Irrelevance of the soft budget constraint for the shortage phenomenon

Kornai's thesis that shortage results from demand expansions bred by the soft budget constraint, derives from his implicit assumption that price regimes of input and output firms are different. Since any firm is both an input and an output firm, which discards the assumption as logically untenable, excess demand can only turn up because of lower than contracted inputs of labor and management that are not offset by an adequate downward adjustment of earnings. Expansions of demand that appear to be autonomous, are incited by uncertain deliveries of inputs, that is, by inefficiency (of output firms) as well. A by far the largest part of excess demand can be explained by state preferences for fast growth. As planners are more successful in generating investment, and the ensuing consumer, demand than in expanding production, shortage is inevitable regardless of the character of the firms' budget constraints.     

A Comparative Study of Employment Adjustment in Chinese Enterprises (1986–1990)

Structural change and competition are profoundly affecting the way labor markets work in China, especially in rural areas. The rapid growth of jobs in township and village enterprises during the 1980s was forged largely by market forces and with little government oversight. Similar pressures are now playing an increasing role in urban markets, but the difficulties of state enterprises have made the transition more difficult. The inflexibility of the urban labor market has several negative effects on the performance of urban enterprises, especially SOEs. One of the problems it creates is over-staffing in SOEs, which is largely due to their failure to adjust employment with respect to efficient labor demand. The massive lay-offs that took place since 1995 demonstrate the seriousness of the over-staffing problem in the state sector of China's industry. Government officials estimate that 15 to 20 percent of state enterprise employees could be released from their companies without affecting output. This study investigates the differences in the speed of employment adjustment between state, collective, and township-village enterprises in China. Using panel data from a sample of Chinese enterprises during 1986-1990, our empirical results indicate that the speed of adjustment in production workers might be the slowest in the state-owned enterprises.     

破产程序中劳动债权的法律保障

破产企业职工劳动债权的保护问题，是破产法理论和司法实践中的重要问题之一，我国与企业市场退出相配套的社会保障机制尚未建立，破产企业职工生活尚缺乏足够的社会保障，为此研究职工劳动权益的保护问题有着重要的意义。本文以中国现代法制人道关怀、救助社会弱者为出发点，对政策性破产中劳动债权的破产优先权、一般企业破产中劳动债权的优先受偿权及劳动债权的参与权等问题作了初步探讨。     

On the employment effect of noncompliance with the minimum wage law

A major result of the economic literature on minimum wage noncompliance is that a competitive employer who opts not to comply with the minimum wage law will employ less labor than he would have in the absence of a law. The reason for this is that noncompliance entails the risk of getting caught and punished, consequently raising the marginal cost of labor to the employer. An implicit assumption underlying this result is that noncompliance does not affect the free market wage rate facing the competitive employer. The present note shows that noncompliance will bring about a fall in the market wage rate and that if employers and workers are risk neutral, the market wage rate will fall in a way that leaves the marginal cost of labor intact. Consequently, the enactment of a minimum wage law, if not accompanied by sufficient enforcement to induce compliance, will have no effect on the level of employment.     

Takeover Defenses’ Influence on Managerial Incentives

This article examines how takeover defenses influence managerial incentives with respect to long-term investments, excess liquidity and capital structure. The article presents a cross-sectional regression based on a sample of listed Danish firms and deals explicitly with the problem of causation between the variables. Takeover defenses adopted by Danish firms mainly consist of shares with dual class voting rights, which are often combined with foundation ownership. The article finds that protected firms have significantly less debt to equity. However, protected firms are not significantly more oriented towards the long-term and do not have significantly more excess liquidity.     

China's State-Owned Enterprises in the First Reform Decade: An Analysis of a Declining Monopsony

We study the evolution of employment and wage outcomes in Chinese SOEs during the first decade of economic reforms, using a panel of data for almost 1000 enterprises covering the years 1980–90. Unlike the 1990s, which were marked by growing labor redundancy in the SOE sector, we find that CPE-fostered capital-intensity remained so extreme during the 1980s that workers' marginal products exceeded their full wages, just as in a classical monopsony outcome. Consistent with reasoning about the impact of competition upon monopsony, however, we find the marginal product-wage gap declined in the face of market-oriented reforms, and that monopsony was weakest where the state sector's shares of industrial output and enterprises were lowest, and for smaller enterprises and enterprises managed by lower levels of government. Our analysis also supports Xu and Zhuang's (1996) finding that bonus payments increased enterprises' revenues by more than it did their costs.     

Severance payments for dismissed employees in Germany

This contribution investigates severance payments for dismissed employees in Germany. Particularly, it responds to two questions: “Who receives severance payments?” and “By which characteristics is the level of severance payments determined?”. Individual and collective dismissals are analyzed separately. This is the first study on this issue using individual representative data—the German Socio-Economic Panel—and multivariate methods. The results indicate that rather women, persons with many years of tenure and working in large firms receive severance payments. There is a huge variance in the size of the payments. The most important determinants are the previous wage, tenure and age.     

Do Ukrainian Firms Benefit from FDI?

