[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/hig/wpaper/87-ec-2014.html
   My bibliography  Save this paper

Firms And Social Policy In The Post-Communist Bloc: Evidence From Russia

Author

Listed:
  • Israel Marques

    (National Research University Higher School of Economics)

Abstract
When does business support the expansion of social policy in the developing world? Existing work on managers preferences has tended to concentrate on the developed world, where governments can credibly commit to policy, tax evasion is constrained, and mechanisms exist to hold the bureaucracy accountable for policy implementation. In this paper, I relax these assumptions, arguing that weak institutions create opportunities for some firms to shift costs onto others: making social policy more attractive. I argue that firms with political connections are uniquely positioned to benefit from subsidies and property rights protection, which decreases the cost of social policy, while firms with low visibility can evade taxes and free-ride off universalistic social policy. I test this argument using a survey of 666 firms in 10 Russian regions.

Suggested Citation

  • Israel Marques, 2014. "Firms And Social Policy In The Post-Communist Bloc: Evidence From Russia," HSE Working papers WP BRP 87/EC/2014, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:87/ec/2014
    as

    Download full text from publisher

    File URL: http://www.hse.ru/data/2014/12/25/1103917836/87EC2014.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Johnson, Simon & Kaufmann, Daniel & McMillan, John & Woodruff, Christopher, 2000. "Why do firms hide? Bribes and unofficial activity after communism," Journal of Public Economics, Elsevier, vol. 76(3), pages 495-520, June.
    2. Boix, Carles & Svolik, Milan, 2009. "The Foundations of Limited Authoritarian Government: Institutions and Power-Sharing in Dictatorships," Papers 10-21-2009b, Princeton University, Research Program in Political Economy.
    3. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    4. Wagstaff, Adam & Moreno-Serra, Rodrigo, 2009. "Europe and central Asia's great post-communist social health insurance experiment: Aggregate impacts on health sector outcomes," Journal of Health Economics, Elsevier, vol. 28(2), pages 322-340, March.
    5. Judyth Twigg, 1998. "Balancing the state and the market: Russia's adoption of obligatory medical insurance," Europe-Asia Studies, Taylor & Francis Journals, vol. 50(4), pages 583-602.
    6. A.V. Dobronogov & L.D. Mayhew, 2000. "Pension Reform in a Highly Informalized Post-Soviet Economy," Working Papers ir00041, International Institute for Applied Systems Analysis.
    7. Vladimir Gimpelson & Rostislav Kapeliushnikov & Anna Lukiyanova, 2012. "Stuck Between Surplus and Shortage: Demand for Skills in Russian Industry," Studies in Economic Transition, in: Tilman Brück & Hartmut Lehmann (ed.), In the Grip of Transition: Economic and Social Consequences of Restructuring in Russia and Ukraine, chapter 2, pages 47-75, Palgrave Macmillan.
    8. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    9. Irina Slinko & Ekaterina Zhuravskaya & Evgeny Yakovlev, 2005. "Laws for Sale: Evidence from Russia," American Law and Economics Review, American Law and Economics Association, vol. 7(1), pages 284-318.
    10. Martin, Cathie Jo, 2005. "Corporatism from the Firm Perspective: Employers and Social Policy in Denmark and Britain," British Journal of Political Science, Cambridge University Press, vol. 35(1), pages 127-148, January.
    11. Tan, Hong & Savchenko, Yevgeniya & Gimpelson, Vladimir & Kapelyushnikov, Rostislav & Lukyanova, Anna, 2007. "Skills shortages and training in Russian enterprises," Policy Research Working Paper Series 4222, The World Bank.
    12. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    13. Thelen,Kathleen, 2004. "How Institutions Evolve," Cambridge Books, Cambridge University Press, number 9780521546744, September.
    14. Burger Jr., E.J. & Field, M.G. & Twigg, J.L., 1998. "From assurance to insurance in Russian Health Care: The Problematic transition," American Journal of Public Health, American Public Health Association, vol. 88(5), pages 755-758.
