Publications

"Is Privatization Working in Ukraine? New Estimates from Comprehensive Manufacturing Firm Data, 1989-2013" (with J. David Brown, John S. Earle, and Volodymyr Vakhitov)

We provide new estimates of the productivity impact of privatization in Ukraine using long panel data on all initially state-owned manufacturing firms. The large size and length of the data permit us to track the privatization process, to estimate impacts within industry-year cells and with controls for firm fixed effects and trends, and to examine the heterogeneity of effects along several dimensions. We estimate that majority privatization raises multi-factor productivity (MFP) 4-10%, with the impact increasing over time to about 16-18% six years after privatization. The estimates exceed those reported in previous research using earlier data for Ukraine, and they lie in the general range of estimates for Central Europe. We find an increasing effect with calendar time, but decreasing with privatization year. The data are inconsistent with some notions of “sequencing” whereby the best firms are privatized earliest. MFP gains from privatization are estimated to decrease in pre-privatization MFP. Privatization tends to raise firm survival and provides a reallocation boost to aggregate productivity through a stronger survival-productivity linkage. The relatively few cases of foreign takeovers are associated with much higher impacts, 17-33%, compared to domestic private ownership, but the gap is much lower when the foreign source country is “offshore” – an indirect channel for Ukrainian nationals – and it is also lower when the source is Russia. Privatization of 100% ownership has much larger effects than partial privatization of either minority or majority stakes, ownership structures that have largely disappeared since the early 2000s, as Ukraine has sold off remaining shares. Nevertheless, as of 2013, the data contain more than 1000 majority state-owned firms in the manufacturing sector alone that could be considered for privatization in the future.

"Motherhood Wage Penalty in Times of Transition" (with O.Nizalova and T.Sliusarenko)

Depopulation trend in Ukraine caused to a large extent by the lowest low fertility rates raises serious concerns about the long-term economic growth and the country's future in general. In this paper we investigate the existence and the extent of the motherhood wage penalty as a potential impediment to having (more) children in a unique institutional environment. This environment is characterized by: de jure family supportive labor laws but de facto no legal enforcement of these laws; publicly subsidized childcare; and low cultural support for maternal employment, combined with extensive involvement of grand-parents. Relying on the data from the Ukrainian Longitudinal Monitoring Survey over the period from 1997 to 2007, we find that the overall motherhood wage penalty in Ukraine is much lower than in countries with similar de jure family policies and cultural norms. It constitutes approximately 19%, controlling for individual unobserved heterogeneity, a number of human capital characteristics, actual time in the labor force, and selection into employment. We also find that the motherhood wage penalty differs by education, age at birth of first child, and marital status.

Working Papers

"Employment and Productivity Effects of Tax Haven FDI" (Job Market Paper)

Using longitudinal data on more than 300,000 Ukrainian firms over period of 1999-2013 representing more than 10,000 acquisitions by foreign investors, this study estimates the extent to which tax haven ownership affects employment and firm productivity in the post-acquisition period. Controlling for a rich set of fixed effects and employing propensity score matching, I find that firms acquired by foreign investors experience boost in employment of 8-30%, labor productivity of 10-16% and total factor productivity of 9-11% relative to firms that stay domestic. The gap is much lower for firms acquired by investors from tax haven countries: focusing on the most conservative specification that controls for firm specific fixed effects and growth trajectories, my results suggest that employment of tax haven acquired firms does not change in the post-acquisition period, while productivity improvement ranges from 4 to 5 percent. My findings suggest that the implications of tax havens go beyond the loss of tax revenue and might also include stunted growth of the domestic companies receiving FDI from tax havens.

"Preventing Predation: Oligarchs, Obfuscation, and Political Connections" (with John S. Earle, Scott Gehlbach, and Anton Shirikov)

We examine the decision of wealthy business owners to protect their holdings from expropriation and arbitrary taxation through proxies, shell companies, and offshore firms. Our theoretical framework emphasizes the role of political connections in decisions to obfuscate. Linking information from investigative journalists on Ukrainian oligarchs with firm-level administrative data on formal ownership ties, we observe obfuscation among more than two-thirds of oligarch-controlled firms, but such behavior is much less common for connected oligarchs. Further exploiting the abrupt shock to political connections that accompanied the Orange Revolution, we find a sharp rise in obfuscation among previously connected oligarchs.