All countries are eager to attract as much foreign direct investments (FDI) as possible. At the same time FDI may have not only positive, but also negative economic effects for receiving countries. Positive effects are associated with technology transfer, efficient allocation of resources, and training of domestic workers. However, the entry of foreign firms could, e.g., lead to a decrease of labor productivity at domestic firms, which is a negative effect. The main purpose of this paper is to estimate direct and indirect effects of FDI. First, we test for direct influence of foreign direct investments on firms’ performance, where the latter is estimated alternatively as labor productivity and as exports. FDI notably increases both labor productivity and export volumes. Second, we look for spillover or indirect effects. There is statistical evidence that the levels of FDI in certain regional industries are associated with higher performance indicators of firms’ not receiving FDI in those same regional industries.     

Legal Problems Involved in the Convergence of Collective and State Farms and the Emergence of a Single Type of Publicly-Owned Agricultural Enterprise

The Party Program adopted by the 22nd CPSU Congress, representing a creative advance of Marxism-Leninism, has defined scientifically the perspectives and courses to be followed to achieve a further sharp rise in agriculture as a prerequisite for the building of a communist society in our country. The CPSU Program points out: "The further advance of the village toward communism will follow the course of development and improvement of both forms of socialist enterprise — collective and state farms." They are both becoming transformed into highly productive and highly profitable forms of enterprise. The economic basis for their development is the continuous growth of the productive forces and improvement in their utilization, improved organization of production and methods of management, a steady rise in labor productivity, and rigorous adherence to the principle that good work and superior results lead to higher pay. On this basis, the collective and state farms will increasingly become enterprises of a communist type in their production relations, the character of the work involved, the living and cultural standards of their personnel. As the building of communism progresses, and as production is improved and increased in volume, "the collective farms will," says the CPSU Program, "come to be agricultural enterprises under general public ownership, by virtue of their economic condition."     

The size of the SOE sector and macroeconomic performance: an empirical study based on Chinese provincial data

Using a neoclassical growth model augmented with human capital, we investigate the impact of the presence of state owned enterprises (SOEs) on macroeconomic performance in China, using provincial data from 1990 to 2004. We estimate a macroeconomic model with panel methods to explain changes in labor productivity resulting from standard influences as well as presence of the SOE sector measured in five different ways. While controlling for growth in the labor force and physical capital, government size, exposure to trade and change in economic structure, we conclude that the relative share of the SOE sector has no significant influence on macroeconomic performance in China during our sample period.     

Privatisation or Competition?

Market competition is essential for any economy to be efficient. In order to develop competition in a transition economy, it is conventionally thought that privatisation should take place first. This wisdom has been challenged by the Chinese reform experience of the last two decades, which modified the incentive structure of state enterprises and created markets and market competition in the absence of large scale privatisation. China's experience, however, raises the question of whether its chosen type of reform is sufficient to promote competition in a market dominated by public firms. To answer this, we need to know what kind of markets were created – regional markets closed to trade or unified markets with easy access – and whether or not improved incentives for state firms have led to competition. This paper investigates these questions on the basis of a survey of both theory and empirical evidence; and finds that the Chinese reform policies did succeed in stimulating competition among state firms.     

Anticompetitive Employment

Scholars, antitrust agencies, and policy makers have historically paid little attention to anticompetitive practices in labor markets. This was largely due a misconception that antitrust law is meant to govern conventional markets in which goods and services trade, rather than govern labor markets. Antitrust law may also offer a poor remedy to redress employers who enter no-poaching agreements or otherwise impair competition. The primary tension involves antitrust's purpose, which is to promote “consumer welfare.” To identify whether conduct eroded consumer welfare, courts tend to scrutinize whether prices increased. But here, lessening wages can enable firms to sell goods at cheaper prices, benefiting consumers. Another issue is that the typical restraint affects only a smattering of workers instead of lessening wages throughout the greater market. This article uses empirical analyses to show that antitrust should promote labor's welfare as it does consumer welfare, and it argues that enforcement must condemn labor cartels as per se illegal. The research demonstrates that labor cartels are more pernicious than restraints in product markets, as employers can lessen wages with less effort than in product markets. Antitrust should even proscribe no-poaching agreements formed for a legitimate purpose (e.g., to protect trade secrets) because employers could have achieved the same goals using less coercive means; the noncompete agreement, at least, provides labor with a semblance of notice and bargaining power without drawing antitrust scrutiny. The prohibition of labor cartels would thus promote competition and consumer welfare, especially in minimum wage labor markets.     

Neoclassical Difficulties: Tort Deterrence for Latent Injuries*

Economists often claim that the tort system leads firms to provide consumers and workers with the socially optimal level of safety. Moreover, in the case of work-related hazards, employers are alleged to have another source of incentives to take precautions. If wages are sensitive to job-related risks, employers should spend money to reduce such risks when, by doing so, they can save more in wage costs than the costs of the precautions taken. Whatever their merits in other settings, in the case of latent injuries such as workplace exposure to asbestos neither tort nor market are likely to provide an optimal level of safety; indeed, they have failed to do so in the examples we discuss. We find that the introduction of a long delay between the exposure to a hazard and the onset of symptoms introduces a variety of empirical complications that overwhelm the assumptions on which the neoclassical model rests. Our conclusion is thus that comparisons between tort and alternative systems of deterrence/compensation should start from an empirical assessment of how the tort system actually works (and doesn't work), rather than beginning with misleading theoretical claims about the system's optimality.     

