Location: Europe

Gender Board Diversity Across Europe Throughout Four Decades

Posted on December 16, 2024 | Policy Brief

Top-down view of a team analyzing Gender Board Diversity statistics in a corporate setting.

Despite comprising a large share of the workforce, women remain a minority in corporate boardrooms across Europe. While progress has been made in recent decades among public (listed) firms, diversity lags behind in private corporations. This policy brief showcases evidence from the Gender Board Diversity Dataset (GBDD) – a newly released, unique data source which covers a comprehensive sample of European private and public corporations over multiple decades. Uniquely, the GBDD, encompasses private (non-listed) companies, a novel method for identifying the gender of board members based on linguistic and cultural heuristics, and a cross-country harmonization of firm-level data. These features make the GBDD a great tool for answering policy-related questions and enable cross-country and cross-sector comparisons. As such, the GBDD can help ensure that policies aimed at promoting gender board diversity are scientifically well grounded.

Background

The labor force participation rate of women in Europe has been rising over the last few decades and is approaching the participation rate of men. However, the proportion of company board positions held by women is still significantly lower. This issue has generated heated debate among academics (e.g. see Nguyen et al., 2020, for a recent literature review) as well as among the general public. It has also prompted several countries to mandate gender quotas for some companies (typically public companies or the largest limited liability companies). For example, in Norway, large and medium-size firms are mandated to guarantee that both women and men account for at least 40 percent of board members. Given the increasing proliferation of mandated gender board quotas across countries, it is imperative that the public be aware of the main facts concerning gender board diversity in a broad set of companies i.e. those that make up the largest proportion of the economy, offer the majority of jobs, and often remain outside the scope of quota legislation.

The Gender Board Diversity Dataset

The Gender Board Diversity Dataset (GBDD), created by Drazkowski, Tyrowicz, and Zalas (2024), provides a novel cross-country perspective on women in management and supervisory boards over the past four decades. The GBDD is based on firm-level registry data from Orbis, which the authors have harmonized to ensure comparability across countries. A key feature of the GBDD is that it covers registry information from both public and private (non-listed) companies. This makes it a comprehensive source of information as the majority of board positions, as well as the majority of jobs in general, are in private rather than public companies. Data on private companies are scarce, and the GBDD is one of very few data sources containing this information across Europe. The GBDD is based on a sample of over 28 million unique firms from 43 European countries observed, on average, for around seven years. It contains information about nearly 59 million individuals who sit on management and supervisory boards and covers the period between 1985 and 2020.

Another key component of the GBDD is the identification of the gender of board members, which is a key innovation compared to other studies that use Orbis data. While the original data do not specify the gender of individuals until 2010, they do include names and surnames, which the creators utilized to perform gender identification. By applying cultural and linguistic heuristics, they were able to determine the gender of over 99 percent of the board members in their sample. For example, in some languages (e.g. Czech), surnames end with a gender-specific suffix, while in other languages (e.g. Polish), given names of women end with a vowel.

The GBDD reports several measures of gender board diversity computed for countries over time, as well as for sectors in each country over time. As such, it is a unique source of information about gender board diversity in corporate Europe, and it can serve as a useful guide for policymakers and analysts. The data are publicly available and can be downloaded in various formats from the website of the authors’ research group: https://grape.org.pl/gbdd.

The Absence of Women in Boardrooms

A key insight emerging from the GBDD is that, despite women holding on average 22 percent of all board positions in a given industry, more than two-thirds of all firms report no women in their boardrooms. More specifically, 68 percent of sectors across the European continent over the past several decades have not had a single firm with at least one woman in their boardrooms. Figure 1 shows the fraction of firms in a sector with no women in the boardroom. This is a new measure in the literature. The x-axis shows the proportion of such firms in a sector, ranging from 0 (all firms in that sector have at least one woman on their boards) to 1 (women are absent from all corporate boardrooms in the entire sector). The y-axis shows the relative number of sectors in the sample for each of the observed fractions.

Figure 1. Fraction of firms with no women in the boardroom

Note: The figure details the distribution (countries and years are combined). Source: Drazkowski, Tyrowicz, and Zalas (2024).

This finding points to clusters of companies with potentially significant obstacles to gender board diversity. Since lack of representation could be considered a major barrier to diversity, policies aimed at promoting even minimal representation of women among board members could have a significant impact on overall diversity.

The Substantial Differences Between Industries and Countries

The average firm-level share of women on corporate boards is only around 16 percent in the IT sector, while it is 35 percent in the education, health, and care (EHC) sector. Figure 2 shows two distributions of the average firm-level shares of women among board members: one for the IT sector and the other for the EHC sector. The distribution for the EHC sector is clearly to the right relative to the distribution for the IT sector, which means that across multiple countries and years, women tend to constitute a much smaller proportion of board members in the IT sector than in the EHC sector. Furthermore, the proportion of observations with no female board members (the spike at value 0) is much higher in the IT sector than in the EHC sector.

Figure 2. Distribution across sectors

Note: Distribution of the firm-level share of women on boards across countries and years in two broad sectors. The following categories make up the two sectors. IT: 61, 62, 63; Education, health & care: 85, 86, 87. Source: GBDD.

Decomposing the data by country also highlights significant differences. For example, firms with no female board members tend to be more prevalent in Poland than in Finland. This is illustrated in Figure 3, where the distribution for Poland is shifted to the right relative to the distribution for Finland.

Figure 3. Distribution across countries

Note: Distributions of the share of firms in an industry with no female board members (Finland vs Poland). Source: GBDD.

The above data suggest that there may exist a set of sector- and country-specific barriers to gender board diversity. Therefore, policies tailored to addressing those specific barriers could be more appropriate than blanket economy-wide policies.

Diversity Has Mildly Increased

The GBDD can also be used to assess how gender board diversity has evolved over time. Generally, there was an increase in diversity in the 1990s, stagnation in the 2000s, and another increase in the 2010s. However, in the case of supervisory boards, the recent increase in the proportion of female board members was not accompanied by an increase in the number of women on supervisory boards. While the full explanation of this observation would require further research, one possible interpretation is that supervisory boards might have become smaller over time, with male board members accounting for most of the decline, thus mechanically increasing the share of female board members.

Conclusion

Despite the increase in gender diversity among company board members over the last three decades, women still comprise a smaller share of board members and, in many cases, are completely absent from boards. While examining the reasons for this is beyond the scope of this policy brief, the high prevalence of firms with no women on their boards suggests the possibility that significant barriers to entry for women still exist, with this total lack of representation in many companies potentially being one. Policymakers interested in fostering an inclusive and fair society could focus their attention to understanding and removing barriers to board participation faced by women. Furthermore, identifying and tackling country- and sector-specific barriers to board diversity could be particularly impactful. The GBDD can be used by researchers and non-researchers alike to gain further insights into this topic, thus contributing to evidence-based policymaking.

Acknowledgement

The research outlined in this policy brief was funded by Norwegian Financial Mechanism 2014–2021 (grant # 2019/34/H/HS4/00481).

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

The 2024 FREE Network Retreat: Economic Research and Capacity Building in Moldova

Posted on October 28, 2024 | Policy Brief

Panel discussion on capacity building in Moldova and research within the FREE Network experience with experts from ISET-PI, BEROC, BICEPS, CenEA, and SITE

The 2024 FREE Network Retreat, held in Chisinau, Moldova on September 11-13, brought together representatives from the FREE Network institutes and other stakeholders, focusing on economic research and capacity building, especially in the context of Moldova’s EU accession efforts. The event featured general sessions on institutional development, special tracks on academic, administrative and communication topics, and a half-day conference on “Economic Research and Capacity Building“. Key discussions addressed challenges such as Moldova’s weak economic research infrastructure, policymaking gaps, and the need for capacity building. Several examples of Moldovan success stories were also highlighted. The event concluded with a call for strengthened collaboration and donor support towards economics education and fostering Moldova’s research and capacity-building landscape.

Introduction

The FREE Network Retreat is an annual event for researchers and administrators from the FREE Network institutes. The 2024 Retreat took place in Chisinau, Moldova, September 11-13 and was attended by representatives from BEROC (Belarus – currently in exile in Lithuania), BICEPS (Latvia), CenEA (Poland), ISET (Georgia), KSE (Ukraine) and SITE (Sweden). In addition, although not being a member of the FREE Network, the New Uzbekistan University in Tashkent and its Greater Eurasia Research Center (GEAR) were represented.

Like at previous retreats, there were two general sessions with a focus on the development of the individual institutes and the Network as a whole, and three tracks of special sessions on academic, administration and communication topics. The Retreat also involved a meeting of the FREE Network’s joint initiative The Forum for Research on Gender in Eastern Europe (FROGEE) – and a special side event on the integration of Ukrainian Refugees in Moldova.

An integral part of this year’s Retreat was the half-day conference, “Economic Research and Capacity Building”. Drawing on the FREE Network’s experience, the conference focused on how capacity building and research can facilitate the transformation of societies and economies, particularly within the Moldovan context, on its path towards EU-accession. In addition, it provided the FREE Network members an opportunity to share their experiences of capacity building, economic research and policymaking with Moldovan stakeholders.

The Conference was open to external participants interested in the topic, particularly policymakers, academics, and think tank representatives. It clearly illustrated the need to strengthen not only economic research and capacity building but also academic education in economics and related fields, improve the quality and access to data, and raise the level of competence in economics within the government and public sector in general.

A summary of the Conference discussions is provided below. For a full overview of the program and participants see the Appendix.

The Opening Session

The opening session started with the general observation that EU integration, in addition to being a political and security issue is primarily an economic issue with a need for economic research and analysis that can inform policy discussions and educate current and future stakeholders. Within this context, all the FREE Network institutes have considerable experience engaging in research and discussions of policy and policy reform within the region. With Moldova not (yet) represented in the FREE Network, the Conference served as a platform for the Network to learn and eventually engage in sustainable partnership(s).

The discussion then shifted to the Moldovan situation and the challenges ahead on the path to EU membership. Several challenges were identified: a lack of economic research, with most existing research being rather weak; missing connections between researchers and policymakers; a shortage of human resources; and generally weak institutions; as well as policies often being based on trial and error rather than evidence-based decision-making.

To address these challenges several actions were suggested including the need to strengthen research and independent economic thinking through capacity building; drawing on the experience of the countries that have joined the EU during the last two decades; developing international research cooperation through networks like the FREE Network; business-friendly practices and treating investors right while at the same time encouraging entrepreneurship and educating society on the importance of private and public investments.

The discussion also addressed activities supporting civil society undertaken by the EU and Sweden, respectively. Examples of activities include building partnerships and strong ecosystems for innovation and entrepreneurship, supporting reforms cutting red tape and improving the business climate in general as well as supporting the Academy of Economic Studies Moldova and the Association of Women in Business.

Research and Capacity Building – the Moldovan Perspective

The discussion started with a presentation of three Moldovan success stories. The first one is a recently launched program on media, gaming development and animation. Currently, 1,000 students are being enrolled. The program attracts Moldovans from all over the country as well as Moldovan students abroad who decided to terminate their studies abroad to go back to Moldova and enrol in the program. The success of the program is a good example of cooperation between industry, higher education institutions and the Ministry of Education opening up to new professions and programs that attract young people.

The second example is taken from the fashion industry. Traditionally Moldova has been a country where sewing takes place thanks to cheap labor. However, in recent years a “pipeline” of talent, design and brands has developed. As a result, the value added in the industry and export revenues as well as wages have increased.

The final example is the Moldovan tech industry. The tech industry has been at the forefront and could be considered the tiger of the Moldovan economy with growth rates of 30-40 percent per year. There are two main reasons behind this success: the rapidly developing Moldovan startup scene combined with a 7 percent single tax mechanism for the tech industry.

The discussion then turned to the role of research in policymaking. The first argument put forward focused on the impact (or rather the lack of impact) of research and analysis on Moldovan policymaking. As the examples above show, the Moldovan economy has the potential to develop – however, the policy discussion does not focus on the transition towards higher-value activities. On the contrary, even though Moldovan research highlights the role of transition to higher value-added, this argument has essentially been ignored in the policy debate that has been mostly characterized by rhetoric on job creation rather than transition to an economy that creates jobs within the high(er) value-added sectors. Unfortunately, this is not the only example of Moldovan policy discussions and decision-making ignoring the research perspective and outcomes. Among other examples mentioned is the recent tax reform experience and programs supporting Small and Medium Sized Enterprises. Currently, reforms are driven either by purely political reasons or by lobbying or by any other vested interests. There is essentially no impact assessment or any economic analysis underpinning the decisions. Due to the fact that policy initiatives neither are based on economic analysis  nor on best practices, they are vulnerable to clientelism or corruption. The importance of rule of law was emphasized in light of Moldova’s anchoring to the EU and with reference to Latvia and the other Baltic states. It is a too important topic to be left to the lawyers and should hence be part of economic capacity building and research.

The second argument referred to access to reliable data needed for quality policy-oriented research. While the data collected by the National Bureau of Statistics in general is good, the main issue lies in accessing it. The Bureau does not have the resources to support researchers. To exacerbate the problem further, there seems to be no willingness among policymakers to address this issue. Given Moldova’s vulnerability to Russian disinformation and the increased pressure on Moldova, the issue of access to reliable data is even more pressing today than a few years ago.

To foster an informed policy debate and decision-making process taking evidence-based research into account, it would be desirable to create a platform to advocate the results of economic policy analysis where, e.g., policy papers and monitoring reports, could be presented and discussed by experts and decision-makers in the public and private sectors as well as the civil society.

The session continued with a discussion on human capital. The successful program attracting Georgians in the diaspora to return and work for the Georgian government, launched during the first decade of the 2000s, served as the point of departure for the discussion. The key to the success in Georgia was that the government was able to pay competitive salaries. This is one of the main challenges facing Moldova. Even though there have been some adjustments in government salaries during recent years, the government is still far from being anywhere close to paying the same salaries as the private sector in general and think tanks in particular. An understanding of this is important not only at the national level but also among donors. It was noted that there have been some adjustments in government salaries, but it has not been enough. Further, while the Moldovan diaspora are starting to return, they, however, have little governmental or political experience, which makes it difficult to involve them in, e.g. policymaking and development of support programs. It would be good to draw on experiences and best practices from other countries in the region – such as the Baltic states and Georgia – and use them as benchmarks, e.g., for the innovation ecosystem, incubators and accelerators.

Research and Capacity Building – the FREE Network Experience

The FREE Network institutes shared their experiences in capacity building and brain gain, developing an economics undergraduate program, research and policy impact, and network building through research.

ISET (Georgia) shared their experience on attracting talented economists in the Georgian diaspora back to Georgian academia, research, and government positions. The starting point was an initiative developed in collaboration with the donor community to establish a world-class economics school in the Caucasus – the International School of Economics (ISET). The school has developed from a small boutique school to a school with three academic programs (undergraduate and graduate) and about 700 enrolled students. ISET graduates are in high demand and are seen in the private and public sectors. The ISET Policy Institute plays a pivotal role in terms of contributing to evidence-based policymaking. Throughout the years more than 50 ISET graduates have been accepted in Ph.D. programs at top universities worldwide. Many of them have returned to Georgia and ISET after completing their Ph.D. Had not it been for opportunities offered by ISET and the Policy Institute, it is very unlikely that they would have returned. The FREE Network and the opportunities offered are a great resource for the ISET as well as for the ISET Policy Institute.

