MA Theses 2007

Ivane Barbakadze: “Explaining inflation in Georgia: do exchange rate and nominal wage matter?”


This study investigates the behavior of inflation in Georgia in the poststabilization period based on the long-run equilibrium models of three interrelated markets – foreign exchange, money and labor. It is the first attempt to look at the sensitivity of consumer prices to the changes of nominal wages and, respectively, evaluate the potential consequences of the high increases in nominal wages in the country during 2004-2006. The study also explains the opposite dynamics of inflation and the domestic exchange rate depreciation in Georgia in the last two years (2005-2006). By estimating a pass-through equation using the cointegrating framework, this paper finds that the exchange rate pass-through to prices is very strong related to the other determinants (money supply, nominal wages, and food prices) – in the short-run depreciation of the Georgian lari against US dollar by 1 percent leads to contemporaneous increase in CPI inflation by 0.28 percent. The long-run response of consumer prices to the exchange rate becomes much stronger (0.43 percent). Changes in nominal wages have significant effect on consumer prices as well – an increase in nominal wages by 1 percent leads to increase in the CPI inflation by 0.03 percent in the same month – making the predictions of the NBG experts about the risk of high future inflation (due to increase in nominal wages) reasonable.


Dmytro Bezuskyy: “Boom or bubble in the Kyiv residential real estate market”


This paper uses econometric techniques to detect the speculative part (bubble) in the Kyiv residential real estate prices. The bubble part is estimated as the difference between actual housing prices and ‘fundamental’ prices, where fundamental prices are determined as the sum of the discounted future expected dividends (monthly rent payments). We quantitatively estimate bubble part-to-fundamental price ratio for all 10 Kyiv districts. The results obtained during this paper clearly indicate importance of the speculative factor (bubble factor) in actual price growth in the Kyiv Residential Real Estate Market. Bubble part is a significant driver of current housing prices for all 10 Kyiv districts even if we looked in it either as a homogenous variable or as a function of fundamentals.


Dmytro Bilodid: “Price volatility influence on agricultural income instability”


In the paper I investigate how different price shocks, world and domestic, influence the stability of farmers’ income in Ukraine. For this purpose I computed the coefficient of variation (CV) of income, using approach developed by Rapsomanikis and Sarris (2005) which combines prices variability of crops cultivated with income structure of farmers. This framework allows evaluating the impact of price shocks on agricultural producers’ profits. The results show that CV’s varies for different groups of firms depending either on type and region of location of an enterprise. Investigating the sources of income instability, I have found that it is caused mostly by the domestic factors. Trade liberalization would just slightly decrease agricultural income uncertainty.

Viktor Bisovetskyi: “Job satisfaction and self independence: the case of Ukraine”


This work is devoted to job satisfaction. In the study we use a new interpretation of utility: procedural utility. The goal of the work is direct application of the procedural utility to learn more about satisfaction an individual derives from a job. In our testing we used the dataset of the Ukrainian Longitudinal Monitoring Survey for 2003 and 2004. The results of the computations showed that within the set of employed the level of freedom, measured as the number of people at the enterprise and the number of subordinates an employee has, is important and influences their feeling of happiness they receive from the job. However, results of our estimation did not support other hypothesis: we did not find positive connection between level of autonomy and job satisfaction among self-employed and self-employed status has no significant effect on job satisfaction. We propose some new hypothesis to explain this insignificance and provide directions for future researches.


Vladimer Botchorishvili: “Private returns to education in Georgia”


This thesis studies the marginal private returns to education in Georgia for the years from 1997 to 2006. Using the sample selection correction procedure, the returns to additional year of schooling in 2006 are estimated to be 6.2% for both, men and women. The marginal private returns to higher education were found to be the largest compared to other educational levels and constituted 6.6% for men and 7% for women, pointing that incentives to acquire higher education are in place. These returns were also estimated to be increasing over time, suggesting that education in Georgia gets increasingly valued as the transition process progresses.


