Centrum Analiz Ekonomicznych

Publikacje / Working Paper Series

CenEA Working Papers in chronological order:

Working Paper 03/11

Mommies’ girls get dresses, daddies’ boys get toys. Gender preferences in Poland and their implications.

Krzysztof Karbownik and Michał Myck

Abstract:

We examine the relationship of child gender with family and economic outcomes using a large dataset from the Polish Household Budgets’ Survey (PHBS) for years 2003-2009. Apart from studying the effects of gender on family stability, fertility and mothers’ labor market outcomes, we take advantage of the PHBS’ detailed expenditure module to examine effects of gender on consumption patterns. We find that a first born daughter is significantly less likely to be living with her father compared to a first born son and that the probability of having the second child is negatively correlated with a first born daughter. Using the context of the collective model we provide interpretation of these results from the perspective of individual parental gender preferences. We also examine the potential effects of sample selection bias which may affect the results and may be important for other findings in the literature. Labor supply of mothers and overall child-related consumption is not affected by gender of the first child, but the pattern of expenditure significantly varies between those with first born sons and first born daughters. One possible interpretation of the findings is that Polish fathers have preferences for sons and Polish mothers have preferences for daughters. Expenditure patterns suggest potential early determination of gender roles – mommies’ girls get dresses and daddies’ boys get toys.

Working Paper 02/11

CenEA_WP_0211.pdf

Long shadows of history - persecution in Central Europe and its labor market consequences

Michał Myck and Radim Bohacek

Abstract:

We analyze the extent and effects of job-related persecution under communist regimes in the Czech Republic and Poland using a representative sample of individuals aged 50+ from the Survey of Health, Ageing and Retirement in Europe. Retrospective information collected in the SHARELIFE interview offers a unique chance to relate past and current labor market outcomes to experiences of persecution reflecting the historical developments in Central Europe in the 20th century. Individual level data with details on labor market histories is matched with information on the experiences of state oppression. On-the-job persecution is found to have significant effect on job quality assessment and is strongly related to reporting of distinct periods of stress in both countries. Consequences of on-the-job persecution seem to have been much more severe and longer lasting in the Czech Republic, with significant financial effects of job loss or discrimination. This is explained by the greater degree of state control over the labour market in the former Czechoslovakia compared to Poland and different characteristics of the dissident groups in both countries.

Working Paper 01/11

CenEA_WP_0111.pdf

The effect of health and employment risks on precautionary savings.

Johannes Geyer

Abstract:

This paper extends the idea of using ex-ante risk measures in a model of precautionary savings by explicitly simulating future net-income risks. The uncertainty measure takes into account the interdependency of labour market and health status. The model is estimated for prime age males using the German Socio-Economic Panel Study for years 2001-2007. The empirical analysis is conducted using a measure for savings stocks and savings flows. The latter model allows to control for individual specific effects. We find evidence for precautionary savings in response to the uncertainty measures. The results are robust and stable across specifications. There is evidence for a share of precautionary wealth of about 14 to 17 percent.

Working Paper 02/10

CenEA_WP_0210.pdf

Persecution in Central Europe and its consequences on the lives of SHARE respondents.

Radim Bohacek, Michał Myck

Abstract:

We report information from the SHARELIFE data recalling experiences of persecution and dispossession of SHARE respondents and focus on the relationship of persecution and current outcomes in the three Central European populations. 10% of the Czech and East German respondents and about 6% of those in Poland report being persecuted, and political reasons are most frequently reported to be the main reason for this persecution (respectively 61%, 47% and 40%). Persecution in the Czech Republic had most severe consequences for professional careers of the respondents. The experience of persecution in the Czech Republic has strongest effects on the reported satisfaction with job achievements and career disappointment. The relationship between persecution and health is strongest in Poland, where compared to those not persecuted in the past, the persecuted individuals are from 60-70% more likely to report current poor health, three or more limitations in performing daily activities (ADLs), as well as having experienced long-term illness and a period of disability. Persecuted individuals in Poland are also twice as likely to report having three or more symptoms of poor health. Effects of persecution on health are also present in the Czech and GDR samples, though in most cases the effects are not statistically significant.
[To be published in: Axel Börsch-Supan, Martina Brandt, Karsten Hank and Mathis Schröder (eds)(2011): "The Individual and the Welfare State. Life Histories in Europe". Springer: Heidelberg.]

Working Paper 01/10

CenEA_WP_0110.pdf

Poorer health - shorter hours? Health and flexibility of hours of work.