BEROC (Belarus – in exile in Lithuania since 2022) shared their experience on the process of creating and launching an undergraduate program in economics and business. BEROC started as a research center, but the idea to establish a Bachelor program in economics and business had been around for several years. As part of the re-organization and reformation of the European Humanities University (Belarusian, but in exile), the European Commission approached BEROC asking if it could develop an undergraduate program in economics and business for Belarusian students.

The challenge has been two-fold: first, in the current political situation, Belarusian people are “locked within the country” and for them it is much easier to go to Russia for studies. In addition, the cost of living and the tuition fee (although low by Baltic standards) provide additional barriers to potential students. Second, BEROC operates in exile themselves. Nevertheless, a Bachelor program in economics and business will be launched in October 2024 with the support of Belarusian business in exile. Thanks to cooperation with partners within the FREE Network the program is at the global frontier.

BICEPS (Latvia) provided an overview of how research can contribute to the policy agenda. BICEPS’s first policy reports, published more than 15 years ago, focused on the unsustainable Latvian economic growth and inflation levels at the time. These reports reached conclusions that, while correct ex-post, were contrary to those of the Latvian Central Bank. This divergence sparked substantial discussion at both the political level and in the media.

In the early 2010s, BICEPS was commissioned to produce the first-ever Latvian Competitiveness Report. This report has served as a foundation for policymaking and has left a lasting mark on the policy agenda. Furthermore, following BICEPS’s research on the shadow economy and the annual presentation of the shadow economy index, the Ministry of Finance, through public procurement, commissioned a 2021 project to develop a model addressing the impact of the shadow economy.

The Global Entrepreneurship Monitor (GEM) Latvia and the EUROMOD tax-benefit microsimulation model are long-term projects run by BICEPS. Current projects include one focused on the impact of broadening the sugar tax base, a regional Global Entrepreneurship Monitor study, a project on road congestion tolls in cities and the development of sustainable agriculture in Africa.

CenEA (Poland) might be small in terms of people employed, but disproportionally big in terms of impact and presence in the Polish policy discussion. From the very beginning, CenEA has aimed at combining policy with solid economic research. The focus has primarily been in the areas of fiscal policy, ageing and health – with the latter two being major issues in Poland.

For CenEA, the FREE Network has been fundamental, both for funding and for building its credibility and position. CenEA has played an active role in terms of broadening and deepening the cooperation within the FREE Network. It has been very active in developing and coordinating the FROGEE project. The project (financed by the Swedish International Development Cooperation Agency, SIDA) has run for six years and covered a wide range of topics within the field of gender equality. It has resulted in several FREE Policy Briefs, policy and research papers, and several conferences and workshops. In addition, the project has contributed to the development of tools and skills for both senior and junior researchers within the Network. Based on the success of the FROGEE project, new projects and initiatives within the Network have been developed.

SITE (Sweden) has taken the lead on the FREECE (the Forum for Research on Eastern Europe: Climate and Environment) project. The project has been around for eighteen months with a focus on the transition from an economy based on the production and consumption of fossil fuels to an economy based on the production and consumption of zero-carbon renewables. This will be a challenge for everyone, especially for countries throughout Eastern Europe that often rely on the extraction and consumption of fossil fuels for employment as well as for energy needs.

The FREECE project provides several opportunities to engage in policy-relevant research while at the same time filling a gap in the literature.

Initiatives and the Road Ahead

At the current stage of Moldovan economic and political development there is a higher demand for analysis and applied research, rather than general and theoretical research. In other words, policy relevance needs to be in focus. At the same time, such applied analysis and research need to involve well-educated human capital with relevant skills, such as university graduates. This puts focus on the role of universities and how they can reform.

The Moldova School of Economics initiative was launched approximately half a year ago. Among the first activities were public lectures on economic behaviour and public policies. In September, in cooperation with CERGE-EI in Prague, the first short economics course was launched. Currently, there are discussions with the Ministry of Education and the State University on developing the initiative into an actual program. So far, the response has been positive. The vision is to create the Moldova School of Economics into an initiative that reaches out not only to Chisinau and Moldova but to the wider region.

The session on this topic proceeded to discuss how the FREE Network could support Moldovan research and capacity building, focusing on its experience in implementing various projects. One potential starting point would be a summer school involving both the FREE Network and Moldovan economists living abroad. There are already contacts with members of the diaspora who have expressed a willingness to participate as faculty members, without compensation. Additionally, there is a need for shorter courses or executive classes aimed at individuals in ministries. Topics to be covered may include basic macroeconomic analysis, fiscal policy, and economic growth. It is also important to incorporate microeconomic subjects, such as the factors driving innovation and the development of economic clusters.

Concluding Comments

The FREE Network Retreat and conference has shown that many of the issues currently facing Moldova, have at least partly been addressed by the FREE Network members in their respective countries. Looking forward this should provide a good basis for cooperation between the Network and Moldovan partners. Three broadly defined areas for collaboration and partnerships were identified: (i) education and training: at the university level as well as for ministries and government agencies; (ii) creation and development of a good environment for research and policy analysis; (iii) communication and outreach.

The dialogue that has been initiated during the conference should continue and include a discussion on how to attract donors to support long-term cooperation that contributes to the needed strengthening of research and capacity building in Moldova.

Appendix

Conference Programme: Economic Research and Capacity Building

9.30 Conference Opening

  • Torbjörn Becker, Director, Stockholm Institute of Transition Economics
  • Jānis Mažeiks, Ambassador of the European Union to the Republic of Moldova
  • Katarina Fried, Ambassador of Sweden to the Republic of Moldova

10:00 Research and Capacity Building – the Moldovan perspective

  • Doina Nistor, Chief of Party, Moldova Future Technologies Activity
  • Adrian Lupușor, Executive Director, Independent Analytical Center Expert-Grup
  • Kálmán Mizsei, EU Adviser to the Government of Moldova

10:50 Research and Capacity Building: The FREE Network Experience

  • Tamar Sulukhia (ISET, Georgia): Capacity building and brain gain
  • Dzmitry Kruk (BEROC, Belarus – in exile): Development of a new academic programme
  • Marija Krūmiņa (BICEPS, Latvia): Research and policy impact
  • Michal Myck (CenEA, Poland): Network building and the FROGEE experience
  • Julius Andersson (SITE, Sweden): Network building and the FREECE experience

11:30 Initiatives and the Road Ahead

  • Mihnea Constantinescu, Advisor to the Governor National Bank of Moldova
  • Misha Zeldin-Gipsman, the Moldova School of Economics Initiative

12:10 Concluding Comments

  • Torbjörn Becker, Director, SITE
  • Kata Fredheim, Associate Professor, BICEPS and Stockholm School of Economics in Riga

12:20 Lunch and Networking

Conference moderator: Kata Fredheim, BICEPS and SSE Riga.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

 

Moldova’s EU Integration and the Special Case of Transnistria

Posted on October 14, 2024 | Policy Brief

Flags of Moldova and the European Union at a diplomatic meeting, symbolizing Moldova's EU integration efforts.

In the shadow of Russia’s invasion of Ukraine, another East European country is actively working to secure its European future. After three years of negotiating cooperation agreements with the European Commission, Moldova finally obtained its EU candidate status and is now on track to join the EU as a member state. However, among many remaining obstacles on the path to full membership, one stands out as especially problematic: the region of Transnistria. The region, officially Pridnestrovian Moldovan Republic, is an internationally unrecognized country and is rather seen as a region with which Russia has “special relations”, including a military presence in the region since 1992. This policy brief provides an overview of the current state of the Transnistrian economy and its relationships with Moldova, the EU, and Russia, arguing that Transnistria’s economy is de facto already integrated into the Moldovan and EU economies. It also points to the key challenges to resolve for a successful integration of Moldova into the EU.

Moldova’s EU Integration: The Moldovan Economy on its Path to EU Accession

On December 14th, 2023, the European Council decided to open accession negotiations with Moldova, recognizing Moldova’s substantial progress when it comes to anti-corruption and de-oligarchisation reforms. The first intergovernmental conference was held on the 25th of June 2024, officially launching accession negotiations (European Council, 2024). On October 20th, 2024, Moldova will hold a referendum on enshrining Moldova’s EU ambitions in the constitution. However, several issues remain to be solved, for Moldova to enter the EU.

With a small and declining population of only about 2.5 million people and a GDP of 16.54 billion US dollars (2023), Moldova remains among the poorest countries in Eastern Europe. In 2023 the GDP per capita was 6600 US dollars in exchange rate terms (substantially higher if using PPP-adjusted measures; World Bank, 2024a). In the last decade, the largest share of its GDP, about 60 percent, stemmed from activities in the services sector, and about 20 and 10 percent from the industrial and agricultural sectors, respectively (Statista, 2024). Despite substantial economic growth in the last decade (3.3 percent on average between 2016 and 2021) and recent reforms (largely under the presidency of Maia Sandu), Moldova remains highly dependent on financial assistance from abroad and remittances, the latter contributing to about 15 – 35 percent of Moldova’s GDP in the last two decades (World Bank, 2024b).

The COVID-19 pandemic and refugee flows caused by Russia’s invasion of Ukraine have only intensified this dependence. Furthermore, these events excavated existing vulnerabilities in the Moldovan economy, such as high inflation and soaring energy and food prices, which depressed households’ disposable incomes and consumption, while war-related uncertainty contributed to weaker investment (World Bank, 2024c).

The Contested Region of Transnistria – Challenge for Moldova’s EU Integration

In addition to Moldova’s economic challenges, the country also faces a particular and unusual problem; it does not fully control its territory. The Transnistrian region in the North-West of the country (at the South-Western border of Ukraine) constitutes about 12 percent of Moldova’s territory. The region has a population of about 350 000 people, mostly Russian-speaking Moldovans, Russians, and Ukrainians.

Following the breakup of the Soviet Union, a movement for self-determination for the Pridnestrovian Moldavian Republic resulted in a self-declaration of its independence on the 2nd of September 1990. More specifically, the alleged suppression of the Russian language and threats of unification between Moldova and Romania were the main stated reasons for the Transnistrian movement for self-determination, which in turn led to the civil armed conflict in 1992 and a following ceasefire agreement (Government of Republic of Moldova, 1992). The main points of the agreement concern the stationing of Russia’s 14th Army in Transnistria, the establishment of a demilitarized security zone, and the removal of restrictions on the movement of people, goods, and services between Moldova and Transnistria. As of 1992, Transnistria is de-facto an entity under “Russia’s effective control” (Roșa, 2021).

Over the years, the interpretations of the conflict have become more controversial, ranging from the local elite’s perspectives to assertions of an entirely artificial conflict fueled by malign Russian influence (Tofilat and Parlicov, 2020).

Notably, the Moldovan government has never officially recognized Transnistria as an occupied territory (see Article 11 of the Moldovan constitution stating “The Republic of Moldova – a Neutral State (1) The Republic of Moldova proclaims its permanent neutrality.  (2) The Republic of Moldova shall not allow the dispersal of foreign military troops on its territory” (Constitute, 2024)).

Furthermore, the European Council’s official recognition of Transnistria as an “occupied territory” on March 15, 2022, underscores the EU’s stance on the matter and highlights Russia’s pivotal role in providing political, economic, and military support to Transnistria (PACE, 2022).

The Transnistrian Economy: Main Indicators and Weaknesses

Despite Russia’s central role in Transnistria, the region’s economy is, in practice, substantially integrated into the Moldovan and EU economies. This fact should be considered at various levels of decision-making when discussing Moldova’s EU accession.

As depicted in Figure 1, economic activity in Transnistria has been quite “stable” in the last decade. GDP per capita has remained around 2000 US dollars, 2,5 times lower than Moldova’s GDP per capita in 2021.

Figure 1. Moldovan and Transnistrian GDP per capita, in thousand USD

Source: Data from World Bank, 2024; Pridnestrovian Republican Bank, 2024a. Note: since 2022 the Pridnestrovian Republican Bank has suspended publishing official statistics on macroeconomic indicators.

However, one must be careful when estimating and interpreting Transnistrian economic indicators in dollar terms. The local currency is the Transnistrian ruble which is not recognized anywhere in the world except in Russia. Its real value is thus highly uncertain as there is no market for this currency. Moreover, only Russian banks are authorized to open accounts and conduct transactions in the currency, demonstrating yet another significant weakness for Transnistria as a potential independent state, particularly given the current global ban on most Russian banks. As such, the official exchange rate for US dollars should be taken with a grain of salt. At the same time, there are no alternative statistics as the Pridnestrovian Republican Bank is the only source for relevant data on Transnistria.

Another distinctive feature of Transnistria is the substantial reliance on remittances from abroad (see Figure 2). In 2021, remittances amounted to 143.7 million US dollars, constituting 15.5 percent of GDP in 2021 (if relying on the official exchange rate for US dollars, as published by the Pridnestrovian Republican Bank).

Figure 2. Remittances to/from Transnistria, in million USD

Source: Data from the Pridnestrovian Republican Bank (2024b). Note: CIS denotes the Commonwealth of Independent States and all other countries.

Figure 2 illustrates a notable trend of increasing dependency on remittances in recent years, particularly on remittances originating from CIS countries, chiefly Russia and Ukraine.

In terms of reliance on Russia, this dependency is not a concern when it comes to Transnistria’s exports. Foreign trade data from recent years indicates that the Transnistrian economy no longer relies on exports to Russia. As seen in Figure 3, the share of exports to Russia has been constantly declining since 2014 and amounted to merely 9.2 percent in 2021. At the same time, exports to the EU, Moldova and Ukraine collectively accounted for about 80 percent in 2021. The primary commodities driving Transnistrian exports were metal products, amounting to 337.3 million US dollars in 2021, followed by electricity supplies at 130.1 million US dollars. Additionally, food products and raw materials contributed 87.6 million US dollars to Transnistrian exports in the same period.

Figure 3. Transnistrian exports by destination countries, in percent

Source: Data from the Pridnestrovian Republican Bank Bulletins (2024c).

These figures highlight the significant integration of the Transnistrian economy into the European market and, to some extent, indicate the strong potential to further align in this direction.

The increase in Transnistria’s exports to the EU in recent years can be largely attributed to the implementation of mandatory registration of Transnistrian enterprises in Moldova in 2006 as a prerequisite for engaging in foreign economic activities (EUBAM, 2017). Consequently, Moldova has exercised full control over Transnistrian exports and partial control over its imports since 2006.

However, Transnistria remains reliant on Russia for its imports, particularly in the energy sector. In contrast to the export structure, Russia’s share in Transnistrian imports was significantly larger in 2021. About 45 percent of the imports originated from Russia in 2021, and mostly constituted of fuel and energy goods (447.0 million US dollars) and metal imports (254.3 million US dollars), quite typical for a transition economy.

Figure 4. Transnistrian imports by origin countries, in percent

Source: Data from the Pridnestrovian Republican Bank Bulletins (2024c).

Transnistria’s Energy Dependence on Russia

The biggest challenge for Transnistria, as well as for Moldova, is the large fuel and energy dependence on Russia, mostly in the form of natural gas.