Olena Chekmezova: “Do we pay for clean air: hedonic price analysis of housing market in Kyiv”


This paper provides estimation of marginal willingness to pay for the air quality improvement using hedonic price analysis. It is conducted for housing market in Kyiv and is motivated by the high air pollution in Kyiv on the one hand, and lack of applications of hedonic price techniques for valuation environmental amenities in transition countries on the other hand. This study utilized data on rental and sales housing markets with combination of the data on four air pollutants: particulate matter (PM), sulfur dioxide (SO2), nitrogen dioxide (NO2), and carbon monoxide (CO). It appears that residents of Kyiv are concerned more about pollution that comes from stationary sources comparing to pollution that comes from mobile emission sources. It is indicated by their positive willingness to pay for improvement in SO2 concentrations. This relationship is supported in the analysis of both rental and sales housing market data, which confirms the idea that residents of Kyiv do value clean air.


Sergiu Frunze: “Modeling spot prices in Ukrainian wholesale electricity market”


In this paper we investigate the behavior of spot electricity prices in Ukrainian Wholesale Electricity Market. The data covers the period from January 2003 to January 2007. The price behavior is estimated by a GARCH, TGARCH and EGARCH model in order to capture the asymmetry effects of “bad news” and “good news” on the conditional volatility. The analysis starts by examining the seasonal behavior of the spot electricity prices such as intra-daily, weekly and monthly. The findings also reveal a high degree of volatility persistence. An “inverse leverage effect” is found which means that positive innovations have a bigger impact on the conditional volatility than negative shocks do.


Maia Gejadze: “Health inequalities in Ukraine: does education matter?”


This paper examines educational gradient in health using the Ukrainian Longitudinal Monitoring Survey in 2003. To estimate the impact of additional year of education on the probability of having no serious illnesses, obese body mass category, and of Self Reported Health status Probit and Ordered Probit Models are employed. Due to the gender differences in health, results are reported separately for males and females. To account for the reverse causality problem from better health to better education, education is instrumented by parental education. While among males the results concerning the health- educational relationship is mixed, among females causal effect of education on health is found to be positive and significant with magnitude varying across different health measures from 1% to 3.7%. This finding implies that more educated females are more efficient producers of health. Thus, policies that aim increasing the general level of education in the population will also accomplish the goal of improved health among females.


Iaryna Grynkiv: “Interest rate pass through in Ukraine”


This paper aims to investigate the issue of interest rate pass through in Ukaine between 2000 and 2006. After identifying a structural break in the interest rate data, we apply structural vector autoregressive methodology to model the process of pass through from monetary policy shock and from a measure of cost of funds to a series of bank retail rates for the whole period and a post-break subperiod. We find the evidence of incomplete pass through in the short run: the transmitted proportion of changes in market interest rate to bank deposit and credit rates within one month is at most 64%. At the same time, the hypothesis of full pass through to most retail rates in the long run can not be unanimously rejected. Also, the pass through from monetary policy rate (the NBU discount rate) appears to be higher both in the short and long run than the pass through from market interest rates, which stands out against the popular belief that the monetary policy does not work in Ukraine. Inaddition, we find the pass through to be both higher and associated with a shoter lag since the July of 2002, the point of structural break. Finally, no asymmetry is found in the interest rate pass through process.


Serhiy Hvozdyk: “Risk-sharing and industrial specialization: the case of Ukraine”


This thesis defines and examines the link between risk sharing and industrial specialization on the basis of the regional information which is something that has not been done for Ukraine. Since regions have different specialization it is interesting to see how specialization is insured against shocks. It is especially important in the case of Ukraine because the economic conditions are volatile, economic and political changes happen very often and the economy is not stable. The obtained results are mostly consistent with the theory, economic and sociologic interpretation and logic.