Johannes Geyer, Michał Myck

Abstract:

We analyse the role of health in determining the difference between desired and actual hours of work in a sample of German men using the Socio-Economic Panel Data for years 1996-2007. The effects of both self-assessed health and legal disability status are examined. About 60% of employees report working more than they would wish with the mean difference of -3.9 hours/week. We estimate static and dynamic model specifications allowing for auto-regressive nature of the dependent variable and testing for the role of lagged health status. Important differences are found between east and west German Laender. In the west we confirm serial dependence in the disequilibrium and find statistically significant role of general health measures in determining the disequilibrium. Employees in bad health want to work on average by about 0.4 hour/week less according to the static specification, and by about 1 hour/week less if dynamics of health and of the disequilibrium are taken into account. This is respectively 10% and 25% of the mean difference. We find no effects of legal disability status on the disequilibrium which we interpret as a reflection of stronger legal position of disabled employees.

Working Paper 09/09

CenEA_WP_0909.pdf

Altruism in the modern family: private transfers between parents and their biological and non-biological children

Małgorzata Kalbarczyk, Anna Nicińska

Abstract:

It has been recognized for a long time in the literature that there are altruistic relations within a family of parents and their biological children. The dispute on the sources of altruism refers usually to sociobiology and genetic improvement, even though there are also arguments for another mechanism in operation based rather upon social than biological relations. The changes in family formation, tenure and structure that took place over the previous century might have affected signicantly the relations within family. In addition to these processes Europe is facing opportunities and threats coming from ageing which makes mechanisms determining intergenerational interactions especially relevant. For these reasons the hypothesis on kinship altruism's presence within families shall be investigated in more detail. We found evidence over the sample of 50+ population in Europe showing that there is no reason to believe that parents over 49 treat the biological childrenn in a different way than non-biological children as far as the intervivos transfers are concerned. However, children among which there is a non-biological one are less likely to provide financial and non-financial transfers to parents.

Working Paper 08/09

CenEA_WP_0809.pdf

Count your hours: returns to education in Poland

Michał Myck, Anna Nicińska, Leszek Morawski

Abstract:

Combining information from two Polish surveys from 2005 and taking advantage of the Polish microsimulation model (SIMPL) we demonstrate how different the estimates of returns to education can be depending on whether we use net or gross, and monthly or hourly wages, and we examine the role of correcting for employment selection. Annual rates of return to university education for men vary from 6.7% to 9.7% and for women from 8.0% to 13.4%. We show that simple linear estimation performs relatively well for men, while family demographics seem to be the “second best" exclusion restriction in the case of the estimation for women.

Working Paper 07/09

cenea_wp_0709.pdf

Dynamics of poor health and non-employment

Peter Haan, Michał Myck

Abstract:

While there is little doubt that the probability of poor health increases with age, and that less healthy people face a more difficult situation on the labour market, the precise relationship between facing the risks of health deterioration and labour market instability is not well understood. Using twelve years of data from the German Socio-Economic Panel we study the nature of the relationship between poor health and non-employment on a sample of German men aged 30-59. We propose to model poor health and non-employment as interrelated risks determined within a dynamic structure conditional on a set of individual characteristics. Applying dynamic panel estimation we identify the mechanism through which poor health contributes to the probability of being jobless and vice versa. We find an important role of unobserved heterogeneity and evidence for correlation in the unobservable characteristics determining the two processes. The results also show strong persistence in the dynamics of poor health and non-employment.

Working Paper 06/09

cenea_wp_0609.pdf

Dynamics of Earnings and Hourly Wages in Germany

Michał Myck, Richard Ochmann, Salmai Qari

Abstract:

There is by now a vast number of studies which document a sharp increase in cross-sectional wage inequality during the 2000s. It is often assumed that this inequality is of a "permanent nature" which in turn is used as an argument calling for government intervention. We examine these claims using a fully balanced panel of full-time employed individuals in Germany from the German Socio-Economic Panel for the years 1994-2006. In line with previous studies, our sample shows sharply rising inequality during the

2000s. Applying covariance structure models, we calculate the fraction of permanent and transitory wage and earnings inequality. From 1994 on, permanent inequality increases continuously, peaks in 2001 and then declines in subsequent years. Interestingly the decline in the permanent fraction of inequality occurs at the time of most rapid increases in cross-sectional inequality. It seems therefore that it is primarily the temporary and not the permanent component which has driven the strong expansion of cross-sectional inequality during the 2000s in Germany.