For many years, gas has been supplied to Transnistria effectively for free, often in the form of a so-called “gas subsidy” (Roșa, 2021).  This gas flows through Transnistria to Moldova, effectively accumulating a gas debt. Typically, Gazprom supplies gas to Moldovagaz, which in turn distributes gas to Moldovan consumers and to Tiraspol-Transgaz in Transnistria. Tiraspol-Transgaz then resell the gas at subsidized tariffs to local Transnistrian households and businesses. This included providing gas to the Moldovan State Regional Power Station, also known as MGRES – the largest power plant in Moldova. MGRES, in turn, exports electricity, further highlighting the interconnectedness of energy distribution between the Transnistrian region and the rest of Moldova.

Figure 5. Export/import of fuel and energy products from/to Transnistria, in million USD

Source: Data from the Pridnestrovian Republican Bank Bulletins (2024c). Note: Data for 2017 and 2018 unavailable.

The revenue generated from energy exports to Moldova has been deposited into a so-called special gas account and subsequently channeled directly into the Transnistrian budget in the form of loans from Tiraspol-Transgaz. In this way the Transnistrian government has covered more than 30 percent of their total budgetary expenditures over the last ten-year period. This further points to Transnistria’s’ fiscal inefficiencies and highlights its precarious dependency on gas from the Russian Federation.

In the last few years there have however been repeated disruptions in the gas supply and continuous disputes about prices and how much Moldovagaz owes Gazprom. De jure Tiraspol-Transgaz operates as a subsidiary of Moldovagaz, but de facto its assets were effectively nationalized by the separatist authorities in Transnistria (Tofilat and Parlicov, 2020). These unclarities has led to multiple conflicts over who owes the built-up gas debt. Given the ownership structure the debt is often seen as “Moldovan debt to Russia” (see e.g., Miller, 2023), albeit created by Transnistrian authorities. According to Gazprom, the outstanding amount owed by Moldovagaz to Gazprom stood at approximately 8 billion USD at the end of 2019 (Gazprom, 2024). This corresponds to about 7 times of Transnistria’s GDP. The Moldavian assessment of the debt is about two orders of magnitude lower  (Gotev, 2023).

The disagreement on the debt amount was the official reason for the gas supply to be drastically reduced in October 2022. From December 2022 to March 2023, Russia’s Gazprom supplied gas only to Transnistria and it was not until March 2023 that supplies to the rest of Moldova were resumed. Since then, there have been shifts back and forth with Moldova mainly buying gas from Moldovan state-owned Energocom, which imports gas from suppliers other than Gazprom (Całus, 2023; Tanas, 2023). Understanding all turns and events is at times challenging due to lack of transparency in dealings.

Currently, despite Gazprom’s debt claims, the entirety of Transnistria’s gas is still being provided by Russia. While this is a relatively “cheap” investment from the Russian perspective, its impact on Moldova is large, as highlighted by Tofilat and Parlicov (2020) “the bottomline costs for Russia with maintaining Transnistria as its main instrument of influence in Moldova was at most USD 1 billion—not too expensive for twenty-seven years of influence in a European country of 3 million people”.

Corruption in Transnistria – Who is the Real “Sheriff”?

Another obstacle hindering a resolution of the Transnistrian conflict is the near complete monopoly of political and economic power held by Transnistria’s former President Igor Smirnov (1991-2011), through his strong ties to the Sheriff corporation. The corporation, established in 1993 by two former members of Transnistria’s “special services” (Ilya Kazmaly and Victor Gushan), was enabled by Transnistria’s former president, Igor Smirnov. For instance, the Sheriff company was exempt from paying customs duties and was permitted to monopolize trade, oil, and telecommunications in Transnistria. In return, the company supported Smirnov’s party during his presidency. For more on the conflict between Transnistria’s power clans and their relationships with Russia, see Hedenskog and Roine (2009) and Wesolowsky (2021).

The Sheriff company encompasses supermarkets, gas stations, construction firms, hotels, a mobile phone network, bakeries, a distillery, and a mini media empire comprising radio and TV stations. Presently, the company is reported to exert control over approximately 60 percent of the region’s economy (Wesolowsky, 2021).

A straightforward illustration of Sheriff’s political influence is the establishment of the Sheriff football team. For the team, Victor Gushan constructed the Sheriff sports complex, the largest football stadium in Moldova, accommodating
12 746 spectators. This investment in sports infrastructure is notable, especially considering that the total population of Transnistria is only approximately 350 000, and that the region is fairy poor. A similar example concerns the allocation of a land plot of 6.4 hectares to the company “to expand the construction of sports complex for long-term use under a simplified privatization procedure” signed directly by the former president.

While these details may seem peripheral to broader problems, they illustrate how some vested interests in the Transnistrian region may not be keen to change towards a society based on the rule-of-law, increased transparency and a market-oriented economy.

Moldova’s Options for Resolving the Transnistrian Conflict in EU Integration

As Moldova grapples with both the consequences of the ongoing conflict in Ukraine and the prolonged “frozen” conflict with Transnistria, its economy remains vulnerable. With the recent attainment of EU candidate status, it’s essential for the Moldovan government to map out ways to solve the conflict despite strong interest from powerful political and economic groups in preserving the status quo.

While the perspectives of resolving the Transnistrian conflict obviously hinge on Russian troops withdrawing from the region, Moldova would also need to address a wide range of economic issues. The Transnistrian economy faces numerous critical structural challenges including a persistent negative foreign trade balance, an unsustainable banking system, and pervasive corruption. Notably, the dominant oligarchic entity, the Sheriff company, exercises monopolistic political and economic influence, striving to preserve the status quo for Transnistria. The obvious unviability of the local currency due to its artificial nature and a complete dependency on Russia’s banking system are additional challenges to be solved for Moldova to be able to integrate Transnistria properly into its economy. Therefore, introducing additional measures such as restricting access to remittances in Transnistria, and imposing personal sanctions on elite groups could help Moldova in establishing economic control over the region.

Furthermore, while the Transnistrian region de-facto has strong economic ties with the Moldovan and European markets in terms of exports, its heavy reliance on Russian gas imports remains a significant vulnerability.

When integrating Transnistria and severing its ties with Russia, Moldova would also need to resolve the issues arising from its reliance on the electricity produced at MGRES using subsidized Russian gas. Natural gas bought at market prices would make Moldovan electricity highly costly, presenting financial challenges to Moldova, and effectively destroying the competitive advantage and important source of revenue in the Transnistrian region. Moreover, alternative electricity routes to Moldova are yet to be completed (with an estimated cost of approximately 27 million EUR).

These and other issues need to be dealt with for a successful Moldovan transition into the EU. Although these challenges are highly important from a Moldovan point of view, and even more so from a Transnistrian perspective, it should be emphasized that these issues are, in economic terms, relatively small for the EU. Given that the EU has opened the way for Moldovan accession, it should be ready to step up financially to help Moldova solve these issues and stay on the membership path.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Gender Gap in Life Expectancy and Its Socio-Economic Implications

Posted on October 1, 2024 | FROGEE PROJECT, Policy Brief

Silhouetted crowd of people walking in a public square, symbolizing societal impacts of the gender gap in life expectancy.

Today women live longer than men virtually in every country of the world. Although scientists still struggle to fully explain this disparity, the most prominent sources of this gender inequality are biological and behavioral. From an evolutionary point of view, female longevity was more advantageous for offspring survival. This resulted in a higher frequency of non-fatal diseases among women and in a later onset of fatal conditions. The observed high variation in the longevity gap across countries, however, points towards an important role of social and behavioral arguments. These include higher consumption of alcohol, tobacco, and fats among men as well as a generally riskier behavior. The gender gap in life expectancy often reaches 6-12 percent of the average human lifespan and has remained stubbornly stable in many countries. Lower life expectancy among men is an important social concern on its own and has significant consequences for the well-being of their surviving partners and the economy as a whole. It is an important, yet under-discussed type of gender inequality.

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Gender Gap in Life Expectancy and Its Socio-Economic Implications

Today, women on average live longer than men across the globe. Despite the universality of this basic qualitative fact, the gender gap in life expectancy (GGLE) varies a lot across countries (as well as over time) and scientists have only a limited understanding of the causes of this variation (Rochelle et al., 2015). Regardless of the reasons for this discrepancy, it has sizable economic and financial implications. Abnormal male mortality makes a dent in the labour force in nations where GGLE happens to be the highest, while at the same time, large GGLE might contribute to a divergence in male and female discount factors with implications for employment and pension savings. Large discrepancies in life expectancy translate into a higher incidence of widowhood and a longer time in which women live as widows. The gender gap in life expectancy is one of the less frequently discussed dimensions of gender inequality, and while it clearly has negative implications for men, lower male longevity has also substantial negative consequences for women and society as a whole.

Figure A. Gender gap in life expectancy across selected countries

Source: World Bank.

The earliest available reliable data on the relative longevity of men and women shows that the gender gap in life expectancy is not a new phenomenon. In the middle of the 19th century, women in Scandinavian countries outlived men by 3-5 years (Rochelle et al., 2015), and Bavarian nuns enjoyed an additional 1.1 years of life, relative to the monks (Luy, 2003). At the beginning of the 20th century, relative higher female longevity became universal as women started to live longer than men in almost every country (Barford et al., 2006). GGLE appears to be a complex phenomenon with no single factor able to fully explain it. Scientists from various fields such as anthropology, evolutionary biology, genetics, medical science, and economics have made numerous attempts to study the mechanisms behind this gender disparity. Their discoveries typically fall into one of two groups: biological and behavioural. Noteworthy, GGLE seems to be fairly unrelated to the basic economic fundamentals such as GDP per capita which in turn has a strong association with the level of healthcare, overall life expectancy, and human development index (Rochelle et al., 2015). Figure B presents the (lack of) association between GDP per capita and GGLE in a cross-section of countries. The data shows large heterogeneity, especially at low-income levels, and virtually no association from middle-level GDP per capita onwards.

Figure B. Association between gender gap in life expectancy and GDP per capita

Source: World Bank.

Biological Factors

The main intuition behind female superior longevity provided by evolutionary biologists is based on the idea that the offspring’s survival rates disproportionally benefited from the presence of their mothers and grandmothers. The female hormone estrogen is known to lower the risks of cardiovascular disease. Women also have a better immune system which helps them avoid a number of life-threatening diseases, while also making them more likely to suffer from (non-fatal) autoimmune diseases (Schünemann et al., 2017). The basic genetic advantage of females comes from the mere fact of them having two X chromosomes and thus avoiding a number of diseases stemming from Y chromosome defects (Holden, 1987; Austad, 2006; Oksuzyan et al., 2008).

Despite a number of biological factors contributing to female longevity, it is well known that, on average, women have poorer health than men at the same age. This counterintuitive phenomenon is called the morbidity-mortality paradox (Kulminski et al., 2008). Figure C shows the estimated cumulative health deficits for both genders and their average life expectancies in the Canadian population, based on a study by Schünemann et al. (2017). It shows that at any age, women tend to have poorer health yet lower mortality rates than men. This paradox can be explained by two factors: women tend to suffer more from non-fatal diseases, and the onset of fatal diseases occurs later in life for women compared to men.

Figure C. Health deficits and life expectancy for Canadian men and women

Source: Schünemann et al. (2017). Note: Men: solid line; Women: dashed line; Circles: life expectancy at age 20.

Behavioural Factors

Given the large variation in GGLE, biological factors clearly cannot be the only driving force. Worldwide, men are three times more likely to die from road traffic injuries and two times more likely to drown than women (WHO, 2002). According to the World Health Organization (WHO), the average ratio of male-to-female completed suicides among the 183 surveyed countries is 3.78 (WHO, 2024). Schünemann et al. (2017) find that differences in behaviour can explain 3.2 out of 4.6 years of GGLE observed on average in developed countries. Statistics clearly show that men engage in unhealthy behaviours such as smoking and alcohol consumption much more often than women (Rochelle et al., 2015). Men are also more likely to be obese. Alcohol consumption plays a special role among behavioural contributors to the GGLE. A study based on data from 30 European countries found that alcohol consumption accounted for 10 to 20 percent of GGLE in Western Europe and for 20 to 30 percent in Eastern Europe (McCartney et al., 2011). Another group of authors has focused their research on Central and Eastern European countries between 1965 and 2012. They have estimated that throughout that time period between 15 and 19 percent of the GGLE can be attributed to alcohol (Trias-Llimós & Janssen, 2018). On the other hand, tobacco is estimated to be responsible for up to 30 percent and 20 percent of the gender gap in mortality in Eastern Europe and the rest of Europe, respectively (McCartney et al., 2011).

Another factor potentially decreasing male longevity is participation in risk-taking activities stemming from extreme events such as wars and military activities, high-risk jobs, and seemingly unnecessary health-hazardous actions. However, to the best of our knowledge, there is no rigorous research quantifying the contribution of these factors to the reduced male longevity. It is also plausible that the relative importance of these factors varies substantially by country and historical period.

Gender inequality and social gender norms also negatively affect men. Although women suffer from depression more frequently than men (Albert, 2015; Kuehner, 2017), it is men who commit most suicides. One study finds that men with lower masculinity (measured with a range of questions on social norms and gender role orientation) are less likely to suffer from coronary heart disease (Hunt et al., 2007). Finally, evidence shows that men are less likely to utilize medical care when facing the same health conditions as women and that they are also less likely to conduct regular medical check-ups (Trias-Llimós & Janssen, 2018).

It is possible to hypothesize that behavioural factors of premature male deaths may also be seen as biological ones with, for example, risky behaviour being somehow coded in male DNA. But this hypothesis may have only very limited truth to it as we observe how male longevity and GGLE vary between countries and even within countries over relatively short periods of time.

Economic Implications

Premature male mortality decreases the total labour force of one of the world leaders in GGLE, Belarus, by at least 4 percent (author’s own calculation, based on WHO data). Similar numbers for other developed nations range from 1 to 3 percent. Premature mortality, on average, costs European countries 1.2 percent of GDP, with 70 percent of these losses attributable to male excess mortality. If male premature mortality could be avoided, Sweden would gain 0.3 percent of GDP, Poland would gain 1.7 percent of GDP, while Latvia and Lithuania – countries with the highest GGLE in the EU – would each gain around 2.3 percent of GDP (Łyszczarz, 2019). Large disparities in the expected longevity also mean that women should anticipate longer post-retirement lives. Combined with the gender employment and pay gap, this implies that either women need to devote a larger percentage of their earnings to retirement savings or retirement systems need to include provisions to secure material support for surviving spouses. Since in most of the retirement systems the value of pensions is calculated using average, not gender-specific, life expectancy, the ensuing differences may result in a perception that men are not getting their fair share from accumulated contributions.

Policy Recommendations

To successfully limit the extent of the GGLE and to effectively address its consequences, more research is needed in the area of differential gender mortality. In the medical research dimension, it is noteworthy that, historically, women have been under-represented in recruitment into clinical trials, reporting of gender-disaggregated data in research has been low, and a larger amount of research funding has been allocated to “male diseases” (Holdcroft, 2007; Mirin, 2021). At the same time, the missing link research-wise is the peculiar discrepancy between a likely better understanding of male body and health and the poorer utilization of this knowledge.

The existing literature suggests several possible interventions that may substantially reduce premature male mortality. Among the top preventable behavioural factors are smoking and excessive alcohol consumption. Many studies point out substantial country differences in the contribution of these two factors to GGLE (McCartney, 2011), which might indicate that gender differences in alcohol and nicotine abuse may be amplified by the prevailing gender roles in a given society (Wilsnack et al., 2000). Since the other key factors impairing male longevity are stress and risky behaviour, it seems that a broader societal change away from the traditional gender norms is needed. As country differences in GGLE suggest, higher male mortality is mainly driven by behaviours often influenced by societies and policies. This gives hope that higher male mortality could be reduced as we move towards greater gender equality, and give more support to risk-reducing policies.