Veronika Ivanova: “Broken dreams or divorce theory at work in Ukraine”


In this work we look at the implications of the economic divorce theory: the expectation inconsistency theory and divorce risk factors analysis. The testing of the expectation inconsistency theory, which studies how deviations from expected earnings influence divorce hazard, shows that risk of divorce decreases as males earn more than was expected. When males earn less then was anticipated the divorce hazard is not influenced, as well as in the case of any deviations in earnings of women. The main conclusions of divorce risk factors analysis are robust to variations in the model specification and differ for males and females. Increase in wages, working status, age boost divorce risk for women. Whereas the risk of divorce increases if men are aging or when increase in wages is observed. Factors that increase the stability of marriage for both spouses are: living in a region with high average wage or living in a village, being educated, presence of children (the magnitude of the effect is the largest for children up to 6 years). The marriage is stabilized when men are working or having positive deviation in earnings. Overall, we conclude that Ukrainian empirical evidence is consistent with that of other countries, although some country specifics are also present.


Andriy Ivasiuk: “Interest rate modeling, estimation of the parameters of vasicek model”


Vasicek interest model is one of the mostly used in modern finance. It constitutes a basis for derivative pricing theory and finds a sound application in practice. Nevertheless there is a still undeveloped estimation techniques and discussion is going on. In this paper we provided a comparative analysis of the mostly used Euler approximation technique and continuous record based exact ML estimators. We proved asymptotical properties of exact ML estimator and performed a Monte Carlo simulation to investigate convergence peculiarities.


Volodymyr Koval: “A theory of self-segregation as a response to relative deprivation: the role of migration costs”


This paper investigates the role of migration costs in a theory of self-segregation as response to relative deprivation (RD). A previously developed framework was extended by relaxing assumption of zero migration costs. We employed two different measures of RD: absolute and relative. The surprising finding was that in case of absolute measure of RD some levels of migration costs can reduce aggregate deprivation in the region. However, this result is not robust to the distribution of incomes in a region. Another finding is that if we employ relative measure of RD, migration cost value should be larger than income of the poorest individual and smaller than income of the second richest individual in order to meaningfully influence the steady state distribution of individuals between regions.


Ganna Kuznetsova: “The welfare effect of export restrictions: the case of Ukrainian market for wheat”


On September 28, 2006, Ukrainian government introduced licensing of grain exports, which was afterwards replaced with a quota system. A detailed investigation of the quotas on grain exports in Ukraine was made by the World Bank and IER. They have shown that a grain quota introduction is not justified. Also producers suffered losses and consumers gained much less from the grain quota introduction than it is predicted by the theory. And, alternative measures to secure the supply of domestic Ukrainian markets exist. Therefore, this paper is a continuation of the research World Bank and IER (2006), which focuses on the empirical evaluation of welfare effects for one of the grain markets – the market for wheat. The paper adopts the partial equilibrium analysis for empirical evaluation of the effect of export quotas and taxes with 5%, 10%, 15% and 20% rates under the assumption of a “small” county case. For this purpose the paper provides the required domestic demand and supply, and import demand elasticities. On the basis of the estimated price elasticities a quantitative estimation is conducted on the welfare effects of wheat producers, consumers, the government and the country as a whole. The econometric results demonstrate that export quotas are not desirable for national welfare, and export taxes are sound alternatives.


Iryna Lazorenko: “Wage expectations and job prospects of Kyiv economics students”


Expected wages and job prospects are influential determinants of labor market development. Despite importance of these expectations for human capital formation, empirical studies dedicated to this issue are still scarce. This study is the first attempt to learn students’ expectations about wages and job prospects in Ukraine – a country in transition. The study analyzes determinants of expected wages/salaries right after graduation and 10 years from graduation as well as impacts on absolute and relative job prospects using a sample of economics students from 4 Kyiv universities. Obtained results are in accord with the existing literature on human capital. Moreover, formation of students’ expectations in Ukraine is very similar to European. One of the most considerable differences in expectations formation is large gender gap in expected earnings.