    15. Cameron, David R., 1978. "The Expansion of the Public Economy: A Comparative Analysis," American Political Science Review, Cambridge University Press, vol. 72(4), pages 1243-1261, December.
    16. Rauch, James E, 1995. "Bureaucracy, Infrastructure, and Economic Growth: Evidence from U.S. Cities during the Progressive Era," American Economic Review, American Economic Association, vol. 85(4), pages 968-979, September.
    17. Tuuli Juurikkala & Olga Lazareva, 2006. "Lobbying at the local level: social assets in Russian firms," Working Papers w0061, New Economic School (NES).
    18. Becker, Gary S., 1985. "Public policies, pressure groups, and dead weight costs," Journal of Public Economics, Elsevier, vol. 28(3), pages 329-347, December.
    19. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, September.
    20. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
    21. MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
    22. Timothy Frye & John Reuter & David Szakonyi, 2012. "Political Machines at Work: Voter Mobilization and Electoral Subversion in the Workplace," HSE Working papers WP BRP 08/PS/2012, National Research University Higher School of Economics.
    23. repec:zbw:bofitp:2006_001 is not listed on IDEAS
    24. Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
    25. Afanasiev, S.A., 2003. "Pension Reform in Russia: First Year of Implementing," Discussion Paper 146, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    26. Moene, Karl Ove & Wallerstein, Michael, 2001. "Inequality, Social Insurance, and Redistribution," American Political Science Review, Cambridge University Press, vol. 95(4), pages 859-874, December.
    27. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    28. Adserà, Alícia & Boix, Carles, 2002. "Trade, Democracy, and the Size of the Public Sector: The Political Underpinnings of Openness," International Organization, Cambridge University Press, vol. 56(2), pages 229-262, April.
    29. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 3(2), pages 243-277, Fall.
    30. Gehlbach, Scott & Keefer, Philip, 2011. "Investment without democracy: Ruling-party institutionalization and credible commitment in autocracies," Journal of Comparative Economics, Elsevier, vol. 39(2), pages 123-139, June.
    31. Weingast, Barry R & Moran, Mark J, 1983. "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, University of Chicago Press, vol. 91(5), pages 765-800, October.
    32. North,Douglass C. & Wallis,John Joseph & Weingast,Barry R., 2013. "Violence and Social Orders," Cambridge Books, Cambridge University Press, number 9781107646995.
    33. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
    34. Frye, Timothy M. & Iwasaki, Ichiro, 2011. "Government directors and business–state relations in Russia," European Journal of Political Economy, Elsevier, vol. 27(4), pages 642-658.
    35. Iversen, Torben & Soskice, David, 2001. "An Asset Theory of Social Policy Preferences," American Political Science Review, Cambridge University Press, vol. 95(4), pages 875-893, December.
    36. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    37. Thelen,Kathleen, 2004. "How Institutions Evolve," Cambridge Books, Cambridge University Press, number 9780521837682, September.
    38. Jensen, Robert T. & Richter, Kaspar, 2004. "The health implications of social security failure: evidence from the Russian pension crisis," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 209-236, January.
    39. Olson, Mancur, 1993. "Dictatorship, Democracy, and Development," American Political Science Review, Cambridge University Press, vol. 87(3), pages 567-576, September.
    40. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    41. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paster, Thomas, 2015. "Bringing power back in: A review of the literature on the role of business in welfare state politics," MPIfG Discussion Paper 15/3, Max Planck Institute for the Study of Societies.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marques II, Israel, 2018. "Firms and social policy preferences under weak institutions : Evidence from Russia," BOFIT Discussion Papers 7/2018, Bank of Finland, Institute for Economies in Transition.
    2. repec:zbw:bofitp:2018_007 is not listed on IDEAS