While the fundamental biological differences contributing to the GGLE cannot be changed, special attention should be devoted to improving healthcare utilization among men and to increasingly including the effects of sex and gender in medical research on health and disease (Holdcoft, 2007; Mirin, 2021; McGregor et al., 2016, Regitz-Zagrosek & Seeland, 2012).

References

About FROGEE Policy Briefs

FROGEE Policy Briefs is a special series aimed at providing overviews and the popularization of economic research related to gender equality issues. Debates around policies related to gender equality are often highly politicized. We believe that using arguments derived from the most up to date research-based knowledge would help us build a more fruitful discussion of policy proposals and in the end achieve better outcomes.

The aim of the briefs is to improve the understanding of research-based arguments and their implications, by covering the key theories and the most important findings in areas of special interest to the current debate. The briefs start with short general overviews of a given theme, which are followed by a presentation of country-specific contexts, specific policy challenges, implemented reforms and a discussion of other policy options.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Sanctions on Russia: Getting the Facts Right

Posted on March 14, 2024 | Policy Brief

20240314 Sanctions on Russia Image 03

The important strategic role that sanctions play in the efforts to constrain Russia’s geopolitical ambitions and end its brutal war on Ukraine is often questioned and diminished in the public debate. This policy brief, authored by a collective of experts from various countries, shares insights on the complexities surrounding the use of sanctions against Russia, in light of its illegal aggression towards Ukraine. The aim is to facilitate a public discussion based on facts and reduce the risk that the debate falls prey to the information war.

Sanctions are a pivotal component in the array of strategies deployed to address the threat posed by Russia to the rule-based international order. Contrary to views minimizing their impact, evidence and research suggest that sanctions, particularly those targeting Russian energy exports, have significantly affected Russia’s macroeconomic stability [1,2,3]. Between 2022 and 2023:

  • merchandise exports fell by 28 percent,
  • the trade surplus decreased by 62 percent,
  • and the current account surplus dropped by 79 percent (see the Bank of Russia’s external sector statistics here).

Although 2022 represents an extraordinarily high baseline due to the delayed impacts of energy sanctions, the $190 billion decrease in foreign currency inflows during this time has already made a significant difference for Russia. This amount is equivalent to about two years of Russia’s current military spending, or around 10 percent of Russia’s yearly GDP, depending on the figures. Our estimates suggest that Russia’s losses due to the oil price cap and import embargo alone amount to several percent of its GDP [3,4]. These losses have contributed to the ruble’s continued weakness and have forced Russian authorities to sharply increase interest rates, which will have painful ripple effects throughout the economy in the coming months and years. Furthermore, the international sanctions coalition’s freezing of about $300 billion of the Bank of Russia’s reserves has significantly curtailed the central bank’s ability to manage the Russian economy in this era of war and sanctions.

Sanctions Enforcement

Addressing the enforcement of sanctions, it is crucial to acknowledge the extensive and continuous work undertaken by governments, think tanks, and the private sector to identify and close loopholes that facilitate sanctions evasion. Suggesting that such efforts are futile, often with arguments that lack solid evidence, potentially undermines these contributions, and furthermore provides (perhaps unintended) support to those advocating for a dismantling of the sanctions regime. We do not deny that several key aspects are facing challenges, from the oil price cap to export controls on military and dual-use goods. However, the path forward is to step up efforts and strengthen the implementation and enforcement – not to abandon the strategy altogether. Yes, Russia’s shadow fleet threatens the fundamental mechanism of the oil sanctions and, namely its reliance on Western services [4,5,6]. However, recent actions by the U.S. Treasury Department have shown that the sanctioning coalition can in fact weaken Russia’s ability to work around the energy sanctions. Specifically, the approach to designate (i.e., sanction) individual tankers has effectively removed them from the Russian oil trade. More vessels could be targeted in a similar way to gradually step-up the pressure on Russia [7]. While Russia continues to have access to many products identified as critical for the military industry (for instance semiconductors) [8], it has been shown that Russia pays significant mark-ups for these goods to compensate for the many layers of intermediaries involved in circumvention schemes. Sanctions, even when imperfect, thus still work as trade barriers. In addition to existing efforts and undertakings, companies which help Russia evade export controls can be sanctioned, even when registered in countries outside of the sanctioning coalition. Furthermore, compliance efforts within, and against, western companies, who remain extremely important for Russia, can be stepped up.

The Russian Economy

Many recent newspaper articles have been centered around the theme of Russia’s surprisingly resilient economy. We find these articles to generally be superficial and missing a key point: Russia is transitioning to a war economy, driven by massive and unsustainable public spending. In 2024, military spending is projected to boost Russia’s GDP growth by at least 2.5 percentage points, driven by a planned $100 billion in defense expenditures [9]. However, seeing this for what it is, namely war-spending, raises significant concerns about the sustainability of this growth, as it eats into existing reserves and crowds out investments in areas with a larger long-term growth potential. The massive spending also feeds inflation in consumer prices and wages, in particular as private investment levels are low and the labor market is short on competent labor. This puts pressure on monetary policy causing the central bank to increase interest rates even further, to compensate for the overly stimulating fiscal policy.

Further, it is important to bear in mind that, beyond this stimulus, the Russian economy is characterised by fundamental weaknesses. Russia has for many years dealt with anaemic growth due to low productivity gains and unfavourable demographics. Since the first round of sanctions was imposed on Russia, following its illegal annexation of Crimea in 2014, growth has hovered at around 1 percent per year on average – abysmal for an emerging market with catch-up potential. More recently, current sanctions and war expenditures have made Russia dramatically underperform compared to other oil-exporting countries [10]. Moreover, none of the normal (non-war related) growth fundamentals is likely to improve. Rather, the military aggression and the ensuing sanctions have made things worse. Hundreds of thousands of Russians have been killed or wounded in the war; many more have left the country to either escape the Putin regime or mobilization. Those leaving are often the younger and better educated, worsening the already dire demographic situation, and reinforcing the labor market inefficiencies. Additionally, with the country largely cut off from the world’s most important financial markets, investments in the Russian economy are completely insufficient [11].

As a result, Russia will be increasingly dependent on fossil fuel extraction and exports, a strategy that holds limited promise as considerations related to climate change continue to gain importance. With the loss of the European market, either due to sanctions or Putin’s failed attempt to weaponize gas flows to Europe, Russia finds itself dependent on a limited number of buyers for its oil and gas. Such dependency compels Russia to accept painful discounts and increases its exposure to market risks and price fluctuations [12].

The Cost of Sanctions

Sanctions have not been without costs for the countries imposing them. Nonetheless, the sanctioning countries are in a much better position than Russia. Any sanction strategy is necessarily a tradeoff between maximizing the sanctioned country’s economic loss while minimizing the loss to the sanctioning countries [9], but there are at least two qualifications to bear in mind. The first is that some sanctions imply very low losses – if any – while others may carry limited short term losses but longer term gains. This includes the oil-price cap that allows many importing countries to buy Russian oil at a discount [3], and policies to reduce energy demand, which squeezes Russia’s oil-income [13]. These policies may also initially hurt sanctioning countries, but in the long term facilitate an investment in energy self-sufficiency. Similarly, trade sanctions also imply some protection of one’s own industry, meaning that such sanctions may in fact bring benefits to the sanctioning countries – at least in the short run. The second qualification is that, in cases where sanctions do imply a cost to the sanctioning countries, the question is what cost is reasonable. Russia’s economy is many times smaller than, for instance, the EU’s economy. This gives the EU a strategic advantage akin to that in Texas hold’em poker: going dollar for dollar and euro for euro, Russia is bound to go bankrupt. Currently, Russia allocates a significantly larger portion of its GDP to its war machine than most sanctioning countries spend on their defense. That alone suggests sanctioning countries may want to go beyond dollar for dollar as it is cheaper to stop Russia economically today than on a future battlefield. This points to the bigger question: what would be the future cost of not sanctioning Russia today? Many accredit the weak response from the West to the annexation of Crimea in 2014 as part of the explanation behind Putin’s decision to pursue the current full-scale invasion of Ukraine. Similarly, an unwillingness to bear limited costs today may entail much more substantial costs tomorrow.

When discussing the cost of sanctions, one must also take into account Russia’s counter moves and whether they are credible [14]. Often, they are not [3, 15]. Fear-inducing platitudes, such that China and Russia will reshape the global financial system to insulate themselves from the West’s economic statecraft tools, circulate broadly. We do not deny that these countries are undertaking measures in this direction, but it is much harder to do so in practice than in political speeches. For instance, moving away from the U.S. dollar (and the Euro) in international trade (aside from in bilateral trade relations that are roughly balanced) is highly challenging. In such a trade, conducted without the U.S. dollar, one side of the bargain will end up with a large amount of currency that it does not need and cannot exchange, at scale, for hard currency. As long as a transaction is conducted in U.S. dollar, the U.S. financial system is involved via corresponding accounts, and the threat of secondary sanctions remains powerful. We have seen examples of this in recent months, following President Biden’s executive order on December 22, 2023.

One of Many Tools

Finally, we and other proponents of sanctions do not view them as a panacea, or an alternative to the essential military and financial support that Ukraine requires. Rather, we maintain that sanctions are a critical component of a multi-pronged strategy aimed at halting Putin’s unlawful and aggressive war against Ukraine, a war that threatens not only Ukraine, but peace, liberty, and prosperity across Europe. The necessity for sanctions becomes clear when considering the alternative: a Russian regime with access to $300 billion in the central bank’s reserves, the ability to earn billions more from fossil fuel exports, and to freely acquire advanced Western technology for its military operations against Ukrainian civilians. In fact, the less successful the economic statecraft measures are, the greater the need for military and financial aid to Ukraine becomes, alongside broader indirect costs such as increased defense spending, higher interest rates, and inflation in sanctioning countries. A case in point is the West’s provision of vital – yet expensive – air defense systems to Ukraine, required to counteract Russian missiles and drones, which in turn are enabled by access to Western technology. Abandoning sanctions would only exacerbate this type of challenges.

Conclusion

The discourse on sanctions against Russia necessitates a nuanced understanding of their role within the context of the broader strategy against Russia. It is critical to understand that shallow statements and misinformed opinions become part of the information war, and that the effectiveness of sanctions also depends on all stakeholders’ perceptions about the sanctioning regime’s effectiveness and long run sustainability. Supporting Ukraine in its struggle against the Russian aggression is not a matter of choosing between material support and sanctions; rather, Ukraine’s allies must employ all available tools to ensure Ukraine’s victory. While sanctions alone are not a cure-all, they are indispensable in the concerted effort to support Ukraine and restore peace and stability in the region. The way forward is thus to make the sanctions even more effective and to strengthen the enforcement, not to abandon them.

References

[1] “Russia Chartbook”. KSE Institute, February 2024

[2] “One year of sanctions: Russia’s oil export revenues cut by EUR 34 bn”. Center for Research on Energy and Clean Air, December 2023

[3] “The Price Cap on Russian Oil: A Quantitative Analysis”. Wachtmeister, H., Gars, J. and Spiro, D, July 2023

[4] Spiro, D. Gars, J, and Wachtmeister, H. (2023). “The effects of an EU import and shipping embargo on Russian oil income,” mimeo

[5] “Energy Sanctions: Four Key Steps to Constrain Russia in 2024 and Beyond”. International Working Group on Russian Sanctions & KSE Institute, February 2024

[6] “Tracking the impacts of G7 & EU’s sanctions on Russian oil”. Center for Research on Energy and Clean Air

[7] “Russia Oil Tracker”. KSE Institute, February 2024

[8] “Challenges of Export Controls Enforcement: How Russia Continues to Import Components for Its Military Production”. International Working Group on Russian Sanctions & KSE Institute, January 2024

[9] “Russia Plans Huge Defense Spending Hike in 2024 as War Drags”. Bloomberg, September 2023

[10] “Sanctions and Russia’s War: Limiting Putin’s Capabilities”. U.S. Department of the Treasury, December 2023

[11] “World Investment Report 2023”. UNCTAD

[12] “Russia-China energy relations since 24 February: Consequences and options for Europe”. Swedish Institute of International Affairs, June 2023

[13] Gars, J., Spiro, D. and Wachtmeister, H. (2022). “The effect of European fuel-tax cuts on the oil income of Russia”. Nature Energy, 7(10), pp.989-997

[14] Spiro, D. (2023). “Economic Warfare”. Available at SSRN 4445359

[15] Gars, J., Spiro, D. and Wachtmeister, H., (2023). “Were Russia’s threats of reduced oil exports credible?”. Working paper

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Trending? Social Media Attention on Russia’s War in Ukraine

Posted on February 19, 2024 | Policy Brief

20240218 Social Media Attention on Russia Image 01

Russia’s invasion of Ukraine is one of the most important geopolitical events of the 21st century. For almost two years, international news outlets have been covering the war, often providing daily or even hourly updates. But what is the level of public interest and public engagement in countries around the world? When does the war capture an international audience’s attention and what are the events that supplant it? This brief uses data on X (formerly Twitter) trends in 62 countries to address these questions.

The competition for attention is a defining feature of our information landscape. From the relentless stream of social media updates to the myriad of news articles vying for our clicks, individuals are constantly bombarded with information, each competing for a slice of their limited attention. Amidst this cacophony of voices, certain topics rise to the forefront, capturing the collective consciousness and dominating public discourse.

Russia’s war in Ukraine has, for obvious reasons, commanded significant media coverage over the past two years. It has been described as a hybrid war, where conventional military tactics are increasingly combined with non-traditional methods. This includes an information war, fought with narratives to manipulate people’s perceptions, spread falsehoods, or enlist support. To a large extent, this information war has taken place on social media. On the one hand, social media platforms have been used to spread disinformation and propaganda. For example, we’ve seen the spread of false narratives about the causes of the war, the actions of the different parties involved, and the suffering of the Ukrainian people. But on the other hand, social media has also been used to counter this disinformation, with fact-checking initiatives and grassroots efforts to promote accurate information.

This policy brief analyses the prominence of the war in social media discourse. While the content on traditional media outlets provides a snapshot of the supply of information, platforms like X/Twitter offer a unique window into the broader population’s demand for that information and how they evolve over time. Whether or not hashtags related to Russia’s war in Ukraine are trending in a given country, depends not just on the public’s interest in the war relative to other events in the news, but also on the level of interest relative to sport, music, television, and cats. By tracking the prevalence of trending hashtags, we can gain insights into the public’s engagement with Russia’s war in Ukraine, going beyond traditional media narratives and high-level governmental discussions to uncover the conversations and sentiments that shape broader public opinion.

The X/Twitter data suggest that in most countries, social media attention in the Russian war on Ukraine has been short-lived and sporadic. On February 24, 2022, Ukraine-related hashtags were trending in 100 percent of the countries in our dataset. Two weeks later, on March 9, 2022, they were trending in only 3 percent of the countries. We find that geographical proximity to the conflict is a strong predictor of social media interest. Related hashtags trend most frequently in Eastern, Central and Northern Europe. We also document spikes in interest around events that link a country to the war in Ukraine: announcements of military assistance or visits by Ukraine’s President Volodymyr Zelenskyj. Finally, we compare the hashtags trending in NATO countries to those trending in countries that either sided with Russia or abstained from voting in a critical UN resolution and show significant differences between the two groups.