Oleksandr Lozovyi: “The determinants of portfolio flows into CIS”


The main goal of this research is to identify the factors responsible for portfolio capital flows in the CIS region. In order to reach the goal the paper uses standard Tobin-Markowitz set of determinants which are investment return in host country relative to abroad, risk, flows comovements, and diversification. Using the data from 1996 and till 2006, the author finds the political risk index to be the most important factor of portfolio flows in the CIS countries. This result is in line with the findings of other studies on portfolio flows to CIS. Additionally, the paper reports strong evidence of complementarity between global stock market activity and portfolio flows into the CIS. This finding could be explained by the liquidity hypothesis. Furthermore, portfolio capital flows to CIS countries do depend on domestic investment return, however, the influence is lower than in the case of such factors as risk measure and return in global stock market.


Vitaliy Luzhentsov: “The analysis of Ukrainian trade flows with EU and SES countries. Trade costs and institutional influance”


Ukraine is country which is now on its way of development and recognition from the world’s economic community. Having finally become an independent state, in 1991 Ukrainian economy was still dependent from the countries of the former USSR. The trade patterns were still tied to those countries and only in recent years the tendency has significantly changed. Nowadays, Ukrainian trade flows are mostly divided between European Union countries and the countries of Single Economic Space. Therefore, Ukraine, as a transition country, came to the point when it should choose the direction of its integration. Some influential studies tried to justify the necessity for a clear Ukrainian trade position along with impossibility of cooperation between those two integration vectors. However, other studies regard these vectors as complementary (see, Yevdokimov and Molchanov, 2005). This study does not cover in depth all points of interest that arise as result. However, it covers the most influencing factor that determines economic integration – international trade. Analyzing the dynamics of Ukrainian trade patterns for the period of 1999-2006 including institutions involved the study tries to estimate, on the basis of a gravity model, the current trade gradients as well as institutional impact on international trade in Ukraine. It also aims to measure the impact of the potential acceptance of Ukraine as full EU member. The model develops a completely new idea: to test the importance of the difference between CIF and FOB (CIF-FOB) accounting standards which is viewed as costs of trade (direct & indirect). Therefore, this study aims to analyze the influence of the integration process in Ukraine on the costs of international trade.


Oksana Lyashuk: “Testing for evidence of adverse selection in developing automobile insurance market”


In the paper I investigate the evidence of adverse selection in Kyiv automobile insurance market, which can be identified as a developing insurance market. For separation of adverse selection from moral hazard, as a cause of asymmetric information problem, I employ the unused observables test, proposed by Finkelstein and Poterba (2006), which allows for the presence of heterogeneity in risk preferences. I find that individual riskiness influences the choice of coverage and the occurrence of accidents, which gives the opportunity to state about the evidence of adverse selection problem in the market. Using different specification of the policyholder’s riskiness, I check obtained results for the robustness. Investigating the relationship between the individual loss ratio and choice of coverage, I do not find presence of cross subsidization in the insurance market. Thus, I conclude that Kyiv automobile insurance market is affected by adverse selection, but, on the other hand, it is not seriously infected by cross subsidization problem between policyholders. It supports previous findings suggesting that problem of asymmetric information is immanent mainly for undeveloped and developing insurance markets.


Orest Novoselsky: “Global retail: determinants of efficiency”


In our work we were aiming to find out whether retail companies are globally efficient. Using wide panel of data we have found huge inefficiencies in operation. We estimated efficiency score using DEA and SFA. We also found significant influence of Regulatory framework on efficiency. And we were not able to find support for so called home bias. Other results were mixed.


Nataliya Ogarkova: “Price of corporate takeover. Evidence from firms that make many acquisitions”


The study of 1,345 domestic U.S. M&A deals announced for exchange-listed (NYSE, AMEX, NASDAQ) targets over the period 1980 – 2002 provides evidence on terms of M&A deals for firms that make many acquisitions. Heteroscedasticity robust OLS was used to predict premia, probit was employed to model success rates. Possibility of sample selection bias was corrected with Heckman correction procedure. Results suggest that on the available sample there are no reliable differences in terms of success and premium paid by multiple acquirers. Comprehensive list of control variables includes deal-specific characteristics of takeover and firm-specific characteristics of both target and acquiring company.


