Business Environment and Labor Market Outcomes in Europe and Central Asia Countries
New firm entry has been fundamental for job creation in the transition economies. Hence, the urge to reform the framework in which firms operate. This paper aims to improve our understanding of the business environment of the Europe and Central Asia (ECA) countries, as well as to assess which of the institutions that shape it are most important for labor market performance. To achieve that aim, the author groups the institutions into those affecting firm entry and those affecting business survival and growth, and proceeds to construct indicators to summarize them. Next, she analyzes the impact of the business environment institutions on the employment generated by the private sector of the countries, proxied by the service employment rate. The regression analysis uses an unbalanced panel of 28 ECA countries over 14 years-from 1988 to 2002. Recent literature on the labor market performance of the OECD countries argues that what matters for employment is the interaction between institutions and shocks. Accordingly, the explanatory variables used in the regression are the interactions between the transition shock suffered by the ECA countries and each of the business environment institutions previously defined. The author finds that access to finance is the most important institution across all ECA countries. The development of the financial sector can explain about 40 percent of private employment creation in the European transition economies according to the model. On the other hand, the poor access to finance in Bulgaria, Croatia, and above all, Romania, is the main factor behind their poor development of the private sector. Market regulation (credit and labor regulation), start-up costs, and the tax burden are all found to significantly affect employment as well.
Saved in:
Bibliographic Details
| Main Author: |
Lopez-Garcia, Paloma |
|---|
| Language: | English |
|---|
| Published: |
World Bank, Washington, DC
2006-04
|
|---|
| Subjects: | AGGREGATE DEMAND,
AGGREGATE EMPLOYMENT,
AGGREGATE SUPPLY,
AGRICULTURE,
BANK LOANS,
BANKRUPTCY,
BUSINESS ENVIRONMENT,
COLLECTIVE BARGAINING,
COMPANY,
COMPETITIVENESS,
CONTRACT ENFORCEMENT,
CORPORATIONS,
CORRELATION ANALYSIS,
CYCLICAL UNEMPLOYMENT,
DISPLACED WORKERS,
DISPLACEMENT,
ECONOMIC PERFORMANCE,
ECONOMIC SECTORS,
EMPLOYMENT,
EMPLOYMENT GROWTH,
EMPLOYMENT LEVEL,
EMPLOYMENT OUTCOMES,
EMPLOYMENT PERFORMANCE,
EMPLOYMENT PROTECTION LEGISLATION,
EMPLOYMENT RATE,
EMPLOYMENT RATES,
ENTREPRENEURIAL ACTIVITY,
ENTREPRENEURS,
ENTREPRENEURSHIP,
ENTRY BARRIERS,
EXISTING BUSINESSES,
EXPANSION,
FINANCIAL MARKET,
FINANCIAL SECTOR,
FIRM ENTRY,
FIRM SIZE,
FIRMS,
GDP,
GDP PER CAPITA,
HIGH UNEMPLOYMENT,
INFLATION,
INFORMAL ECONOMY,
INFORMAL SECTOR,
JOB CREATION,
JOB DESTRUCTION,
JOBS,
LABOR MARKET,
LABOR MARKET INDICATOR,
LABOR MARKET INDICATORS,
LABOR MARKET INSTITUTIONS,
LABOR MARKET OUTCOMES,
LABOR MARKET PERFORMANCE,
LABOR MARKET REGULATION,
LABOR MARKET REGULATIONS,
LABOR MARKETS,
LABOR REGULATION,
LABOUR,
LABOUR FORCE,
LABOUR MARKET,
LABOUR MARKET PERFORMANCE,
LARGE ENTERPRISES,
LAW FIRMS,
LOW UNEMPLOYMENT,
MACROECONOMIC POLICIES,
MARKET ECONOMIES,
MARKET ECONOMY,
MINIMUM WAGES,
NATURAL RATE OF UNEMPLOYMENT,
PRELIMINARY ANALYSIS,
PREVIOUS SECTION,
PRICE CONTROLS,
PRIVATE,
PRIVATE EMPLOYMENT,
PRIVATE SECTOR,
PROPERTY RIGHTS,
PUBLIC EMPLOYMENT,
PUBLIC SECTOR EMPLOYMENT,
REAL INTEREST RATE,
REGRESSION ANALYSIS,
RETAIL,
RETAIL TRADE,
SERVICE EMPLOYMENT,
SERVICE SECTOR,
SMALL BUSINESSES,
SMALL FIRMS,
SPREAD,
TOTAL EMPLOYMENT,
TRANSITION ECONOMIES,
UNEMPLOYMENT,
UNEMPLOYMENT BENEFITS,
UNEMPLOYMENT RATE,
VENTURE CAPITAL,
WORKER,
WORKERS, |
|---|
| Online Access: | http://documents.worldbank.org/curated/en/2006/04/6727780/business-environment-labor-market-outcomes-europe-central-asia-countries
https://hdl.handle.net/10986/8722
|
|---|
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
|---|