Data and Methodology

The source for our dataset is archive.twitter-trending.com – a website that records trending hashtags on X/Twitter across countries and over time. We scrape this website to collect (i) the five highest volume topics in each country on each day and (ii) the five longest-trending topics in each country on each day (these two categories can overlap). Our sample consists of the 62 countries available on the website and covers the timeframe July 2021 to December 2023. From this, we construct a country-by-day panel dataset with 55,862 observations.

We identify 11 topic categories that collectively account for the overwhelming majority of trending topics related to Russia’s war in Ukraine. These topics and their relative frequency are shown in Figure 1. The three dominant categories are “Ukraine”, “Russia” and ”Putin”. We use Google’s translation software to translate non-English tweets which account for a significant fraction of the dataset.

Figure 1. Frequency of hashtags in 11 category topics.

Note: This chart shows the number of times topics assigned to our 11 war-related categories were among the top five longest trending topics (in orange) or the top five highest volume topics (in blue) in any country on any day in our dataset. The source are data scraped from archive.twitter-trending.com

Figure 1 shows that it is more common for war-related topics to be among the highest volume topics on a given day than among the longest trending topics. This suggests that these topics attract a lot of interest in a narrow timeframe (e.g. when news breaks) but are relatively less likely to remain prominent over a whole day. Despite this difference, we find that the distinction between highest-volume and longest-trending does not affect any of the patterns we observe when comparing across countries or time. For simplicity, the results shown below all use the highest-volume measure.

It is important to acknowledge the limitations of the X/Twitter data. Firstly, the population actively using X/Twitter is not representative of the overall population. Secondly, the composition of users may differ across countries which complicates cross-country comparisons. Trending hashtags provide an indicator of public interest that is informative only because we do not have high frequency, nationally representative surveys that are comparable across countries. Finally, we are only able to observe the top-five hashtags in a country on any given day. In principle, a war-related topic could increase in absolute volume from one day to the next, while still being crowded out of the top five.

Geographic Variation in Attention

Social media attention to the war in Ukraine varies greatly across countries. The map in Figure 2 shows the proportion of days when any hashtag from the considered categories was among the top-five most tweeted, for each country in the database since the start of the war. Interest has, on average, been higher in Europe as well as in Anglo-Saxon countries. In contrast, other regions of the world exhibited less sustained interest, as indicated by the lower frequency of related hashtags among the top-five most tweeted topics.

Figure 2. Prevalence of war-related hashtags.

Note: The map shows the share of days on which war-related hashtags (in our 11 categories) were among the top five highest volume topics on X/Twitter between 24/02/2022 and 18/12/2023. Countries in white are not among the 62 countries in the dataset. The source are data scraped from archive.twitter-trending.com

To some extent, this heterogeneity is explained by distance. Figure 3 plots the frequency of war-related trends against geographical proximity to the conflict zone (represented by the distance from each country’s capital to the city of Kharkiv in eastern Ukraine, a major point of focus during the ongoing war). The relationship is clearly negative, suggesting that physical distance from the crisis reduces the intensity of online discourse and public interest. Unsurprisingly, the number of related trends is highest in countries directly or indirectly involved in the conflict – Ukraine, Russia, and Belarus – as well as in Latvia which borders both Russia and Belarus.

Figure 3. Frequency of war-related hashtags and distance from Kharkiv.

Note: The chart shows the log of the distance from each country’s capital city to the city of Kharkiv in km on the x-axis and the logged frequency of war-related topics among the top five highest volume topics in that country between 24/02/2022 and 18/12/2023 on the y-axis. The source are data scraped from archive.twitter-trending.com

Variation in Attention Over Time

Over the past two years, the war has sustained a relatively high intensity. By contrast, global attention on X/Twitter has been more sporadic, spiking around specific events. This is shown in Figure 4, which plots the day-to-day variation in the number of battle events as recorded by the Armed Conflict Location & Event Data Project (ACLED) (in blue) as well as the share of countries where war-related tweets are trending (in orange). Attention was highest at the time of the invasion in February 2022 and the days of the Wagner Group rebellion in June 2023. Overall, the correlation between twitter trends and conflict intensity is positive but relatively weak.

Figure 4. Frequency of war-related hashtags and intensity of conflict.

Note: The chart shows the number of daily battle events in Ukraine as classified by ACLED on the left axis (in blue) and the share of countries where war-related topics were trending on the respective day on the right axis (in orange). The sources are ACLED’s Ukraine conflict monitor and data scraped from archive.twitter-trending.com

Attention also reacts to other major global events. Figure 5 compares the number of top-five trending hashtags related to the categories of interest in each country on two specific dates: February 24, 2022, the day of Russia’s full-scale invasion of Ukraine, and October 7, 2023, the day of a Hamas terror attack on Israel. On the day of the Russian invasion, the majority of countries in our sample exhibited the highest value. In contrast, on the day of the Hamas attack, related hashtags were trending almost nowhere outside Ukraine and Russia, indicating that global attention and engagement with this new ongoing crisis significantly overshadowed the focus on the situation in Ukraine. This shift in attention demonstrates how breaking news can capture the public’s interest and divert focus from ongoing crises, affecting the level of engagement on social media and potentially influencing the global response and discourse surrounding these events.

Figure 5. Map of prevalence of war-related hashtags on two different dates.

Note: The maps show the share of the top five highest volume topics on twitter related to Russia’s war on Ukraine. The map on the left shows 24/02/2022 – the day of Russia’s invasion. The map on the right shows 07/10/2023 – the day of a Hamas terror attack on Israel. Countries in white are not among the 62 countries in the dataset. The source are data scraped from archive.twitter-trending.com

While some events impact attention globally, others affect the salience of the conflict for a specific country. Figure 6 shows that people pay more attention to the war when there is a tangible connection to their own country. The panel on the left shows that war-related topics were more likely to trend in a country around the days where the country announced an aid package for Ukraine (military, financial or humanitarian). It shows an increasing trend in the preceding days and a peak on the day of the announcement. The panel on the right shows that war-related topics were more likely to trend in a country around the days of a visit from President Zelenskyj. This effect is large in magnitude but only lasts for around three days.

Figure 6. Likelihood of hashtags trending in relation to country-specific event.

Note: The charts show variation in the share of countries where at least one war-related topic was among the top five highest volume topics on days relative to a specific event. In the left chart, day 0 represents the day on which a country’s government announces an aid package for Ukraine. In the right chart, day 0 represents the day on which President Zelenskyj arrived in a country for an official visit. The source for these charts are: (i) the Kiel Institute’s Ukraine Support Tracker (Trebesch et al., 2023), (ii) Wikipedia’s list of official visits by President Zelenskyj and (iii) data scraped from archive.twitter-trending.com

While the events above act as drivers of attention, it is also interesting to consider what causes war-related topics to drop out of the top five trending topics. We distinguish between two reasons why war-related hashtags could stop trending: (i) a loss of interest that results in a reduction in the absolute number of related tweets (ii) the rise of other topics that displace war-related tweets from the top five. Figure 7 focuses on days where war-related topics dropped out and compares the volume of tweets on the last day where they were in the top five, to the threshold they would have had to surpass in order to make the top five on the subsequent day. In cases where the threshold is lower than the previously observed volume of tweets (a ratio of less than 1), the topic would have kept trending had it sustained its volumes, and one can conclude there was an absolute loss of interest. In cases where the ratio is greater than one, it is possible that the topic sustained its previous volume of tweets but was crowded-out by the rise of a new trending topic. Figure 7plots the histogram of this ratio. 73 percent of the cases are in the first category (loss of attention) and 27 percent are in the possible crowding out category. This provides further evidence to suggest that attention to the war on social media is typically fleeting.

Figure 7. Loss of attention vs crowding out.

Note: The sample are country-days where war-related topics were among the top five highest-volume topics but then dropped out of the top five the next day. The chart provides a histogram of the ratio of the threshold for making the top five on the subsequent day to the highest volume of tweets of a war-related topic. Values below 1 (in blue) indicate that the volume was above the next day’s threshold and the topic declined in absolute terms. Values above 1 (in orange) indicate that the volume was below the next day’s threshold. The source are data scraped from archive.twitter-trending.com

We also examine the content of discussions on the first day after war-related hashtags drop out of the top five. The word cloud in Figure 8 suggests that on such days, people primarily discuss entertainment topics like music and football.

Figure 8. Word cloud of hashtags trending on days war-related categories drop out.

Note: The figure provides a word cloud of trending topics on country-days where no war-related topic was among the top five highest volume topics, but at least one war-related topic had been in the top five on the previous day. The source are data scraped from archive.twitter-trending.com

Content and Context of War-Related Discourse

In addition to providing insight into the level of engagement, hashtag analysis can also reveal the content and context of popular discourse surrounding the war. By examining words trending on the same days as those from our 11 categories, we can gain a better understanding of the topics people are discussing and how the conversation varies across different regions. Figure 9 illustrates this through word clouds, showing the language used in NATO countries on the left and in countries that abstained or voted against the United Nations General Assembly Resolution ES-11/1 on the right. This resolution, dated March 2, 2022, condemned the brutal invasion of Ukraine and demanded that Russia immediately withdraw its forces and comply with international law.

This exercise allows us to compare the dominant themes and narratives in these two groups of countries and observe any differences in public perception and discourse regarding the conflict. The prevalence of cryptocurrency and NFT (non-fungible tokens) references in the word cloud on the right is suggestive of how economic interests and alternative financial systems could be relevant for the positions of countries that abstained or voted against the resolution, and how this might affect their involvement or response to the conflict. On the left, words like “NATO”, ”Biden”,  and ”Trump” clearly stand out, suggesting that these topics are central to the discourse on the war in NATO countries. This could indicate a focus on geopolitical alliances, international cooperation, and the role of key political figures in shaping the response to the conflict. Interestingly, “Putin” is very prominent in the left word cloud while “Russia” and “Russian” are more prominent on the right. This could indicate that Putin is seen and discussed as the primary antagonist in NATO countries.

Figure 9. Word cloud of hashtags in NATO countries vs Russia-friendly countries.

Note: These word clouds represent topics that trend on days where at least one war-related topic is trending in the respective country. The cloud on the left shows NATO countries. The cloud on the right shows countries that either abstained or voted against United Nations General Assembly Resolution ES-11/1. The source are data scraped from archive.twitter-trending.com

Conclusion

This brief uses X/Twitter trends as a barometer of public interest in Russia’s war in Ukraine. We show how attention fluctuates over time in response to developments in the conflict, to other breaking news, and to local events that make the conflict salient for a domestic audience. We also provide descriptive evidence on the variation across geographical regions and among different groups of countries. Additionally, we analyse the instance where Ukraine-related topics stop trending and find suggestive evidence that this is typically due to a gradual loss of interest rather than crowding out by new distracting trends.

Public attention and engagement drive policy in democratic countries, and the sustained support of its democratic allies is vital for Ukraine during this critical time. Understanding the patterns and influences of public attention is crucial for developing effective strategies to sustain engagement and support. This can be achieved for example by regularly highlighting the ongoing significance and bearing of Russia’s war against Ukraine, even as other events dominate the headlines. Emphasizing the impact of the conflict on individuals and communities, as well as its broader implications for international relations and global security, can help sustain public interest and engagement.

References

  • ACLED. Ukraine Conflict Monitor. https://acleddata.com/ukraine-conflict-monitor/
  • Trebesch, C., Antezza, A., Bushnell, K., Bomprezzi, P., Dyussimbinov, Y., Frank, A., Frank, P., Franz, L., Kharitonov, I., Kumar, B., Rebinskaya, E., Schade, C., Schramm, S., and Weiser, L. (2023). The Ukraine Support Tracker: Which countries help Ukraine and how? Kiel Working Paper, 2218, 1-75.
  • Twitter Trending Archive. Scraped on ##/12/2023. https://archive.twitter-trending.com/

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

The Political Economy of Environmental Policy | Call for Papers

Posted on February, 2024 | News

20240215 Political Economy of Environmental Policy Image 01

The Stockholm Institute of Transition Economics (SITE) and the Forum for Research on Eastern Europe: Climate and Environment (FREECE) invites paper submissions to a one-day workshop session on the ‘Political Economy of Environmental Policy’ with a keynote lecture by Michaël Aklin (EPFL, Swiss Federal Institute) on 19th of April 2024 in Stockholm.

This event, hosted by FREECE together with SITE, will bring together leading academics and experts in the field to discuss and explore the complex relationship between politics, economics, and environmental policy.

The ‘Political Economy of Environmental Policy’ workshop aims to foster a dynamic exchange of ideas and insights among scholars, researchers, and practitioners. Participants will have the opportunity to engage in thought-provoking discussions, share their latest research findings, and explore innovative approaches to addressing the challenges of environmental policy in today’s rapidly changing world.

Keynote Speaker

Keynote address by Michaël Aklin, an Associate Professor from the EPFL, Swiss Federal Institute, and an expert in the political economy of environmental policy.

Workshop

Just like last year (The Economics of Sustainable Transport), the workshop will consist of two elements:

  1. a session with paper presentations, and
  2. keynote speeches from invited experts in the field.

The workshop will thus provide presentations of the latest research and guidance on the future of the field to economists interested in doing their own research on the topic.

Call for Papers

We would like to invite paper and extended abstract submissions, as well as expressions of interest in attending the workshop by 4 March 2024.

Important Dates and Submission Deadline

  • 4th of March 2024 – Submission deadline (full papers or extended abstracts)
  • 11th of March 2024 – Notification of acceptance
  • 19th of April 2024 – FREECE Workshop session on the ‘Political Economy of Environmental Policy’

Please send your submission to: julius.andersson@hhs.se.

The workshop is organised as part of the FREECE initiative – the Forum for Research on Eastern Europe: Climate and Environment supported by the Swedish International Development Cooperation Agency (Sida).

What Is the Evidence on the Swedish “Paternity Leave” Policy?

Posted on February 5, 2024 | Policy Brief

20240204 Swedish Paternity Leave image representing fathers parental leave policy

Since 1995, Sweden has earmarked an increasing number of parental leave days to each parent, creating a strong incentive for fathers to increase their (traditionally low) parental leave uptake. The literature on the causal impacts of these policies establishes several important findings. First, the incentive seems to work, as fathers tend to increase their uptake of paternity leave. However, who responds to the incentive, the timing of the leave and how mothers adjust to it is heterogenous, depending on the policy design and the underlying couple characteristics. Second, there is no strong support in the data for the argument, popular in public opinion and among policy-makers, that paternity leave should improve the balance of childcare duties within a couple and ultimately enhance women’s labor market position. However, in order to estimate causal effects, the studies reviewed in this policy brief focus on the first cohort of families affected by earmarked parental policies, whereas impacts on mothers’ labor market outcomes are more likely to manifest in the long run. Further, paternity leave policies in the broader sense have benefitted mothers’ health post childbirth and they may also have broken the social stigma on fathers taking time off to care for their children. Finally, recent evidence suggests that earmarking has improved gender attitudes in the next generation, making men less likely to hold stereotypical views about gender roles in society.

Parental Leave in Sweden

All parents in Sweden have been entitled to paid parental leave benefits since 1974, with no difference between birthing and non-birthing parents (for simplicity referred to as mothers and fathers henceforth). Despite this, fathers’ parental leave take-up has historically been very low (see Figure 1).