Hanna Ostashko: “Trade in beef and milk in the Ukraine: the impact of long term trade conditions, trade shocks and government intervention”


This thesis applies the partial equilibrium simulation model to the livestock sector of Ukraine. The applied model was used for analysis of government intervention impact, consequences of trade conditions and trade shock influence on the beef and milk sectors of Ukraine. Model was estimated by 2SLS procedure. Livestock sector performance and welfare effect was analyzed.


Vladislav Perevozchikov: “Which companies go public in Ukraine”


We analyse the determinants of going public decision for Ukrainian companies during the period of 2000-2006. The empirical work is based on comparing characteristics of public companies with those of private firms. We found out that probability of going public increases with company’s size. Those companies with smaller state owned share also tend to go public more often. Poor liquidity of the Ukrainian stock market and low requirements to listing on the Stock Exchange result in sufficient difference between major European and Ukrainian public offerings. We also found out that IPO boom in Ukraine is significantly driven by investment companies which usually play a role of minority shareholders. The reason is that company management not always participates in the going public process. As a result, we did not find relationship between probability of IPO and company’s intrinsic factors: investments, growth, leverage and operating performance, although such relation is theoretically predicted.


Natalia Piskounova: “Returns to computer usage: the case of Ukraine”


During the last two decades two tendencies have been observed: the increase of wage dispersion among high and low skilled labor and vast computerization among most industries. This paper analyses possible a wage premium associated with computer usage during 2003 in Ukraine based on ULMS dataset. Usual OLS procedure is used. As well as more advanced techniques are implemented: heckman selection model to remove the selectivity bias and instrumental variables to remove endogeneity problem. Estimates suggest that there exists a positive return on computer usage in OLS and heckman procedure and the returns are not statistically different from each other. Instruments used don’t give appropriate results because of their weakness. Hence, there exists a wage premium associated with computer usage which is equal to 15.8% for men and 19.1%.

Iuliia Polietaieva: “Estimation of tariff elasticity of imports in Ukraine”


Proposed work calculates tariff elasticity of imports by means of gravity equation. Model estimation provides coefficient near tariff rate, which is used afterwards together with average tariff to derive the value of imports elasticity equal to 20.77%. The estimation is done for the 202 countries, that were importing 1208 product groups to Ukraine during 2002-2005. The data about tariffs for 2002 are used to approximate the tariff rates in 2003 and 2004 by inspecting amendments made during those years to Ukrainian law about Custom Tariff. First estimation is done by ordinary least squares, further dummies for the year, country, product group are introduced to inspect the influence of each of the named category.


Iryna Poltoratska: “The degree of branch overlap in domestic banking in the United States and performance”


The study examines the impact of geographically overlapping (in-state) and geographically expanding (state-to-state) banking mergers and acquisitions on the abnormal returns to the acquirer stock following the deal announcement and on the long-run post-acquisition performance of the combined bank. Analysis reveals that geographically overlapping M&As bring positive abnormal returns to the acquirer following the improvement of the short-run performance of the combined entity. However, the effect on performance is short-lived and tends to be eliminated in the long-run. At the same time, the effect of the geographical expansion on performance is not revealed in the short-run but tends to appear in the long-run. The effect increases with the increase in the deal size.