Client Influence and the Contingency of Professionalism: The Work of Elite Corporate Lawyers in China

This study examines how the professional work of elite corporate lawyers is constructed by influence from different types of clients. The data presented include interviews with 24 lawyers from six elite corporate law firms in China and the author's participant-observation in one of the firms. For these elite Chinese corporate law firms, foreign corporations, state-owned enterprises, and private enterprises constitute their extremely diversified client types. Accordingly, lawyers' work becomes flexible and adaptive to accommodate the different demands of the clients. Meanwhile, client influence on lawyers' professional work is mediated by the division of labor within the corporate law firm: whereas partners have solid control over the process of diagnosis, inference, and treatment and thus enjoy a high degree of professional autonomy, associates are largely stripped of this cultural machinery in the workplace, and their work becomes vulnerable to client influence. As a result, client influence on professional work appears to decrease with a lawyer's seniority.     

关联企业的法律特征及其与企业集团的关系

关联企业和企业集团存在于我国经济生活已经有很长时间,并频繁出现在我国的有关法律条文中.但我国法学界一般并不将关联企业和企业集团作概念上的区分.关联企业和企业集团既存在量的差异,又存在质的区别.其量的差异表现为:关联企业是两个企业组成的一组企业,企业集团是两个以上企业组成的一群企业;其质的区别表现在:关联企业有股权、契约、身份三种纽带,企业集团仅有股权一种纽带.     

Productivity slowdown and misallocation in the post-recession: What prevents recovery?

This study explores the effects of the 2008 global economic crisis on the labor allocation and productivity in Luxembourg. The analysis is based on firm-level data from manufacturing and non-financial service sectors and finds a dramatic productivity slowdown after 2008. The study reveals that the cleansing effect of recession did not function effectively which would otherwise improve the efficiency in the labor allocation and counterbalance the productivity slowdown. The firm entry and job creation rates are lower in the post-crisis period, but the job destruction is not significantly altered by the crisis. The findings call attention for the strict employment protection legislation that possibly plays a role in preventing reallocation towards more efficient establishments. Relaxing the employment protection legislation simultaneously with facilitating the entry and growth of young firms is expected to promote creative destruction, improve allocative efficiency and speed up the post-crisis recovery.     

Agents of Change or Unchanging Agents? The Role of Lawyers within Russian Industrial Enterprises

The transition from state socialism toward market capitalism has led to an almost endless supply of new laws and legal institutions. Industrial enterprises need to adapt to this new institutional regime. In-house lawyers are well placed to be agents of change in facilitating this adjustment. Using survey data from 328 Russian enterprises, the article examines the role of company lawyers, asking whether they have fulfilled this potential. Legal expertise is not in short supply, but lawyers are marginalized within the enterprise. They focus on established, routine tasks, such as handling labor relations or drafting form contracts, rather than on shaping enterprise strategies in the newer areas created by the transition, such as corporate governance or securities law. The failure of in-house lawyers to emerge as agents of change in Russia reflects a continuation of their low status during the Soviet era and the lack of professional identity among these company lawyers.     

Bureaupreneurs in China: we did it our way

This article explores the different and sometimes conflicting explanations of the success of the collective enterprises (town–village-enterprise) in China during the first phase of transition (1979–1995). It is argued that explanations, relying on cultural variables are not sustainable and this for two reasons. First, the importance of the collective enterprise is shrinking while the private sector is clearly on the rise. Second, other factors, referring to characteristics of the local and central political, administrative and economic environment, in which the Chinese enterprise has to (had to?) operate, provide for a sufficient explanation of the peculiar structure of the Chinese collective enterprises. These enterprises are seen as the result of ?bureau-preneurship’ because local bureaucrats were integrated in their management in order to pre-empt predatory behaviour and to facilitate the relationships with the central institutions. The article contributes to the property rights’ theory of the firm as it analyses an empirically very important case in which firms with unclear property rights and structures, apparently not conducive for incentives, might still be the most efficient option.     

An empirical study of openness and convergence in labor productivity in the Chinese provinces

Based on the theoretical framework of the Solow growth model, this paper employs a dynamic panel data approach to examine the impact of openness on growth and convergence in labor productivity in the Chinese provinces during the period 1984–2008. The study finds that regional openness has a significantly positive effect on regional growth in labor productivity in the Chinese provinces. When regional heterogeneity and regional openness are accounted for, the study finds fast conditional convergence in labor productivity across the Chinese provinces. As a byproduct, this study also estimates the structural parameters of the aggregate production function in the case of China. In sum, the major findings of this study lend strong support to the claim that openness promotes growth of labor productivity in China.