To change this pattern, the legislator has introduced a few reforms over the years. In 1995, 30 of the wage-replaced days (i.e. parental leave days compensated at almost the rate of the daily wage) were earmarked to each parent, creating the so called ”mum/dad month”. When a parent failed to take up these 30 days these would be “lost”, as earmarked days could not be transferred to the other parent. Through two subsequent reforms, effective from 2002 and 2016 respectively, the number of earmarked wage-replaced days increased, first to sixty days and then to ninety days.

Today, the total allowance is 480 benefit days, of which 390 are wage-replaced (paid at about 80 percent of the parent’s wage), and the remaining 90 are compensated at a low flat rate (approximately 15 euros per day). 90 of the wage-replaced days are earmarked to each parent. The parental leave days can be utilized until the day the child turns 12 or until the child finishes 5th grade, but 80 percent of these days must be used by the time the child turns 4.

As shown in Figure 1, father’s share of the total parental leave steadily grew over the years when the earmarking reforms occurred but has since 2018 stalled at a rate of 69/31 (i.e., mothers and fathers take 69 and 31 percent respectively of the total number of leave days claimed in Sweden during one year).

Figure 1. Men’s share of parental leave days in Sweden, 1974-2021, in percent.

Source: Author’s compilation based on data from Statistics Sweden.

One could speculate, based on these trends, that earmarking might have successfully increased father’s take-up of parental leave. However, without rigorous statistical analysis, it is virtually impossible to distinguish between the role of the earmarking polices and secular trends in preferences over parental leave. Thankfully, a few papers have studied the Swedish parental leave reforms, using state-of-the art techniques to understand their respective causal impacts. What is the research-based evidence on the Swedish parental leave earmarking reforms? Did they successfully incentivize fathers to increase their take-up? Did they succeed in their broader goal of balancing child responsibilities within couples, ultimately helping women improve their position in the labor-market? How were children affected by them? What lessons from the Swedish experience can be useful for fine-tuning of the Swedish policy or for similar designs in other countries?

This policy brief delves into the academic literature on the impacts of the Swedish earmarking reforms. The review is by no means representative of the large amount of academic work produced on the Swedish parental leave reforms. Rather, it is a small selection of studies where results can be more easily interpreted as causal impacts, as they are based on comparing families with children born just before versus just after the relevant date for the policy implementation, and account for so called month-of-birth effects (see e.g. Larsen et al., 2017) when needed. Causal estimates can be more directly used to inform policy-making, which is what motivates the focus of this review.

Earmarking and Take-up of Paternity Leave

As explained above, the Swedish earmarking system creates strong incentives for fathers to increase their take-up of leave days, as these would otherwise be “lost”, leaving couples with the need to resort to potentially more costly arrangements for childcare.

It is thus not surprising that the 1995 reform increased fathers’ take-up of wage-replaced leave by an average of 15 days, 50 percent of the pre-reform take-up (Ekberg et al., 2013). This change seems to mostly stem from the 54 percent of fathers who were taking 0 days of leave before the reform and were induced to take between 20 and 40 days after, so that the percentage of fathers not taking any leave declined to 18 precent.

In a recent working paper, Avdic et al. (2023) complement this evidence, considering all leave days together. They show that the reform induced fathers to increase their take-up of total parental leave by 21 days, whereby mothers decreased it by the same amount. Therefore, on average, the total amount of leave taken by Swedish parents remained unchanged, but the mother’s share decreased by about 5.4 percentage points. The paper also compares changes in parents’ take-up month-by-month, finding that some mothers took some unpaid leave within the child’s first year to compensate for the loss of wage-replaced days. It is not clear why these mothers would not resort to the low flat rate leave, as other mothers seem to have done (see Ekberg at al., 2013). In general, the data points to fathers having mostly, although not exclusively, substituted for mothers’ time with the child during the child’s second year of life.

Avdic and Karimi (2018) extend the policy-evaluation to the 2002 reform, which earmarked one additional month to each parent, but also made one more month of wage-replaced leave available. They find that this reform also caused an increase in take-up of paternity leave, but for a different group of fathers. While in 1995 fathers that otherwise would have taken no leave were induced to take approximately one month, the 2002 shift occurred mostly among fathers who, instead of taking between 30 and 40 days of leave, started taking more than 50 days.

These findings are consistent with those in Alden et al. (2023), who study the characteristics of fathers who do not take any leave. They find that while the 1995 reform changed the composition of this group of fathers, the same thing did not happen with the 2002 and 2016 reforms. Over-time, one group of men consistently stands out for not taking any parental leave regardless of the incentives created by the legislator, namely fathers with worse labor-market positions, and whose earnings are lower than that of the mothers.

Paternity Leave and Gender Gaps

The main motivation for policies that seek to increase the take-up of parental leave among fathers is that this increase can help women, especially high-skilled ones, improve their labor-market position (Ekberg et al., 2013). The economics literature has long established a systematic loss in earnings and employment for women following the birth of their first child (the so-called child penalty; see e.g. Kleven et al., 2019). There are two main mechanisms through which earmarking policies could improve women’s labor market outcomes. First, if firms discriminate against women because of the (perceived) cost of maternity leave, the discrimination should decline once employers expect also men to take parental leave. Ginja et al. (2020) show evidence (although not causal) consistent with long maternity leaves reducing child-bearing aged women’s “attractiveness” among Swedish employers.  Second, by creating a stronger bond between fathers and children, and by reducing mothers’ specialization in childcare, paternity leave should increase the time fathers allocate to childcare as the child grows up, thus re-balancing the division of non-market (and possibly market) work within the couple.

As pointed out in Cools et al. (2015), the first type of effect, more likely to be relevant in the long run, is hard to estimate with data from only one country, as virtually all employers in the country should be somewhat affected by the change in perceptions.

Instead, Ekberg et al. (2013) study the effect on intra-household division of childcare responsibilities, by estimating the impact of the 1995 reform on the amount of time that fathers and mothers claim off work when their child is sick. They find no evidence that the 1995 reform increased the share of time off taken by fathers to care for sick children. Consistently, the study also fails to find evidence of large and robust changes in mothers’ earnings for thirteen years post childbirth. Similarly, Avdic et al. (2023) show that mothers affected by the 1995 reform did not increase, on average, their labor supply, except during the first year of the child’s life.

While these analyses are extremely valuable for our understanding of the reforms’ effects on the first cohort of families affected, they fall short of capturing long-term dynamics. For instance, it is important to acknowledge that the decision on who takes time off when the child is sick depends on many factors, including the availability of flexible arrangements at work. Women are known for selecting into occupations and jobs that allow a more flexible schedule (Goldin, 2014). This pattern might change if the increase in take-up of paternity leave leads to updated expectations among women on partners’ willingness to share daycare responsibility. This is most likely a long-term development, which the design used in the above outlined studies does not capture.

Another effect of the Swedish parental leave system, not directly linked to earmarking but nevertheless indicative of the importance of fathers’ time off work during the child’s first year of life, is that on mothers’ health. Persson and Rossin-Slater (2019) show that a Swedish 2012 reform that in practice allowed fathers to take 30 days of parental leave in concomitance with the mother during the child’s first year of life reduced the likelihood of mothers experiencing health issues due to post-partum complications.

An important aspect that the literature has so far not emphasized is also that earmarking reforms might affect another gender gap, namely the “freedom” to take the leave. Given the traditional division of roles across genders, there might be a stigma at a societal level against men taking parental leave. By creating strong economic incentives for taking paternity leave, the earmarking policies may downplay the stigma in the short-term and break it in the long-term. There is some suggestive, although not definitive, evidence that norms around paternity leave might have changed. Avdic and Karimi (2018) show that between 1995 and 2002 the share of fathers who were taking more than one month of leave had already started increasing before the second month was earmarked. More research would be needed, however, to assess the role of policies in changing societal perceptions around paternity leave.

Paternity Leave and Children’s Outcomes

An obvious question to ask is how children are affected by earmarking of parental leave days. Avdic et al. (2023) study this question in the context of the 1995 reform. By looking separately at different groups of children by sex and parents’ education, they find that the 1995 reform caused a decline in GPA for sons of non-college-educated fathers and mothers. The most likely channel for this relationship, according to the authors, is boys’ diminished access to fathers’ time, due to the 1995 reform increasing the likelihood of couple dissolution within the child’s first three years of life (for households with low-earning mothers). At that time children tended to live predominantly with the mother in case of parental separation. However, a potential additional channel could be the worsened economic situation caused by the paternity leave. In households with low-earning mothers, mothers’ and family earnings declined post-reform due to mothers compensating for “lost” leave days by taking unpaid leave. Very conflictual separations could also be behind the effect on children’s GPA.

These findings highlight the importance of considering potential unintended consequences of the parental leave policies, and the diverse effects they might have on different demographic groups. Such considerations could improve the design of future policies. For instance, Avdic and Karimi (2018) find that the 2002 reform, which earmarked one more month and added one month of wage-replaced parental leave, did not cause couple dissolution. Thus, the authors conclude that not imposing strong constraints on households, while creating incentives for fathers to take paternity leave, is highly desirable.

Finally, in a very recent working paper, Fontenay and Gonzalez (2024) consider the effect of earmarking policies on children’s gender attitudes as adults, leveraging data from online surveys of 3,000 respondents across six European countries, including Sweden. They study changes in attitudes as measured by an Implict Association Test, which is meant to capture subconscious associations between women and family and men and career.  In five of the countries studied they find that male respondents born soon after an earmarking reform have less stereotypical gender attitudes than those born before. No differences are detected for women. The effect in Sweden is one of the largest: in a sample of 237 male respondents, the father being eligible for the “dad-month” makes the child hold more egalitarian gender-attitudes as an adult by 0.3 standard deviations. The authors suggest that a role model effect might be at play, whereby boys who observe their fathers being more involved in childcare are nurtured to hold more egalitarian beliefs about gender roles.

Conclusion

Since 1995, Sweden has earmarked an increasing number of parental leave days to each parent, creating strong incentives for fathers to increase their previously very low parental leave uptake. This policy brief has reviewed the literature that studies the causal impacts of these earmarking reforms, highlighting a number of important conclusions as well as gaps in the knowledge on the effects of these policies.

First, the incentives created by the earmarking policies seem to work, as fathers tend to increase their uptake of paternity leave, while mothers tend to increase their labor supply during their child’s first year of life. However, such effects are heterogeneous, depending on the policy design and the underlying couple characteristics. Designs that impose strong constraints on household choices seem to have adverse effects on low-income or low-education households, reducing mothers’ earnings, triggering couple dissolution, and negatively affecting children’s GPA. Future increases in earmarking or similar policies in other countries should consider these design details carefully.

Second, there is no strong support in the data for the argument, popular in the public opinion and among policy makers, that paternity leave improves the balance of childcare duties within a couple and that it ultimately enhances women’s labor market position. However, to estimate causal effects, the studies analyzed in this policy brief focus on the first cohort of families affected by the earmarked reforms, whereas impacts on mothers’ labor market outcomes are more likely to be seen in the long run. After all, Sweden is one of the countries with the lowest documented child penalty in employment and earnings (see the child penalty atlas), and it is unlikely that policy played no role in narrowing gender gaps among parents. Consistently, recent evidence suggests that earmarking has improved gender attitudes in the next generation, making men less likely to hold stereotypical views about gender roles in society.

Further, it is important to mention that paternity leave policies in general have benefitted mothers’ post-childbirth health and that they may have broken a societal stigma around fathers taking time off to care for their children.

References

  • Aldén, L., Boschini, A. and Tallås Ahlzen, M. (2023). Fathers but not Caregivers. http://dx.doi.org/10.2139/ssrn.4405212
  • Avdic, D. and Karimi, A., (2018). Modern family? Paternity leave and marital stability. American Economic Journal: Applied Economics, 10(4), pp. 283-307.
  • Avdic, D., Karimi, A., Sundberg, E. and Sjögren, A. (2023). Paternity leave and child outcomes. IFAU, Working Paper 25.
  • Ekberg, J., Eriksson, R., and Friebel, G. (2013). Parental leave—A policy evaluation of the Swedish “Daddy-Month” reform. Journal of Public Economics, 97, pp. 131-143.
  • Ginja, R., Karimi, A. and Pengpeng Xiao. (2023). Employer responses to family leave programs. American Economic Journal: Applied Economics, 15(1), pp. 107-135.
  • Goldin, C., (2014). A grand gender convergence: Its last chapter. American Economic Review, 104(4), pp. 1091-1119.
  • Gonzalez, L. and Fontenay, S. (2024). Can Public Policies Break the Gender Mold? Evidence from Paternity Leave Reforms in Six Countries. BSE, Working Paper 1422.
  • Kleven, H., Landais, C., Posch, J., Steinhauer, A. and Zweimüller, J. (2019). Child penalties across countries: Evidence and explanation”. AEA Papers and Proceedings, 109, pp. 122-126.
  • Larsen, E. R. and Solli, I. F. (2017). Born to run behind? Persisting birth month effects on earnings. Labour Economics, 46, pp. 200-210.
  • Persson, P., and Rossin-Slater, M. (2019). When dad can stay home: fathers’ workplace flexibility and maternal health. National Bureau of Economic Research, Working Paper 25902.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Ukrainian Refugees: Who Returns and Why?

Posted on January, 2024 | Policy Brief

Image depicting Ukrainian refugees, including a child holding a teddy bear, eagerly awaiting their return to Ukraine

Of the 17 million Ukrainians who have fled the country since the full-scale Russian invasion in spring 2022, over 60 percent have returned to the country. Based on survey data of Ukrainians who were previously abroad but have returned and those who have remained abroad, we look at the factors that impact their respective decisions to return or to stay. We find that having family in Ukraine is an important factor, but so is missing one’s home, a wish for children to study in Ukraine and a desire to participate in the reconstruction of Ukraine. People who emigrated with their spouse, and those who had planned to emigrate prior to the full-scale war, are more likely to stay abroad. We also find that those staying in a host country are highly involved in Ukrainian affairs and argue that the Ukrainian government should consider them a resource rather than lost human capital.

One of the major consequences of the Russian war on Ukraine has been the mass exodus of Ukrainians fleeing the war. As of February 2022, the Ukrainian statistical agency has ceased publishing population data for both technical and security reasons, so the exact number of Ukrainians that have left the country is unknown. However, on the basis of  mirror statistics from other countries, data from international organizations or surveys, it can be estimated that about 17 million people have fled the country since February 2022. Out of those, over 60 percent have returned to Ukraine, while 6 million Ukrainians have remained abroad.

As people are key in the future reconstruction and development of Ukraine, it is of great importance to understand what factors drive people to return (or not to return) to Ukraine. A recent paper (Sologoub, 2024) aims at addressing this question using a representative survey implemented by the Factum Group in July-August 2023. The survey includes 1400 people who, since early 2022, have fled Ukraine.  Half of the respondents had returned to Ukraine at the time of the survey while the other half remained abroad. The first group is from here on referred to as returnees and the latter as refugees.

To look at the factors that determine individual’s decisions to return or stay abroad, the paper specifically considers the factors that impact three probabilities:

  • the probability that a person stays abroad;
  • the probability that a person who stays abroad plans to return (64 percent of the refugees);
  • and the probability that a person who returned plans to stay in Ukraine (56 percent of the returnees).

This policy brief briefly describes the survey data, summarizes the key findings and concludes with policy implications and recommendations.