Mariya Portyanko: “Infrastructure as a determinant of rural non-farm employment: the case of Ukraine”


This thesis analyses the role on infrastructure in rural non-farm employment in Ukraine using data from State Committee of Statistics Household Survey 2004. The research identifies and describes personal, household, regional and infrastructural factors that influence rural non-farm employment participation in Ukraine. In this study I discovered determinants that are essential in a person’s decision to work off-farm. For this purpose probit estimation model was applied. The research show that such infrastructural variables as centralized gas, running water and sewerage do not influence RNFE. The only infrastructural factor that affects decision to work off-farm is telecommunication availability. It was also proved that determinants of RNFE differ for genders. Hence, it turned out that the level of education is important only for females` decision to work off-farm. At the same time land owning and livestock availability appeared to be significant factors in determining RNFE only for males. Overall obtained results are mostly in line with previous findings on the RNFE issue.


Vitaliy Provotorov: “Substitution of private for public expenditure on health care services: the case of countries in transition”


In this study we investigate the empirical evidence of the existence of the degree of substitution between the public and the private expenditures on health care services and products. A special attention is paid to the countries in transition. We construct two panel datasets and for each of them estimate the model of the private expenditures on health. The main finding is that the degree of substitution between the two types of expenditures does exist, it is considerably less than perfect and does not differ much for the poor countries comparing to the richer ones. The next major finding is that the degree of substitution is not significantly different for the transition countries. The main results provide support to the previous findings. So any claims to reduce the government expenditures on health should take into account less than perfect substitution between the public and the private expenditures on health.


Andriy Radomskyy: “Analysis of macroeconomic shocks in FSU countries”


The thesis investigates the structure of macroeconomic shocks affecting Ukraine and compares the shocks to those occurring in EMU, Central and Eastern European States as well as Russia and Belarus. The shocks are recovered using the Structural VAR with long-run restrictions based on the IS-LM framework. It is found that Ukraine is more similar to Russia than to EMU with correlation of shocks of Ukraine with Russia being comparable in size to correlation of shocks of Germany or France vis-a-vis EMU.


Denis Rozhyn: “Energy efficiency opportunities for Ukraine (evidence from energy-capital substitution for industrial firms)”


The study investigate whether increase in energy prices stimulate Ukrainian enterprises to use energy more efficiently. The answer goes through the investigating the question of capital-energy substitution. The main finding that increase in energy prices lead to the increase of capital energy ratio, thus stimulates enterprises to take restructuring measures. Quantitatively this result depends on the method used. If we use standard method then we find that substitution is relatively high. Stochastic frontier gives usually lower result. The result also differs along plant size and industry.


Yuriy Ryzhkov: “Bid-ask spread components: evidence from PFTS (first ukrainian trading system)”


The bid–ask spread is often considered as a cost that an investor pays for a round trip trade. Therefore its magnitude is one of the major factors of the stock market development. In late October, 2007 PFTS introduced market-makers for several securities in order to provide more liquidity and decrease spreads in the Ukrainian stock market. In these conditions it was interesting to explore the components and the dynamics of spreads just prior to the introduction of the so-called “liquidity providers”. One or two years from now on there would be completely different picture of the Ukrainian stock market. The model of the bid–ask spread designed for one market microstructure has shown a generally good performance in another market microstructure conditions. While the inventory holding cost component of the spread originates from the activity of market makers the model tested on the Ukrainian stock market before they were introduced provided statistically and economically significant results. In this thesis I also aimed to get adequate estimates for the scope of informed trading on the domestic stock market. The obtained results suggest that there were only two components of the spread: order proceeding and adverse selection. At the same time the estimates of the adverse-selection component seem to be lower than the true level. The model was applied to analyse an intraday and intraweek trading volumes, posted and traded spreads development for years 2005 and 2006. No strong patterns of their dynamics were observed. However certain features of the prices, spreads and trade volume are similar to those of developed markets are present. One important conclusion is that spreads declined through 2005- 2006. In my opinion this can be explained primarily by a general improvement of the information flows in Ukrainian stock market.


