riga, room 411.

We are delighted to welcome Amaresh Kumar Tiwari as the speaker. Amaresh is a lecturer and researcher at the University of Tartu. His research interests are in the fields of econometrics, industrial economics, and corporate finance. Amaresh holds a Ph.D. in economics from Maastricht University.

Title: Automation in an Open, Catching-Up Economy: Aggregate and Microeconometric Evidence
Time: Thursday, December 7th, 17:00
Venue: SSE Riga, room 411

Abstract

Using the universe of firms in Estonia, we study the implications of imports-led and FDI-facilitated automation for productivity and factor shares of tasks and value-added. First, in contrast to the findings for the developed economies, we find that aggregate labor share of value-added for the automation adopting firms is higher than that for the non-adopters, and has grown, among others, through reallocation of economic activities towards the adopting firms. Second, concurrently, aggregate total factor productivity of the adopters grew faster than that of the non-adopters. Third, from the micro-level study we find that the estimated labor share of tasks has declined over time among the adopting firms and is lowest in firms that automate frequently, where the frequency of automation provides rich information on firms’ automation characteristics. The study emphasizes international spillover and creation of productive jobs by multinational adopters among the reasons for the increase in the labor share of value-added for the adopters even as their labor share of tasks declined. Fourth, productivity impact of automation is heterogeneous: (a) firms that automate regularly, (b) multinational adopters, and (c) firms that realize complementarities between automation and innovative management practices are among the most productive adopters; the third establishes that the innovative management practices instituted by the adopters are those that help discover and facilitate complementarities between automation and human labor.

A new study reveals the impact of minimum wage hikes on envelope wages and employment in tax-compliant firms

In their recent article published in Ir.lv, Nicolas Gavoille and Anna Zasova explore the consequences of raising the minimum wage in Latvia. One of the key takeaways from their work is that an increase in the minimum wage not only reduces envelope wages but also diminishes employment levels within tax-compliant companies.

Gavoille and Zasova’s research is based on a study conducted as part of the EEA-Norway grant project No S-BMT-21-8 (LT08-2- LMT-K-01-073). You can read the full paper by following this link: What we pay in the shadows: Labor tax evasion, minimum wage hike and employment

BICEPS/SSE Riga Research Seminar: Understanding How Job Retention Schemes Reshape the Skill Profile of Labor within Firms

We are happy to invite you to a BICEPS/SSE Riga research seminar, which will take place on Thursday, September 14, at 17:00 at SSE Riga, room 611.

We are delighted to welcome Konstantins Benkovskis (Bank of Latvia and SSE Riga) as the speaker. Konstantins is an advisor to the Monetary Policy Department at the Bank of Latvia and an Associate Professor at SSE Riga. His main research interests include international trade, non-price competitiveness, global value chains, productivity, and resource allocation. Konstantins is a Board Member of the Baltic Economic Association and a member of the Editorial Board of the Baltic Journal of Economics.

Title: Understanding How Job Retention Schemes Reshape the Skill Profile of Labor within Firms (co-authored with Olegs Tkacevs and Karlis Vilerts, Bank of Latvia)

Time: Thursday, September 14, 17:00

Venue: SSE Riga, room 611

 

Abstract

Utilizing employer-employee data from Latvia, this paper examines the repercussions of participation in job retention programs on the skill composition of the workforce at the firm level. The findings of this study reveal that participation in job retention schemes yields a favorable impact on employees’ probability of retaining their employment within the same firm after the program concludes. The magnitude of this effect is independent of the skills acquired by employees who receive the benefits. However, employees with higher skills are less likely to participate in the job retention scheme due to legal restrictions on the maximum benefit amount and income replacement rate. Taken together, the findings of this investigation suggest that job retention schemes may have an adverse effect on the quality of workforce at the firm level.

BICEPS participates in the international ERA-NET project “City Tolls That Work” (2023-2025)

BICEPS, in cooperation with partners from Vienna University of Economics and Business, IT-company Dolphin Technologies (Austria) and Swedish National Road and Transport Research Institute, has successfully applied for the ERA-NET Cofund Urban Accessibility and Connectivity (ENUAC) third call titled “Innovations for Managing Sustainable Urban Accessibility”. The funding agencies from participating countries agreed to support our proposed research project “City Tolls That Works”. The respective local funding agency for this grant is the Latvian Council of Science.