Main Characteristics of the Survey Respondents

The survey data shows that out of the entire sample of people who have returned to Ukraine and who have remained abroad, over 80 percent are women, and out of these 44 percent emigrated from Ukraine with children. About a quarter of our respondents stay or have stayed in Poland or Germany, 7 percent in the Czech Republic, while other countries have accommodated up to 4 percent of the Ukrainian migrants in our sample. The main reason for emigration is safety – almost half of the respondents reported it being the main reason for leaving Ukraine (see Figure 1).

Figure 1. Stated reasons for migration choices.

Source: Factum Group survey, own calculations. Note: Blue bars are for returnees, orange bars are for refugees (i.e. individuals who have stayed in host country). A dark color denotes the main reason, and a light color denotes other reasons.

Half of the respondents who had a job in Ukraine prior to the war lost their jobs at onset of the full-scale invasion, 18 percent quit their jobs and 30 percent continued to work remotely. 53 percent of the refugees had a job at the time of the survey, and 9 percent of those who remained abroad worked online for a Ukrainian organization. Of those who worked abroad at the time of the survey, 61 percent remained on the same qualification level, while 37 percent changed their qualification level – the majority of those changed to a lower qualification level.

39 percent of all respondents had school-aged children. A quarter of them reported that their children studied only online in Ukrainian schools in 2022/23. Over 60 percent stated that their children studied in a host country, but most of these children took additional classes within the Ukrainian school program – in an online or offline environment, with tutors or on their own.

When asked to compare different aspects of their life abroad and in Ukraine, approximately equal shares of the respondents reported an improvement or a worsening of these aspects. Worsening aspects was mainly reported to concern relations with friends, psychological state, and healthcare. The respondents also stated reasons for their return to Ukraine (or willingness to return), which allowed for estimation of the significance of these reasons. Generally, we found that pull factors (factors attracting people to return to Ukraine) are much more powerful than push factors (factors that force people out of host countries).

Main Results from the Probability Models

Demographic factors (age, education, family status, or income group) are non-significant across all models with the exception of marital status. People who are single are more likely to return to Ukraine, while those who migrated together with their spouse and those who do not have children are more likely to stay abroad.

Significantly positive for the probability that a person had returned at the time of the survey were pull factors such as missing family or home, the wish for children to study in Ukraine, better job opportunities in Ukraine, having property in Ukraine, and returning friends. Some significant push factors were loneliness or integration hardship, as well as feeling humiliated for living on subsidies/state support.

Among respondents who lived abroad at the time of the survey, 64 percent planned to return to Ukraine someday, 13 percent did not plan to return to Ukraine and the rest were undecided. One should however keep in mind that peoples’ intentions can change rather quickly – in the qualitative part of the survey, some respondents explained that their decision to return was spontaneous.

The probability that a person plans to return was lower for people who had planned to emigrate prior to 2022, for people who hadn’t been to Ukraine since they fled, and for people with refugee status (in some countries, people may lose refugee protection status if they exit the host country and travel to Ukraine).

Safety improvements and better job prospects increase the probability that a refugee plans to return, as well as a wish for children to study in Ukraine and a desire to participate in Ukraine’s reconstruction. Over 70 percent of the respondents believe that their experiences from abroad will be useful for the reconstruction and over 50 percent state that the new skills they’ve gained abroad can be applied during the reconstruction of Ukraine.

Significant push factors are lacking integration into the local community and an inferior social life abroad compared to life in Ukraine. Higher levels of general well-being and life satisfaction abroad expectedly reduce the probability that a person plans to return.

Lastly, those who had returned to Ukraine at the time of the survey were asked whether or not they planned to stay in Ukraine. 56 percent said yes, 7 percent plan to emigrate again, while the rest will consider the circumstances. The main factors that keep a person in Ukraine are family, the wish for one’s children to study in Ukraine and a willingness to participate in the reconstruction of the country. Improved safety is also a significant factor – which might explain why people who are originally from the Western part of Ukraine are more likely to stay (the regional factor is significant only in this third probability model). Finally, people who planned to emigrate prior to 2022, or those whose life in Ukraine is considerably inferior to that abroad, are less likely to stay.

Ukrainians’ Liaison with Their Country

60 percent of the refugees read Ukrainian news daily, and over 90 percent read them at least several times a week. The majority of the readers spread these news in their local communities and/or in their social networks. Generally, Ukrainian refugees are quite active, over 40 percent attend rallies in support of Ukraine, almost 40 percent participate in volunteer projects, over 70 percent donate to Ukrainian organizations (and the same share help their relatives in Ukraine) and 15 percent work at a non-governmental organization.

Not surprisingly, the opinion among Ukrainian refugees on reforms in Ukraine is very similar to the opinion among returnees: anti-corruption and judicial reform have the highest priority. In line with this, the fear of corruption derailing the reconstruction of Ukraine is greater than the fear that Russia will continue with their missile attacks on Ukraine. Therefore, the determination of the Ukrainian government to fight corruption will likely not only improve life for people in Ukraine but also increase the probability that refugees return to Ukraine.

Conclusion

Most of the Ukrainians who initially fled the war have already returned to Ukraine, with the majority planning on staying in the country. For those who are still abroad, the majority wish to return when safety improves. When analysing the factors behind such wishes, it is evident that among the pull factors lie not only personal drivers, such as missing one’s home or family, but also civic factors such as a willingness to participate in the reconstruction of Ukraine or a wish for one’s children to study in Ukraine, thus contributing to preserving their identity. Moreover, Ukrainians who are living abroad are highly involved in Ukrainian affairs.

Therefore, we suggest that the Ukrainian government consider refugees as a valuable resource rather than as a loss. For example, government representatives could ask refugees to donate to Ukraine, and engage in individual or collective actions (e.g. inform their local friends about the situation in Ukraine, join rallies or flashmobs in support of Ukraine etc.). Such “people’s diplomacy” is important to ensure continued support for Ukraine.

We also recommend that the governments of host countries make it easier for refugees to stay connected with Ukraine. Specifically, refugees should be allowed to travel to Ukraine without losing their protection status.

Lastly, the strongest precondition for refugees’ return to Ukraine is supplying the country with weapons and other crucial support to win the war. A Ukrainian victory will not only bring about reconstruction and development of Ukraine but also promote and enforce global democracy.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Gender Equality and Women’s Economic Empowerment in Times of Crisis

Posted on January 22, 2024 | FROGEE PROJECT, Policy Brief

20240122 Gender Equality Image 01

On October 19-20, 2023, the International School of Economics at Tbilisi State University Policy Institute (ISET Policy Institute), in partnership with the Forum for Research on Gender Economics (FROGEE), organized the conference “Gender Equality and Women’s Economic Empowerment in Times of Crisis”. The conference addressed critical issues surrounding gender equality and women’s economic empowerment. By bringing together academics and practitioners from various sectors it served as a dynamic platform for knowledge sharing and collaboration on actionable solutions and commitments to address multifaceted challenges faced by women globally. This policy brief outlines the keynote, academic and other presentations and discussions featured at the conference.

Introduction

Gender equality and women’s economic empowerment are vital issues that have gained increasing global attention in recent years. Their significance is even more pronounced in times of crisis, such as during economic downturns or global health emergencies. Such challenging circumstances often exacerbate existing gender disparities and vulnerabilities, making it crucial to address the specific challenges women face in accessing economic opportunities and resources. Discussions on these matters delve into the complex intersection of gender equality and economic empowerment and how empowering women economically can contribute to more resilient and equitable societies.

The October 19-20 conference was aimed at examining and addressing the various aspects of gender equality and female empowerment. The conference begun with opening introductions by Tamar Sulukhia, Eva Atterlöv and Kaori Ishikawa (see the participant list at the end for all associations). Following the opening remarks were two distinctive keynote presentations, a policy panel discussion, and academic presentations. This policy brief summarizes the key takeaways from the conference.

Keynote Addresses

The conference’s first keynote speaker, Elizabeth Brainerd, deliberated on the impact of World War II on marriage and fertility among Russian women. Brainerd show that the war affected these women’s lives for decades, leading to lower rates of marriage and fertility and higher out-of-wedlock births and divorce rates in urban areas than would have been the case in absence of the war. These effects were likely exacerbated by a war and post-war institutional environment that encouraged nonmarital births (in part by expanding the child benefit program) and increased the cost of binding commitments through marriage, particularly for men (absolving fathers of any financial or legal responsibility for children fathered outside marriage). As shown by Brainerd the shock to sex ratios in the Soviet Union due to World War II was among the largest experienced by any country in the twentieth century. In this sense, the effect on Russian women and men was unique and arguably not directly relevant to other countries or time periods. Yet, highly unbalanced sex ratios characterize many populations – whether due to war, immigration and emigration, or preferences for sons etc., – and the analysis can therefore shed light on the effects of sex ratio imbalance also in other contexts. Brainerd’s work supports the conclusion that sex ratios matter for marital and fertility outcomes, both on the marriage market itself and within marriage. The insights from the Soviet Union also highlights that the institutional context matters for determining both the size and direction of the sex ratio’s impact on marriage markets and family formations.

In the conferences second keynote presentation, Maria Floro discussed the findings from a time-allocation survey in Georgia. Evident from the results, women’s work differs from men’s in the sense that women more often perform unpaid household tasks, and since they are primarily responsible for household and caregiving duties, including childcare and elderly care. Such combined responsibilities, coupled with working in typically low-paid jobs can negatively affect women’s physical and mental wellbeing. As the data shows, 66 percent of Georgia’s population engage in unpaid domestic work, with women (88.3 percent) and men (39.6 percent) participating at starkly different rates. Rural women’s participation is the highest, at 90,3 percent. On average, the Georgian population spends 2.1 hours per day on unpaid domestic services for household and family members – with a large gender disparity. In general, the time spent per day by men is 0.7 hours while, in contrast, the time spent by women on these activities is 5 times higher in rural areas (3.6 hours) and 4.7 times higher in urban areas (3.2 hours). Women working full time spend 2.7 hours per day on unpaid domestic services, five times higher than the 0.5 hours spent by men working full time. For all areas of residence, the time spent on unpaid domestic services by women increases with age up until 64 years of age when the numbers drop. Further, women’s time spent on unpaid caregiving work (0.9 hours per day) is 4.5 times higher than the time spent by men. Even for full time working women, the daily time spent on unpaid caregiving work (0.6 hours) is three times higher than that of their male counterparts (0.2 hours). Women who have completed a higher level of education spend higher time on unpaid caregiving services (0.9-1.1 hours per day) than those with a lower level of education (0.4-0.7 hours per day). The difference in women’s and men’s time spent on unpaid caregiving work is greatest for Georgians aged 25-44. Such unequal sharing of household and caregiving responsibilities limits women’s job prospects and is a major reason behind their low participation rate in the labor force, as well as the gender pay gap.

The South Caucasus Gender Equality Index

Following the keynote presentations, Davit Keshelava, presented the ISET Policy Institute’s most recent work on the South Caucasus Gender Equality Index (SCGEI). The index, developed by ISET Policy Institute in close collaboration with Swiss Cooperation Office in Georgia and updated on an annual basis, draws inspiration from the European Institute for Gender Equality’s Gender Equality Index. It comprises of six domains: work, money, knowledge, time, power, and health, alongside eleven subdomains and nineteen indicators.

The index is calculated for three South Caucasus countries, Georgia, Armenia, and Azerbaijan, and nine benchmark countries: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovenia. The 2023 edition, mainly based on data from 2021-2022, reveals that within the South Caucasus Armenia is ahead concerning gender equality in the work domain, while Georgia trails behind its regional counterparts. Gender equality in the work domain is lower in the South Caucasus (64.0) than in the baseline countries (67.3).

Georgia stands out as the South Caucasus leader in gender equality within the money domain but significantly trails the baseline countries (South Caucasus – 51.1 vs. baseline countries – 80.5). This discrepancy is the most prominent across all six domains. Azerbaijan leads in the knowledge domain (with Armenia displaying the greatest inequality), yet the South Caucasus slightly outpaces baseline countries in this domain (South Caucasus – 59 and baseline countries – 58.8). This is however the sole equality domain where the South Caucasus surpasses the benchmark countries.

Georgia and Armenia exhibit higher equality in the power domain than Azerbaijan while, in the time domain, Georgia takes the lead in the South Caucasus. In the health domain, Armenia leads in equality, although the difference in index values is marginal.

In the overall index, Georgia emerges as the regional leader in gender equality (60.4), followed by Armenia (57.5) and Azerbaijan (53.0). However, South Caucasus countries as a whole have a lower index (55.4) than the baseline countries (64.1).

Panel Discussion: Topics and Takeaways

The SCGEI presentation was followed by a policy panel discussion, moderated by Tamar Sulukhia and including the panelists Nino Okribelashvili, Nino Chelidze, Nani Bendeliani and Nino Lortkipanidze. The panelists discussed gender inequalities in different areas such as within academia and the tech industry as well as the role of women during crises and the progress made in Georgia towards ensuring gender equality.

Nino Okribelashvili deliberated on the role of women in academia emphasizing that gender inequalities in higher education attainment become obvious when looking at the representation of women across different fields of science. The share of women in subjects such as social work, education and nursing is more than 80 percent, while it is 20 percent in subjects such as computer science, electrical engineering and mechanical engineering. Science, technology, engineering, and mathematics (STEM) oriented institutions are still generally perceived as male dominated. The second glaring gap concerns the representativeness of women in higher rank and leadership positions in academia, where women remain underrepresented in academic and professorial positions across all subjects.

While Nino Okribelashvili discussed the role of women in academia in general, Nino Lortkipanidze focused specifically on the tech industry. She discussed the industry’s potential to create job opportunities for women through various strategies and initiatives such as STEM education and training, diverse hiring practices, leadership development and flexible work policies – including remote work possibilities. Lortkipanidze emphasized that with the right support and opportunities, the rapidly growing tech industry could allow working mothers to thrive in their careers while also enjoying the advantages of a family-friendly work environment.

Shifting the focus to women in times of crisis, Nino Chelidze emphasized the aggravated impact of war on women using the example of the Nagorno-Karabakh conflict. Chelidze highlighted the need for urgent, coordinated action from the donor community to address the challenges of internally displaced persons, most of whom are women and children.

The panel discussion wrapped up with Nani Bendeliani highlighting Georgia’s advancements in gender equality and female empowerment over the past three decades. Bendeliani mentioned different institutional mechanisms adopted in the country for the advancement of women alongside legislative initiatives implemented in different areas concerning for instance maternity and paternity leave, changes to the labor code and the election code. According to Bendeliani, the progress towards gender equality is visible but slow, with available data and multiple assessments showing there is still much to be done.

Academic Presentations

The remainder of the conference was comprised of several academic sessions all contributing to the overall theme of multifaceted gender-related issues. The topics, as detailed below, were: gender disparities in the labor market, violence against women, gender dynamics during the Covid-19 pandemic, the gender divide in education, women in academia and female empowerment and access to services.

Gender Disparities on the Labor Market

The presenters focused on gender disparities on the labor market, exploring aspects such as the implications of labor protection regulations on both men and women, biases and discrimination in employment and wage negotiation, and the impact of female labor force participation on the advancement of women’s rights.