Besik Samkharadze: “The effect of advertisement on youth smoking decision: evidence from Georgian schools”


The purpose of this paper is to empirically estimate the effects of tobacco advertisement on the youth smoking behavior in Georgia. The cross sectional data from the Global Youth Tobacco Survey (GYTS) is employed for the empirical work. This data set includes tobacco advertisement data containing eight types of advertisement and seven types of anti-advertisement. The paper finds that both advertisement and anti-advertisement highly influence the amount of cigarettes consumed, but have negligible effect on the probability of becoming a smoker. In addition, I find that price is not an important determinant of demand for cigarettes by young teens. Parents, friends and classmates have highly significant influence on both, the amount of cigarettes consumed and the probability of becoming a smoker. The findings of the paper suggest that restricting tobacco advertisement will reduce total amount of cigarettes consumed, but may leave the number of smokers unchanged.


Lily Samkharadze: “Education and incentives of return migration: what makes us go home?”


The complementary log-log proportional hazard model is employed to investigate the characteristics of the migrants and the length of their migration spell. In line with the Migration Selection Theory, to control for transferability of education we propose to use the variable indicating whether an individual has obtained the degree abroad as a proxy for transferable education. The empirical evidence suggests the existence of strong positive self-selection on skills in return migrants to Georgia. Migrants with higher level of education, compared to lower levels, have significantly higher hazards of exiting from the state of migration, for any given spell length. In addition, we show that possessing transferable education significantly reduces the hazard of returning to the home country. Migrants with foreign education exhibit a substantial lack of incentives of return migration, and hence they are highly likely to become permanent migrants.


Olena Senyuta: “Life-cycle model of labor supply in Ukraine: estimating wage elasticities”


Our paper investigates labor supply decisions in Ukraine. We estimate intertemporal wage elasticities at the extensive and intensive margins, separating individuals by sex and marital status. We utilize the three-stage procedure, where we account for sample selection, wage endogeneity, and obtain consistent estimates of employment and labor supply elasticities. Our results suggest that individuals in Ukraine are not flexible in their decisions about hours of work supplied. Instead, they respond to wage changes at the extensive margin – take a decision whether to participate in the labor market or not. Intertemporal wage elasticities are found to be significantly different across different group of individuals. Our findings are similar to other empirical results in the literature, suggesting that adjustment in the labor market happens mainly at the extensive margin due to institutional constraints on labor supply.


Lyubomyr Shavalyuk: “The determinants of the mutual funds performance in Ukraine”


The Ukrainian mutual fund industry aroused 4 years ago when first funds began their activity. Since that time the industry highly developed and recently crossed the level of UAH 1 billion of total assets. There are two sources for such a titanic growth. The first one is a good performance of mutual funds expressed in high returns and the second, partially caused by the previous one, is constantly increasing base meaning that more and more people are willing to invest their money into the industry. This study is related to the former source. It tries to investigate the determinants of such serious returns showed by Ukrainian mutual funds using techniques which are based on Modern Portfolio Theory and are widely used among researchers.


Dzmitry Sidarau: “The relationship between labor turnover and non-wage benefits: evidence from Ukrainian firms”


In this paper I study the relation between labor turnover in Ukrainian industrial enterprises and non-wage benefits. The ULFS enterprise level panel questionnaire for 6 time periods of 1993 – 2003 is used. I focus on the panel aspect of my date and follow a fixed set of firms over time. After estimation using Tobit model with Fixed Effect for 2 different groups (administrative workers, regular workers). I found clear evidence that using non-wage benefits can reduce labor turnover rates.


Mykhailo Sitiuk: “Link between households’ income and child labour”


The main goal of this paper is to distinguish between households’ income and child labour in Ukraine. This goal is reached through the empirical analysis of the data set that was collected within the framework of International Program on the Eliminating of child labour. This research identified the role of poverty of the family in the decision to involve a child in working activities. We looked at the influence of poverty or family’s expenditure per capita on child labour hours. We control for person that bring up and sustains a child, region of Ukraine, sex of a child, age of a child and other factors. We established that indeed there is a connection between poverty and child labour. However in spite of the fact that this result is statistically significant it is economically insignificant. If we increase monthly expenditures of the family we would reduce the probability that the child in this family will work but by very tiny amount. Therefore it is very costly to decrease the level of child labor by subsidies or other forms of financial support of families that are vulnerable to have working children.


