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Unemployment Impact of Product and Labor Market Regulation: Evidence from European Countries

Abstract

This paper provides robust estimates of the impact of both product and labor market regulations on unemployment using data from 24 European countries over the period 1998–2013. Controlling for country fixed effects, endogeneity, and a large set of covariates, results show that product market deregulation overall reduces the unemployment rate. This finding is robust across all specifications and in line with theoretical predictions. However, not all types of reforms have the same effect: deregulation of state controls and in particular involvement in business operations tend to push up the unemployment rate. Labor market deregulation, proxied by the employment protection legislation index, is detrimental to unemployment in the short run, while a positive impact (i.e., a reduction in the unemployment rate) occurs only in the long run. Analysis by sub-indicators shows that reducing protection against collective dismissals helps in reducing the unemployment rate. The unemployment rate equation is also estimated for different categories of workers. Although men and women are equally affected by product and labor market deregulations, workers distinguished by age and educational attainment are affected differently. In terms of employment protection, young workers are almost twice as strongly affected as older workers. Regarding product market deregulation, highly educated individuals are less impacted than low- and middle-educated workers.

Open access
Survey vs Scraped Data: Comparing Time Series Properties of Web and Survey Vacancy Data

Abstract

This paper studies the relationship between a vacancy population obtained from web crawling and vacancies in the economy inferred by a National Statistics Office (NSO) using a traditional method. We compare the time series properties of samples obtained between 2007 and 2014 by Statistics Netherlands and by a web scraping company. We find that the web and NSO vacancy data present similar time series properties, suggesting that both time series are generated by the same underlying phenomenon: the real number of new vacancies in the economy. We conclude that, in our case study, web-sourced data are able to capture aggregate economic activity in the labor market.

Open access
Political news and stock market reactions: evidence from Turkey over the period 2008–2017

Abstract

The primary objective of the study is to examine the impact of political news (good and bad news) on the returns and volatility of Borsa Istanbul 100 Index (BIST-100). Sample data cover the period from January 2008 to December 2017. The main sample was divided into two subperiods to insulate the dominating impacts of both the 2008 Global Financial Crisis and 2013 Federal Reserve Tapering on Turkish stock markets. The daily stock market data were collected from the Electronic Data Delivery System (EVDS) web service, while political news headlines were collected from the Guardian newspaper. Different nonlinear volatility models (symmetric and asymmetric Generalized AutoRegressive Conditional Heteroskedasticity [GARCH]-type models) were used to model and estimate BIST-100 volatility in response to political news. The findings of the paper highlight four main results. First, there seems to be a significant impact of political news on the returns and volatility of BIST-100 index. Second, negative shocks derived from bad news tend to have a significant impact on the returns and volatility of BIST-100, while positive shocks derived from good news do not tend to have any significant impact on the returns, but decreased returns volatility. Third, political news, both good and bad, can affect stock return and stock return volatility in different directions, and this direction is time-varying. Fourth, the findings strongly reveal the presence of “Leverage Effect” in the returns of BIST-100 index. Therefore, one can say that political uncertainty is still a problem for the Turkish stock market.

Open access
Solving Systems of Linear Equations under Conditions of Uncertainty on the Example of the Leontief Model

Abstract

The paper presents various methods of solving systems of linear equations under conditions of uncertainty. In a situation when the parameters of such systems cannot be precisely determined with real numbers, they can be represented by interval numbers, fuzzy numbers or ordered fuzzy numbers. Solutions of systems of linear equations with such representations of parameters are shown in the example of Leontief input-output model. It has also been shown that when ordered fuzzy numbers are applied, their additional feature – orientation – can broaden and deepen economic analysis.

Open access
Labor Migration in Indonesia and the Health of Children Left Behind

Abstract

Economic research on labor migration in the developing world has traditionally focused on the role played by the remittances of overseas migrant labor in the sending country’s economy. Recently, due in no small part to the availability of rich microdata, more attention has been paid to the effects of migration on the lives of family members left behind. This paper examines how the temporary migration of parents for work affects the health outcomes of children left behind using the longitudinal data obtained from the Indonesia Family Life Survey. The anthropometric measure of the child health used, height-for-age, serves as a proxy for stunting. The evidence suggests that whether parental migration is beneficial or deleterious to the child health depends on which parent moved. In particular, migration of the mother has an adverse effect on the child’s height-for-age, reducing height-for-age Z-score by 0.5 standard deviations. This effect is not seen on the migration of the father.

Open access
The Adaptive Market Hypothesis and the Day-of-the-Week Effect in African Stock Markets: the Markov Switching Model

Abstract

In line with the Adaptive Market Hypothesis (AMH), the objective of this study is to investigate how the day-of-the-week (DOW) effect behaves under different bull and bear market conditions in African stock markets, and to examine the likelihood of being in a bull or bear regime for each market. A Markov Switching Model (MSM) was employed as the analytical technique. The results show that the DOW effect appears in one regime and disappears in another, in all markets, as rooted in the AMH. Lastly, all markets, except the Johannesburg Stock Exchange have a higher tendency to be in a bearish state than a bullish one. Our findings show that active investment management may yield profits for investors investing in most African markets during bearish conditions.

Open access
The Attitudes of the European Union and China Towards Foreign Direct Investment: Implications for Bilateral Relations

Abstract

The aim of this paper is to discuss new trends that have occurred in the policies of the EU and China towards foreign direct investment (FDI), to examine some implications of the EU-China Comprehensive Agreement on Investment (CAI) – which is currently being negotiated – for their bilateral relations, and to assess the role which China’s “One Belt One Road’ (OBOR) initiative might play in its relations with the new EU Member States. The EU established freedom of capital movement with third countries; however, the introduction of the common investment policy has encountered some obstacles. These are related to investor protection and ISDS issues. In turn, China is carrying out an independent state policy towards foreign investment with limited liberalization of FDI flows. The negotiated EU-China CAI is expected to create conditions conducive to bilateral foreign investment flows, and it might bring positive effects for their economies in the future. However, the progress made thus far in the negotiations is still limited. The relations between China and the new EU Member states (CEE countries) are characterized by common interests in the field of FDI flows. The new EU countries are interested in attracting Chinese FDI and seem not to show the fears that have arisen in the old EU countries.

Open access