In his presentation, Michal Myck outlined the consequences of labor protection policies in Poland for employees within four years of retirement (regulation that protects them against layoffs, a lowering of their wages or adjustment of their responsibilities). Preliminary results indicate no economically or statistically significant adverse impacts on the employment of men and women approaching labor protection eligibility. These findings suggest that either the anticipated negative effects are absent, or that any concerns employers may have harbored regarding prospective employment protection were counteracted by robust labor demand during the reform period. The general conclusion is that extending protection to specific groups of workers, both men and women, does not necessarily lead to the adverse outcomes often highlighted in standard economic theory.

While Michal Myck focused on labor protection regulations, Francisco Lagos addressed the topic of weight-related employment discrimination and its impact on hiring outcomes. In an experiment, job applications accompanied either by a facial photo of a normal-weight person or by a photo of the same person manipulated to look overweight were sent out to real job opening across 12 occupations in Spain. The results reveal a significant disparity in callback rates for weight-manipulated male applicants, who received fewer callbacks compared to their normal-weight counterparts, with a more pronounced effect in female-dominated occupations. Conversely, weight-manipulated female applicants experienced a slight increase in callbacks, particularly in female-dominated fields. For men, the weight manipulation effect is attributed to the overweight making them appear less attractive, which translates into an attractiveness wage premium. On the contrary the findings for women suggest evidence of an attractiveness penalty, which is also combined with a weight penalty.

The topics of discrimination and biases were also central to Ramon Cobo Reyes Cano’s presentation, which outlined the results of a field experiment on anticipated discrimination and wage negotiation. The findings show that female applicants ask for a lower salary than male applicants in the baseline treatment group – when the full name of the applicant is visible. In the main treatment group, when the gender of the applicant was no longer visible to the employer, the wage requested by female applicants increased by 86 percent, whereas male applicants’ wage requests were 18 percent lower. Evidently, the gender gap in requested wages completely disappears (and even slightly reverses) when the applicants know that their sex is not visible for the potential employer.

The presentations on gender inequalities in the labor market were concluded by Nisar Ahmad, who empirically investigate the impact of women’s labor force participation on women’s rights.  In general, female labor force participation has a positive effect on women’s rights in countries with at least some legal economic rights for women. In countries where women’s rights are extremely limited or non-existent, female labor force participation has a negative or negligible impact on women’s rights.

Violence Against Women

In the academic session devoted to violence against women, the presenters elaborated on the primary factors influencing such violence in various countries at different time periods, including during the Covid-19 pandemic.

Monika Oczkowska explores how social norms, values, and stereotypes determine beliefs about abuse, including recognition of abuse, what is considered as abuse, whether abuse is ever justified, and societal consent towards gender-based discrimination. In countries where gender inequality is rampant, reported rates of abuse in standard surveys are sensitive to the socio-economic status and beliefs about gender norms of the participants, highlighting a high scale of variation in the perception of gender-based discrimination in Central and Eastern Europe.

These findings are in line with the results presented by Salome Gelashvili, who consider potential determinants of gender-based violence (GBV) in South Caucasus. According to the research, key factors contributing to GBV in Armenia, Azerbaijan and Georgia include alcohol abuse, social stigma, being a member of a marginalized groups, a pervasive patriarchal culture, adherence to traditional gender roles, a high level of bureaucracy when reporting GBV to the police, generally weak legal support, limited awareness about various forms of GBV, and economic factors such as financial dependence on an abusive partner.

Similar outcomes, but with more emphasis put on norms and the patriarchal system, were found by Reina Shehi, who assesses gender-based violence in Albania. The results show that the patriarchal system and gender-based norms are the two main factors contributing to gender-based violence. However, there is a growing awareness of the importance of patriarchal institutions and gender norms when addressing GBV in Albania.

Violence against women increase in times of crisis, as shown by Velan Nirmala, who studies women’s empowerment and intimate partner violence (IPV) in India. The findings reveal that, regardless of socio-economic factors, the main types of IPV during the Covid-19 lockdown were physical and emotional violence. The results also highlight that a large majority of victims, regardless of education, wealth, region, household structure, religion, and caste, do not disclose the abuse due to societal taboos.

Gender Dynamics During the Covid-19 Pandemic

The unequal effect from the Covid-19 pandemic was further examined in an academic session in which the presenters keyed in on repercussions of the pandemic on women in terms of employment outcomes, decisions related to time allocation, and the division of unpaid household labor.

Nabamita Dutta presented work on gender inequality in employment during Covid-19 related lockdowns in India. The results show that during the pandemic, women were, in general, 8 percent less likely to be employed than men. While return migrants generally suffered less in terms of finding alternative jobs, being a female return migrant, increased the probability of joblessness to about 17 percent. For female return migrants belonging to marginalized castes, the probability of joblessness was about 10 percent, an interesting result considering that women belonging to marginalized castes (but not being return migrants) experience a higher likelihood of being unemployed then women that are not part of marginalized castes.

Anne Devlin further elaborated on this topic, assessing the economic impact of the Covid-19 pandemic on people living in disadvantaged areas in Ireland. The results indicate that Pandemic Unemployment Payment (PUP) rates were higher in more deprived areas during lockdown periods and that woman, on average, receive PUP for a slightly longer duration than men. Further, female unemployment has a negative and statistically significant relationship with the length of PUP claims. The findings show that average PUP durations tend to be shorter in areas with a higher share of individuals with lower education levels, and in areas with historically higher levels of female unemployment.

Jacklyn Makaaru Arinaitwe presented work on how gender, culture, norms, and practices contributed to the unequal distribution of unpaid care work during Covid-19 in Uganda. The findings reveal that there are policy gaps in addressing the issue, as current policies don’t acknowledge the value of unpaid care work at a personal and national level. This lack of recognition and failure to come up with new ways to reduce or share women’s disproportionate burden of unpaid care work creates obstacles to girls’ education and hinder women’s economic empowerment in Uganda.

Also, on the topic of the Covid-19 pandemic impacts on women, Alessandro Toppeta presented work on the impacts of the pandemic on the role of parental beliefs in England. The results show that parents believe that the time they spend with their children is more valuable and less risky than the time children spend in formal childcare or with friends and that parents’ beliefs can predict the choices they make in investing time with their children. Further, the findings align with previous indications of the increased burden on women’s time experienced during the pandemic being a consequence of limited availability of alternative childcare options.

The Gender Divide in Education

Within the topic of gender in education, the presenters delved into the connection between education and gender roles and the importance of parental education for children’s education.

Sumit S. Deole presented work on the causal impact of education on gender role attitudes based on evidence from European datasets. The results suggest that an additional year of education prompts egalitarian gender role attitudes. Furthermore, the impact of increases in education is particularly prominent among women and, to some extent, in urban areas.

Fethiye Burcu Türkmen-Ceylan focus specifically on the importance of maternal education for children’s education in Turkey. Preliminary results indicate that maternal education has a distinctive positive impact on households’ budget allocation for children’s education among Turkish households.

Saumya Kumar also presented work on the importance of maternal education, considering the impacts of paternal education as well. The presented research finds that both maternal and paternal education reduce the gender gap in educational enrollment. However, having an educated mother is more important when it comes to increasing girls’ enrollment as compared to boys’ enrollment. The research also indicates that as mothers’ education levels rise, there is a greater increase in spendings on education for both boys and girls.

Further on the gender divide within education, Lubna Naz deliberated on how drought affects school attendance in rural Pakistan. The income decline caused by drought leads to a four-month decrease in schooling for all children, and a six-month decrease for boys. Asset ownership also has a negative impact on school attendance, suggesting a possible reverse causality or Simpson’s paradox. The combined effect of asset ownership and drought, however, has a positive impact on school attendance, Naz concluded.

Women in Academia

Gender inequalities are apparent also in the academic sphere. Liis Roosaar’s research looks into the impact of having children on women’s careers within academia. Roosaar find that becoming a mother doesn’t impact earnings per hour, but that mother’s do work fewer hours. More than four years after having a child, women in academia have lost the equivalent of two years of full-time work. Interestingly, men don’t face the same reduction in work hours after becoming fathers. The study also reveals that the career setback for women in academia after having a child is shorter compared to the general population. However, female academics experience a decline in citations as a consequence of the reduced working hours.

Barbara Będowska-Sójka’s research on women in academia focus on female representation on editorial boards of finance journals.  According to Będowska-Sójka women account for 20 percent of all editors on average, with considerable variance between countries. When it comes to editor’s affiliations they are strongly concentrated in the United States, and to a lesser extent in the United Kingdom. Additionally, a small number of extremely well-connected editors sit on many boards. The gender ratio is consistent in substructures for editors that are better connected (have so-called a high degree of centrality in terms of network analysis) or editors who serve on a large number of boards, yet men outnumber women.

Female Empowerment and Access to Services

Although their research focuses on distinct topics, Fazle Rabbi and Ulrich Wohak both presented research on the overarching theme of women’s empowerment and enhanced access to goods and services.

In his paper, Fazle Rabbi and his co-authors consider a new way to support marginalized individuals, most of whom are women, through the introduction of a new donation model where development agencies provide goats to project beneficiaries. Goat ownership might help beneficiaries generate income and devote more time to education. The research results show that the proposed donation model significantly enhances the economic empowerment of participants, providing them a steady income, better access to education, and more access to the financial system – with the results being more pronounced for women.

Ulrich Wohak evaluated tampon tax reforms (efforts to reduce the taxation of menstrual hygiene products, including tampons, pads, and menstrual cups) as a means to address gender-based tax discrimination. Using transaction-level scanner data, the study finds that when countries lower their standard VAT rates, the extent to which these reductions are passed on to consumers ranges from 57 percent to 119 percent.

Concluding Remarks

The ISET conference “Gender Equality and Women’s Economic Empowerment in Time of Crisis” brought together diverse voices, perspectives, and expertise from various sectors to engage in discussions and knowledge sharing on how to advance gender equality in times of normality and in times of crises. The conference also served as a platform to inspire actionable solutions and commitments to address the multifaceted challenges women face worldwide.

List of Participants

  • Alessandro Toppeta – Assistant Professor at SOFI, Stockholm University, Sweden. “Parental Beliefs, Perceived Health Risks, and Time Investment in Children: Evidence from COVID-19” (in collaboration with Gabriella Conti and Michele Giannola).
  • Anne Devlin – Research Fellow, Economic and Social Research Institute, Ireland. “The Impact of COVID-19 on Women’s Employment in Ireland” (in collaboration with Adele Whelan, Seamus McGuinnes, Paul Redmond).
  • Aswathi Rebecca Asok – PhD Fellow, University of Portsmouth, United Kingdom. “Unveiling Gendered Dimensions of “Volunteerism”: The COVID-19 Story of Kerala, India”.
  • Barbara Będowska-Sójka – Head of Department, Poznań University of Economics and Business, Poland. “Editorial boards of finance journals: the gender gap and social networks” (in collaboration with Claudia Tarantola, C., Mare, C., Ozturkkal, B., Paccagnini, A., Perri, R., Pisoni, G., Shala, A., Skaftad´ottir, H., K.).
  • Davit Keshelava – Lead Economist, ISET Policy Institute.
  • Elizabeth Brainerd – Susan and Barton Winokur Professor of Economics and Women’s, Gender and Sexuality Studies, Brandeis University.
  • Eva Atterlöv – Deputy Head of Development Cooperation, Embassy of Sweden.
  • Fazle Rabbi – Deputy Head of School of Business, Crown Institute of Higher Education, Australia. “From Goats to Education: An Innovative Approach to Community Empowerment” (in collaboration with Laurel Jackson and Zahid Hasan).
  • Fethiye Burcu Türkmen-Ceylan – Research Fellow, Ahi Evran University, Turkey. “Educate a Woman, And You Educate a Generation: How Does Maternal Education Affect Intro Household Resource Allocation for Education among the Children?” (in collaboration with Ulucan, H., Çakmak, S.).
  • Francisco Lagos – Professor of Economics, Georgetown University, USA. “Weight, Attractiveness, and Gender when Hiring: a Field Experiment in Spain” (in collaboration with Catarina Goulão, Juan Antonio Lacomba, and Dan-Olof Rooth).
  • Jacklyn Makaaru Arinaitwe – Director, Ace Policy Research Institute, Uganda. “Gender, culture, norms, and practices that promote gender gaps in the allocation of time to unpaid domestic work in the context of COVID-19 in Uganda” (in collaboration with Twinomugisha David).
  • Kaori Ishikawa – UN Women Country Representative to Georgia.
  • Liis Roosaar – Lecturer at the Chair of Economic Modelling, University of Tartu, Estonia. “Child penalty in academia: Event study estimate” (in collaboration with Jaan Masso, Jaanika Meriküll, Kärt Rõigas, and Tiiu Paas).
  • Lubna Naz – Associate Professor, Institute of Business Administration. Pakistan. “Left High and Dry: Gendered impacts of Drought on school attainment in Rural Pakistan”.
  • Maria Floro – Professor Emerita Economics, American University in Washington, DC.
  • Michal Myck – Director, Centre for Economic Analysis (CenEA), Poland. “Pre-retirement employment protection: no harm when times are good” (in collaboration with Paweł Chrostek, and Krzysztof Karbownik).
  • Monika Oczkowska – Senior Research Economist, CenEA, Poland. “Patterns of harassment and violence against women in Central and Eastern Europe. The role of the socio-economic context and gender norms in international comparisons” (in collaboration with Kajetan Trzcinski and Michal Myck).
  • Nabamita Dutta – Professor of Economics, University of Wisconsin-La Crosse, USA. “Lockdown and Rural Joblessness in India: Gender Inequality in Employment?” (in collaboration with Kar, S.).
  • Nani Bendeliani – Project Analyst, UN Women Georgia.
  • Nino Chelidze – Program Director of Women’s Initiative for Security and Equity at Mercy Corps.
  • Nino Lortkipanidze – Women in Tech Ambassador for Georgia and Chief Innovation Officer at The Crossroads.
  • Nino Okribelashvili – Vice Rector for Research at Ivane Javakhishvili Tbilisi State University.
  • Ramon Cobo Reyes Cano – Professor of Economics, Georgetown University, USA. “Anticipated Discrimination and Wage Negotiation: A Field Experiment” (in collaboration with Gary Charness and Simone Meraglia).
  • Reina Shehi – Primary Appointment Lecturer, Epoka University, Albania. “Patterns of Geographic Gender-Based Violence in Albania” (in collaboration with Endi Tirana and Ajsela Toci).
  • Salome Gelashvili – Lead Economist, ISET Policy Institute, Georgia. “Gender-based violence in the South Caucasus” (in collaboration with Lobjanidze, G., Seturidze, E., Shubitidze I.).
  • Saumya Kumar – Assistant Professor (Economics), University of Delhi, India. “Gender Differential in Parental Investment in Education: A Study of the Factors Determining Children’s and Adolescents’ Educational Investment in India” (in collaboration with Jawaharlal Nehru).
  • Sumit S. Deole – Scientific Assistant, Trier University, Germany. “The Causal Impact of Education on Gender Role Attitudes: Evidence from European Datasets” (in collaboration with Zeydanli, T.).
  • Tamar Sulukhia – Director ISET and ISET Policy Institute.
  • Ulrich Wohak – Teaching and Research Associate, Vienna University of Economics and Business, Austria. Free the Period? Evaluating Tampon Tax Reforms using Transaction-Level Scanner Data (in collaboration with Kinnl, K.).
  • Velan Nirmala – Professor of Economics, Pondicherry University, India. “Women Empowerment and Intimate Partner Violence in India” (in collaboration with Lusome, R).

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.