Tamara Sliusarenko: “Wage penalty for motherhood: evinence from Ukraine”


Motherhood is usually associated with lower wages due to a number of reasons such as career interruptions, decrease in productivity of females with children, career interruptions due to maternity leave and discrimination. The magnitude of family gap in Ukraine during the period from 1997 to 2004 is analyzed in this study based on the data from the Ukrainian Longitudinal Monitoring Survey. Taking into account unobserved heterogeneity wage penalty found to be 6,5% for one child and 13,2% for two or more children. The paper attempts to determine whether the level of education and decision of timing of first birth influences wage penalty for having a child. It is found that the negative effect of children on female’s wages is smaller if a mother has her first birth later in her life. The wage penalty is found to be the smallest for females with vocational/professional education, but this is mostly comes from the effect of giving a first birth before age 20.


Olena Stetsenko: “Telecommunication infrastructure as a determinant of worldwide economic growth”


In recent years telecommunication infrastructure (TI) became an important determinant of economic growth and development worldwide. This important role is justified by the fact that TI creates global telecommunication connection and promotes favorable conditions for knowledge and technology diffusion, increases market efficiency and becomes an integrated part of the production process. The evidence of positive gains to economic growth from previous studies is unambiguous for high income countries, while the results for the rest of the world are controversial. This research finds that for medium and lower income countries, TI contributes to total growth. The elasticity coefficient of GDP with respect to TI is about 0.1, which is consistent with findings from previous research. The intensive growth of TI in the period (2001-2005), has resulted in a large impact on GDP growth.


Serhiy Sydorenko: “Size-wage relations: evidence from Ukraine”


The study of wage determinants in Ukraine investigates size-wage differentials and their reasons. There is an evidence for size-wage differentials, which is consistent with other economic studies. As a major explanations of such effect could be considered higher efficiency of larger firms and complementarity between physical capital and worker skills. For these purposes ULFS dataset were employed, which provides rich information, describes firm characteristics during the 1994-2004 period.


Alexander Utmelidze: “Banking competition: the case of Georgia and Belarus”


The paper studies type of competition among Georgian banks. It evaluate whether “Rose revolution” in Georgia had an effect on degree of banking competition. In order to expend analyses, type of competition among Belarusian banks was evaluated and compared with Georgian one. According to the result “Rose Revolution” did not change the type of banking competition, which was and is a monopolistic competition. The same type of competition is found for Belarusian banking sector.


Viyaleta Zayats: “Return and volatility on the Ukrainian stock market”


Among the important features of stock markets in countries with developing and transitional economy, including Ukraine, it is possible to mark relatively higher level of return and volatility. Both these index play a substantial role, as for investors so for authorities, pursuing an economic policy. So, the level of return on financial assets is closely related to the cost of loan resources and investment activity in an economy. Persons, making political and economic decisions, frequently examine estimations of volatility as one of indexes influenced not only on financial market but also on all of economy. In this connection the purpose of this work is empirically study factors, influenced on pricing at the Ukrainian stock market with 1997 for 2007. We examine existent theoretical and empirical approaches to the analysis of dynamics of return and volatility of stock market. Based on existing theoretical and models and empiric estimations is pull out the hypotheses about basic groups of factors which can influenced on the dynamics of return and volatility on the Ukrainian stock market. On the basis of empiric estimations the attempts identify the most meaningful for the Ukrainian stock market factors, influencing on a return and volatility of stock assets. Such the following study will allow better to understand the structure of risk factors on the Ukrainian market. It is assumed that this study can be useful at determination for acceptance of economical and political decisions in area of decline of risks, inherent the Ukrainian economy, and also can be useful for investors on the Ukrainian stock market for the decision of task of increase of efficiency of risk-management.