The project aims to identify ways to improve public attitude toward road congestion tolls in cities. Most economists recognize city tolls as an effective policy measure to fight traffic jams and decrease the negative environmental impacts of car traffic in cities. However, unlike paid car parking, a transport policy measure that is present in almost every urban area in Europe, city tolls tend to face strong public backlash. Singapore, London, Milan, Stockholm and Gothenburg are noticeable exceptions of cities with working road congestion pricing. Public acceptability of the pricing mechanism is low mainly due to concerns that tolls lack fairness, affecting some population groups more negatively than others. Such public resistance makes the idea of city tolls de facto non-operational – there was no progress in the introduction of road congestion tolls in European cities over the past decade. This motivates our search for road tolling schemes that can really work in cities, i.e., that make cities more accessible and sustainable, while also being perceived as fair and having broad public support.

To succeed, one first needs to gain a solid understanding of what population groups actually benefit and lose under existing city tolls and why. Project’s Swedish partner will use unique real-world congestion pricing and registry data of the full Swedish population to acquire new insights on long-term distributional effects of city tolls. These will inform our project further, as BICEPS will propose and measure public support in Riga and Vienna (together with the Austrian partners) for innovative road-pricing schemes, including one with a cash-back component, in which collected tolls are returned directly back to drivers in the form of public transport tokens. BICEPS will then support Austrian partners that will design and implement a field experiment in Vienna that measures behavioral reactions to such novel pricing instruments.

The research consortium is led by Vienna University of Economics and Business. The project period runs from April 2023 until October 2025. Sergejs Gubins is BICEPS senior researcher associated with the project.

Publication in the International Migration journal

Congratulations to Zane Vārpiņa, Marija Krūmiņa, Kata Fredheim, and Anders Paalzow on the publication of their article “Back for business: The link between foreign experience and entrepreneurship in Latvia” in the International Migration journal!

Link to publication (open access)

Abstract

Research shows that return migrants have a higher propensity to set up an entrepreneurial activity or be self-employed compared to non-migrants. We take a multidisciplinary approach and empirically study the case of Latvia as a migration donor country to learn how re-migrants participate in entrepreneurship back at home. We are interested if return migrants can be seen as a vehicle for entrepreneurship development and if it is worth looking at them as agents of business growth and innovation. Not only we measure the fact of being entrepreneurial but also explore sources that contribute to the higher propensity, attitudes to creating own business venture, level of ambitions and population sentiment towards entrepreneurs. Based on a nationally representative adult population survey of 8000 observations, we find that early-stage entrepreneurial activity, established business ownership as well as intrapreneurship for return migrants exceed that of the non-migrant population. The self-perceived capabilities to start business is higher for those who have lived abroad, and fear of failure is lower. Return migrants also have better business networks and higher growth and export ambitions. Latvian return migrant entrepreneurship is not necessity driven but rather motivated by opportunities. Migration experience, length of stay aboard and capital accumulated abroad are found to be significant predictors of probability to become entrepreneur when controlled for socioeconomic and personal factors.

 

 

BICEPS/SSE Riga Research Seminar: Nudging or Gambling to Save? A Field Experiment on Savings Behaviour

We are happy to invite you to a BICEPS/SSE Riga research seminar, which will take place on Thursday, March 30, at 17:00 at SSE Riga, room 411.

We are delighted to welcome Andris Saulītis as the speaker. Andris is a Senior Researcher at the University of Latvia’s Institute of Philosophy and Sociology. He earned his PhD in sociology from the European University Institute in Florence, Italy. Andris Saulītis’ research centers on household financial behavior and experimental methodology.

