Working papers

Abstract

This paper examines the implications of automation capital in a Solow growth model with two types of labour. We study the transition from standard production to production using automation capital which substitutes low-skilled workers. We assume that despite advances in technology, AI and machine learning, certain tasks can be performed only by high-skilled labour and are not automatable. We show that under these assumptions, automation capital does not generate endogenous growth without technological progress. However, assuming presence of technological progress augmenting both effective number of workers and effective number of industrial robots, automation increases rate of long-run growth. We analyse a situation in which some countries do not use robots at all and other group of countries starts the transition to the economy where industrial robots replace low-skilled labour. We show that this has potential non-linear effects on σ-convergence and that the model is consistent with temporary divergence of incomes per capita. We derive a set of estimable equations that allows us to test the hypotheses in a Mankiw-Romer-Weil framework.

Abstract

In recent years there has been increasing interest in the question of how inequality affects economic growth. This growing interest has recently stimulated new theoretical as well as empirical research. Some existing theoretical models propose income inequality is detrimental to growth, but alternative theoretical models point at inequality as a determinant furthering economic growth. The main goal of this paper is to obtain deeper insights into the so-called efficiency-equity trade-off. Recently the Stiglitz-Report (Stiglitz et al., 2010) revealed several limits of GDP as an indicator of economic performance and social progress and recommended to shift emphasis towards measuring people's well-being. Following this recommendation, we develop a new multiple criteria decision making model coupled with an extended Leontief input-output model taking into account the social dimension and obtain deeper insights into the so-called efficiency-equity trade-off.

Abstract

The aim of this paper is to provide the first empirical evidence of the impact of fiscal consolidation on income inequality in V4 countries. Although the literature on income inequality and its various determinants is wide, there are still some areas in this topic, where the research is lacking. Different specifications of models imply that fiscal consolidation in V4 countries leads to an increase in income inequality. Results of our analysis suggest, that fiscal consolidation larger than 2 % of GDP has negative impact on equality in V4 countries, while this effect is stronger than the effects of our control variables { GDP growth, change in total factor productivity (TFP), change in trade openness, mean years of schooling and unemployment. Change in structural balance seems to have no effect on income inequality in the given countries. However, structural balance have surprisingly negative effect. We believe it is due to the structure of our data set, which contains only three observations with positive structural balance.

Abstract

Income and wealth inequalities, both between and within the advanced and developing countries, have attracted much attention in current economic debates. Wage inequalities appear to play a key role in the generation of final inequalities in terms of households’ income, consumption and wealth. In this paper, we propose a decomposition approach based on the input-output analysis that allows us to disentangle the effects on the final inequalities’ levels into the contributions of various determinants. So far, the analysis of income and wealth inequalities measured by standard inequality indices, e.g. Gini coefficient, Theil index, has received limited space in the input-output analysis. This does not imply that issues of income and wealth inequalities have been ignored in this stream of research. The focus of the input-output research has however been directed into distinct aspects of inequalities. In one way, researchers have put a lot of effort in the understanding how the income and wealth inequalities influence the structure of final demand of households, and eventually generate ambivalent effects on production, value added and employment. Other stream of research in input-output analysis has paid a lot of attention to inequalities that arise from the distribution of income that goes to labour and capital. We propose to calculate cross-industry and cross-country wage inequalities directly from the input-output tables and analyse the final inequality variations through the lens of changes in the inputs. Detailed industry-level data on employees’ wages linked to their hours worked and education attainments, which are covered by the World input-output database, allow us to illustrate the application of proposed methodology on major advanced and developing countries in the world. The analysis contributes to solving the puzzle around the impacts of human capital and technological progress on income inequality but may shed also more light on the rising global inequalities unfolded by international trade and fragmentation of global value chains.