Working Paper 05/09

cenea_wp_0509.pdf

‘Klin'-ing up: effects of Polish tax reforms on those in and on those out

Leszek Morawski, Michał Myck
Abstract:

In 2007 and 2008 Polish governments introduced a series of reforms which led to a substantial reduction in the tax “wedge" (in Polish: “klin") on labour. These consisted of reductions in the disability rate of Social Security Contributions (SSCs) and an introduction of an income tax credit for families with children. We show that the SSCs reforms on their own brought much greater reductions in the tax burden compared to a widely discussed 15% “flat tax", despite a very similar simulated cost. When considered together the package of introduced reforms reduced the mean ATR on total labour cost from 41.6% to 35.7%. This compares to the mean ATR of 39.6% which would result from the introduction of the “flat tax". In the analysis we present the effects of the reforms both for the employed and for the non-employed populations. The latter analysis is done in such a way as to account for the entire (simulated) distribution of wages of the non-employed and shows interesting differences between the effects of reforms on employed and non-employed individuals. We argue that to fully appreciate the effect of reductions in labour taxation it is important to bear in mind that one of the reasons for introducing them is to make employment more likely for those who currently do not work, and demonstrate that the introduced package has had a particularly important effect on non-employed second earners. Given the extent of the reductions in the “klin" it is somewhat surprising that so far so little attention has been given to the recent Polish reforms.

Working Paper 04/09

cenea_wp_0409.pdf

Multi-family households in a labour supply model: a calibration method with application to Poland

Peter Haan, Michał Myck

Abstract:

Models of cooperative and non-cooperative behaviour opened the household ``black box" and allowed for individual treatment of partners in couples. However, labour supply literature has so far largely ignored a broader issue - the distinction of single versus multi-family ("complex") households. We propose a method to account for multi-family household structure by borrowing from recent applications of the collective model to identify the degree of sharing. We assume that each household is characterised by a between-family sharing parameter, which is calibrated on estimated preferences, observed labour market status and other characteristics. We apply the method to Polish labour market data.

Working Paper 03/09

cenea_wp_0309.pdf

Alternative tax-benefit strategies to support children in Poland

Horacio Levy, Leszek Morawski, Michał Myck

Abstract:

Eurostat data shows that children and elderly are especially at risk of being in poverty. In 2004 the average rates of poverty risk in the European Union for these groups were about 19%. In Poland, the rate was 29% for children and only 7% for the elderly. We examine the role of the tax-benefit system in explaining this situation and analyse how much child poverty figures could change under several reform scenarios. In 2005, families with children were mainly supported by a means-tested family allowance and some supplements. This was extended in 2007 with the introduction of a non-refundable child tax credit. Making use of the European tax-benefit microsimulation model EUROMOD, this paper assesses the consequences of the recent reform in Poland. We examine the outcome in comparison to child policies in three other European systems and show that poverty reduction would have been more pronounced, if child policies were changed along the lines of the system in France or the United Kingdom. The Austrian system - relying primarily on universal benefits - would bring about a similar reduction in the poverty rate but with much greater reduction in the poverty gap. The paper presents detailed distributional analysis under the different systems assuming the cost of "importing" each of them to be the same as that of introducing the 2007 reform.

Working Paper 02/09

cenea_wp_0209.pdf bytes

Safety net still in transition: labour market incentive effects of extending social support in Poland

Peter Haan, Michał Myck

Abstract:

Many aspects of the economic transition which started in 1989 in Poland are by now complete. However, the route Polish governments have so far taken concerning the system of support for low-income families still implies very different poverty alleviation schemes compared to those found in many developed countries. We examine the Polish system of social assistance in a comparative context with Germany and focus on its implications for financial incentives to work. The paper shows the effect of extending the financial support system for poorest families in Poland on labour market incentives. We demonstrate that assumptions concerning sharing of resources among families within households have significant implications on the resulting financial incentives and importantly change the implied consequences of the reforms. This is the case especially for single-adult families. 74\% of single adults without children, and 53\% of lone parents in Poland live in multi-family households. Given the limited role of the state in providing a means-tested safety net, these multi-family arrangements play an important role as far as alleviating poverty is concerned, but they are also significant for incentives on the labour market.

Working Paper 01/09

cenea_wp_0109.pdf

As SIMPL as that: Introducing a Tax-Benefit Microsimulation model for Poland

Olivier Bargain, Leszek Morawski, Michał Myck Mieczysław Socha

Abstract:

The Polish tax and benefit system is presented in the context of a recently developed microsimulation model, SIMPL. The model allows simulating direct taxes, social contributions and public benefits in Poland for the years 2003 and 2005. It is based on the Household Budgets Survey data (Badania Budżetów Gospodarstw Domowych) from 2003 and 2005. The document describes details of the Polish tax and benefit system and the simulation assumptions which were necessary in modelling it in SIMPL. We provide information on the quality of the data used in the model and some details of the validation process through various robustness checks. Finally we provide examples of application of the model for analysis of effects of policy reforms.