Speaker: Andris Saulītis (Institute of Philosophy and Sociology, University of Latvia)

Title: Nudging or Gambling to Save? A Field Experiment on Savings Behaviour (co-authored with Lea Kroeger, Humboldt University of Berlin)

Time: Thursday, March 30, 17:00

Venue: SSE Riga, room 411

Abstract

This experimental study aims to investigate the effect of nudges and prize-linked savings (PLS) account and examine the external validity of laboratory experiments on savings behaviour. We employ a natural setting in collaboration with a professional survey company operating in Latvia and Estonia. The company recruits respondents on a daily basis to take part in commissioned surveys in return for a payment. While usually the payment to the individuals is done immediately after filling out a survey, the experimental design presented participants with a choice between immediate and delayed consumption of the money earned. The experimental design consisted of three experimental groups. In baseline offer, respondents were given the choice between receiving 10 euros immediately or depositing all or part of the amount in a virtual savings account for six months, with a maximum payout of 12 euros. In the social norm treatment, respondents were informed before the choice question that the survey focuses on household financial behaviour and that previous surveys revealed that the majority of respondents choose to save. The PLS account treatment offered individuals, who allocated all 10 euros to the savings account, to participate in a lottery with the chance to win an additional 5 euros on the top of the interest earned. The experimental results show that both social norm nudge and PLS account treatments tend to increase the number of individuals who decide to save. However, it is much lower than found in the laboratory experiments that have examined the effect of PLS accounts on savings behaviour. Both treatments resulted in approximately similar 8% points increase in the number of individuals who opted for savings. The introduction of the PLS account increased savings by 13%, while the social norm treatment increased it by 24%. At the same time, we identify several suggestive savings patterns that are in line with previous studies. First, individuals who play lotteries are more likely to invest in PLS, while non-lottery players are more responsive to social norms. Second, Estonians tend to save more often than Latvians, a trend that has been found in many empirical studies. Taken together, the results of this field experiment provide a more accurate representation of the true behaviour of individuals when it comes to savings and investment decisions. It also suggests that social norms can be as persuasive as financial incentives to increase the savings level.

BICEPS/SSE Riga Research Seminar: Ageing and Urban Demand for Existing Homes

We are happy to invite you to a BICEPS/SSE Riga research seminar, which will take place on Thursday, February 16, at 17:00 at SSE Riga, room 411.

We are delighted to welcome Ellam Kulati as the speaker. Ellam is a PhD Scholar at the Centre for Economic Analysis (CenEA, Poland) and a Quantitative Psychology and Economics PhD candidate at the University of Warsaw.

 

Speaker: Ellam Kulati (Centre for Economic Analysis (CenEA), University of Warsaw, Quantitative Psychology and Economics (QPE))

Title: Ageing and Urban Demand for Existing Homes

Time: Thursday, February 16, 17:00

Venue: SSE Riga, room 411

 

Abstract

How does demographic ageing translate into the housing market? Despite the popularity of hedonic models in housing demand studies, situations where quantity changes better reflect demand adjustments have previously been identified. Using uniquely compiled data on 65 Polish city districts, spanning from 2010 to 2020, this paper interrogates price and turnover as measures of demand while empirically determining the demand adjustment patterns rendered by an ageing population. Results from the implemented spatial panel models reveal an inverse relationship of ageing to the demand for homeownership, predominantly reflected in price relative to quantity responses. The findings are robust to non-spatial model specifications.

New working paper “Keeping the best of two worlds: Linking CGE and microsimulation models for policy analysis” 

Authors: Konstantīns Beņkovskis (Bank of Latvia), Ludmila Fadejeva (Bank of Latvia), Anna Pļuta (BICEPS) and Anna Zasova (BICEPS)

Abstract

In this paper, we link a CGE model with the tax-benefit microsimulation model EUROMOD for Latvia. The model linkage is done using an iterative top-down bottom-up approach, ensuring the convergence of changes in disposable income, employment and wage in both models. We also incorporate the unreported wage payments in CGE and EUROMOD to account for the substantial labour tax non-compliance in Latvia and improve the modelling of the fiscal sector. Several simulations demonstrate the advantages of the joint CGE-EUROMOD system over the individual macro and microsimulation models. The lack of income distribution aspect and the scarcity of fiscal instruments in CGE can be overcome by the features of EUROMOD. The CGE model, on the other hand, provides macroeconomic spillovers that are missing in the simulations of EUROMOD.

Keywords: EUROMOD, CGE model, model linkage, informal sector
JEL codes: C68, D58, D90, J46

Link to publication