Abstract

Growing interest in the analysis of interrelationships between income distribution and economic growth has recently stimulated new theoretical as well as empirical research. Since existing theoretical models propose inequality is detrimental to growth, while others point at income inequality as an essential determinant supporting economic growth. Measures such as head-count ratio for poverty index or widely used Gini coefficient are aggregated indicators without deeper insight into income distribution among the poor or the households. To derive an indicator accounting for income distribution among the income groups, we propose output oriented DEA model with inputs equal unit and weights restrictions imposed so as to favour higher income share in lower quantiles. We demonstrate the merit of this approach on the quintile income breakdown data of the European countries. Prioritizing lower income groups´ welfare, countries – e.g. Slovenia and Slovakia – can be equally favoured by the new proposed indicator while assessed differently by Gini index. Intertemporal analysis reveals a slight deterioration of income distribution over the period of 2007 – 2017 in a Rawlsian sense.

Abstract

In this study, technical efficiency of Slovak general hospitals was investigated. The well-known non-parametric Data Envelopment Analysis was used to compare performance of Slovak health care providers. Results are based on four slightly differentiated models. Both CRS and VRS variation with different input approaches were used. Our results suggest low average efficiency in Slovak hospitals in the range 0.45 to 0.62 with great variations in efficiency score between individual Decision Making Units (DMUs). These results are relative without appropriate cross-country comparisons. Furthermore, in type of hospital entity there is no significant difference in efficiency score. However there is not a single efficient DMU in a group of municipality hospitals. Although, these results must be taken with caution due to questionable quality of data, this paper provides some valuable overview on technical efficiency of health care providers.

Abstract

The paper deals with the topic of deindustrialization as a process of a decreasing relative importance of manufacturing. While the decrease of manufacturing in major developed and developed economies is undeniable, the developing and newly industrialized economies are starting to experience this phenomenon as well. The results of the paper show that the so-called premature deindustrialization is mainly caused by outsourcing. Furthermore, the data suggest the existence of an upper limit of outsourcing for major developed economies. In these economies, the decrease of manufacturing is more likely caused by other relevant factors. Last but not least, a few transition economies face to a slightly decreasing value of outsourcing on a much lower level. This could be explained by a fragmentation of the entire value chain across the European Union. The empirical results are based on the Input-Output methodology, the observation period of fifteen years from 2000 to 2014 and a sample of 43 countries.

Abstract

The present paper provides first empirical evidence on the relationship between market size and the number of firms in the health-care industry for a transition economy. We estimate market size thresholds required to support different numbers of suppliers (firms) for three occupations in the health-care industry in a large number of distinct geographic markets in Slovakia, taking into account the spatial interaction between local markets. The empirical analysis is carried out for three time periods (1995, 2001 and 2010) characterizing different stages of the transition process. Our results suggest that the relationship between market size and the number of firms differs both across industries, and across periods. Furthermore, we find evidence for correlation in entry decisions across administrative borders.

Abstract

In the present paper, we analyse determinants of labour elasticity in V4 countries. While the standard approach relies on the parametric estimation of labour elasticity coefficients, we employ a novel approach based on structural decomposition analysis. This allows us to identify several determinants that mitigate the effects of economic growth on employment. We decompose the overall change in employment into the contribution of six factors: changes in labour productivity, changes in import of intermediate products, changes in the structure of production, changes in the final demand structure by industries and by sectors, and a change in final demand volume. We show that besides generally accepted influence of labour productivity growth on employment other factors such as structural changes and changes in final demand played an important role in employment changes. These results shed some light on low labour elasticity in V4 countries that goes beyond the simple labour productivity growth argument.

Abstract

In pursuit of welfare, environmental issues constitute one important dimension to be taken into account in assessing the welfare along with the economic and social indicators. There has been a lively discussion about measures of social welfare beyond GDParticulated by Stiglitz Report (Stiglitz et al, 2009) which can be viewed as a summation of the earlier efforts to deal with those challenges. This study concentrates on environmental aspects of economic growth in European countries and the changes undergone in the period of 2000 – 2010. Time series of obtained eco-efficiency scores from SBM models were used to infer on the s- and β-convergence analysed in line with the classical econometric approach. Results suggest that except of the post crisis disruption a process of convergence with respect to eco-efficiency has been taking place in European countries.