    3. Marques II, Israel, 2018. "Firms and social policy preferences under weak institutions: Evidence from Russia," BOFIT Discussion Papers 7/2018, Bank of Finland Institute for Emerging Economies (BOFIT).
    4. Israel Marques II, 2017. "Political Connections and Non-Traditional Investment: Evidence from Public-Private Partnerships in Vocational Education," HSE Working papers WP BRP 56/PS/2017, National Research University Higher School of Economics.
    5. Israel Marques II, 2022. "Skipping Out On The Check: Institutional Quality, Tax Evasion, And Individual Preferences For Social Policy," HSE Working papers WP BRP 85/PS/2022, National Research University Higher School of Economics.
    6. Marques, Israel & Remington, Thomas & Bazavliuk, Vladimir, 2020. "Encouraging skill development: Evidence from public-private partnerships in education in Russia’s regions," European Journal of Political Economy, Elsevier, vol. 63(C).
    7. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    8. Kammas, Pantelis & Sarantides, Vassilis, 2019. "Do dictatorships redistribute more?," Journal of Comparative Economics, Elsevier, vol. 47(1), pages 176-195.
    9. Ehrlich Sean D, 2010. "Who Supports Compensation? Individual Preferences for Trade-Related Unemployment Insurance," Business and Politics, De Gruyter, vol. 12(1), pages 1-24, April.
    10. Francis,David C. & Kubinec ,Robert, 2022. "Beyond Political Connections : A Measurement Model Approach to Estimating Firm-levelPolitical Influence in 41 Economies," Policy Research Working Paper Series 10119, The World Bank.
    11. Rougier, Eric, 2016. "“Fire in Cairo”: Authoritarian–Redistributive Social Contracts, Structural Change, and the Arab Spring," World Development, Elsevier, vol. 78(C), pages 148-171.
    12. Aidt, T.S. & Eterovic, D.S., 2007. "Give and Take: Political Competition, Participation and Public Finance in 20th Century Latin America," Cambridge Working Papers in Economics 0714, Faculty of Economics, University of Cambridge.
    13. Carl Henrik Knutsen, 2012. "Democracy and economic growth: A survey of arguments and results," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 15(4), pages 393-415, December.
    14. Michael Albertus & Victor Gay, 2019. "No better time than now: Future uncertainty and private investment under dictatorship," Economics and Politics, Wiley Blackwell, vol. 31(1), pages 71-96, March.
    15. Aidt, Toke S. & Eterovic, Dalibor S., 2011. "Political competition, electoral participation and public finance in 20th century Latin America," European Journal of Political Economy, Elsevier, vol. 27(1), pages 181-200, March.
    16. Amy Pond, 2018. "Protecting Property: The Politics of Redistribution, Expropriation, and Market Openness," Economics and Politics, Wiley Blackwell, vol. 30(2), pages 181-210, July.
    17. Beramendi, Pablo, 2007. "Inequality and the Territorial Fragmentation of Solidarity," International Organization, Cambridge University Press, vol. 61(4), pages 783-820, October.
    18. Barth, Erling & Finseraas, Henning & Kjelsrud, Anders & Moene, Kalle, 2023. "Openness and the welfare state: risk and income effects in protection without protectionism," European Journal of Political Economy, Elsevier, vol. 79(C).
    19. Betz, Timm & Pond, Amy, 2023. "Democratic institutions and regulatory privileges for government debt," European Journal of Political Economy, Elsevier, vol. 79(C).
    20. Thomas F. Remington, 2017. "Closing the Skills-Jobs Gap: Russia and China Compared," HSE Working papers WP BRP 53/PS/2017, National Research University Higher School of Economics.
    21. Schulze-Cleven, Tobias, 2006. "The Politics of an Experimental Society: Creating Labor Market Flexibility in Europe," Institute for Research on Labor and Employment, Working Paper Series qt92x040tt, Institute of Industrial Relations, UC Berkeley.

    More about this item

    Keywords

    Labor markets; Firm manager preferences; Tax evasion; Politically connected firms; Welfare state;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hig:wpaper:87/ec/2014. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shamil Abdulaev or Shamil Abdulaev (email available below). General contact details of provider: https://edirc.repec.org/data/hsecoru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.