ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Jun
20

Why Care About Informal Employment?

Before answering this question, let us define what economists usually mean with ” informal employment”. There is some confusion with this term, and sometimes it is improperly used as a synonym for tax evasion or illegality. ILO defines informal employment as: employment “consisting of units engaged in the production of goods or services with the primary objective of generating employment and incomes to the persons concerned. These units typically operate at a low level of organisation, with little or no division between labour and capital as factors of p...
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Jun
16

Georgia – A Country Between Poland and Korea

In the first part of this article (available also on the homepage of The Financial), I described some of the adverse incentives resulting from a social welfare system. Then I argued that according to Simon Kuznet’s famous paradigm, increasing inequality is hardly evitable when a country enters a growth trajectory (as Georgia did in 2003), and I reasoned that it is at least an ambivalent (not to say questionable) policy for Georgia, at its current state of development, to fight inequality by social welfare measures. In this vein, the articl...
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Jun
09

Redistribution Versus Growth: Georgia at the Crossroads

One day in my village, I saw our neighbors carrying TV sets, refrigerators, parabolic antennas, and washing machines out of their house. Soon I found out that they were hiding all that stuff from the Social Service Agency (SSA) that was about to check eligibility for social benefits. Later, when I spoke with some other villagers, it turned out that some families had even sold their cows to become eligible for social assistance. “Cows are costly and do not give income on a permanent basis”, they said. Others avoided work contracts because official em...
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Recent Comments
Guest — Florian Biermann
Eric, two different economists wrote on the same subject. Of course, they must come to different conclusions -- otherwise, this wo... Read More
Tuesday, 10 June 2014 10:10 AM
Guest — Eric Livny
Here is what we wrote about two years ago on exactly the same subject (http://www.iset.ge/blog/?p=1171):"there are case studies sh... Read More
Monday, 09 June 2014 9:09 AM
Guest — RT
it's probably -- just a bit -- misleading to call Kuznets "a Belorussian economist" :-)
Monday, 09 June 2014 11:11 AM
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May
23

Georgian Shadow Economy - its Past and its Legacy

The existence of a sizeable shadow (or second, informal) economy in the USSR was and is well-known. The Soviet era was characterized by a very rigid formal system with a high level of bureaucratization and inefficient planning. This resulted in many problems, both in terms of production and consumption. Soviet consumers experienced constant frustration and dissatisfaction caused by endlessly searching for goods and services they demanded, the need to queue for them without any guarantee of getting what they wanted, and the risk of having instead to accep...
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Guest — Eric Livny
A very interesting aspect of the Georgian legacy! I am fascinated by the contrast between the extremely positive role of honor-bas... Read More
Friday, 23 May 2014 10:10 AM
Guest — Adam
Great piece!
Friday, 23 May 2014 11:11 AM
Guest — NP
This contrast is indeed remarkable. We just need to see whether Saakashvili's "revolution" has been sufficient to alter permanentl... Read More
Saturday, 24 May 2014 12:12 AM
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May
19

Becoming Rich Delayed

During my morning shower, I like to think about Georgia’s economic prospects and how the country should develop. Since the Rose Revolution, there was a lot of “catch up growth”, i.e. growth that stems from returning from a state of chaos to normal economic conditions. Yet a country cannot catch up forever, and the only possibility for an emerging economy without substantial natural resources to sustain high growth is to profitably interact with the rest of the world. Usually, while I put shampoo on my hair, I start thinking about what Georgia could deliv...
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Guest — Adam
The answer, I believe, is to stop using shampoo. I never get to that stage, and therefore I see continuing growth on a "catch-up b... Read More
Monday, 19 May 2014 3:03 PM
Guest — Eric Livny
I tend to conclude my early morning procedures with a cold shower, and hence tend to agree with both of you . Florian's main point... Read More
Monday, 19 May 2014 4:04 PM
Guest — Adam
A timely discussion. The GoG just announced the following program: http://agenda.ge/news/14407/eng
Tuesday, 20 May 2014 8:08 AM
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May
02

Education That Matters

Cuba’s Fidel Castro once famously said about his country: “Even our prostitutes have university degrees”. While we don’t know about prostitutes, something similar could be said about Georgia. Virtually all Georgians have university degrees, and, as every frequent user of taxi services knows, there are Georgian taxi drivers who have two of them. Yet Georgia’s permeation with human capital  is even more impressive than in Cuba, because Cubans were sent to schools by government command, while Georgians chose to become so literate just by their own moti...
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Guest — uli
In general I agree with your assessment, but I wonder why you missed some important points concerning university education. 1. Yo... Read More
Friday, 02 May 2014 11:11 PM
Guest — Tamar Khitarishvili
Your blog raises a lot of interesting points. I would like to address one related to the link between wages and the quality of edu... Read More
Monday, 05 May 2014 7:07 PM
Guest — Eric Livny
Dear Tamar, many thanks for your very thoughtful comments. I very much agree with the main thrust of your argument, namely, that G... Read More
Friday, 09 May 2014 5:05 PM
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