Research in the Public Sector was focused on the study of the Lisbon methodology assessment framework, as well as the distributional effects of the economic crisis.

An application of the LIME Assessment Framework (LAF): The Case of Cyprus

Academic Advisor: Professor Louis Christofides

This study presents results for the Cypriot economy relative to the EU countries, based on the LIME Assessment Framework (LAF). LAF is a tool developed by the Lisbon Methodology (LIME) Working Group of the Economic Policy Committee (EPC), in order to evaluate the economic progress of all Member States and their structural reforms, using the Lisbon Strategy targets and guidelines.

This study is presented in detail in:

Christofides N. Louis and M. Michael, "An application of the LIME Assessment Framework (LAF): The Case of Cyprus", Economic Policy Paper No. 07-10, Economics Research Centre, University of Cyprus, November 2010.

 

Distributional Effects of the Economic Crisis

This paper examines how the economic crisis has affected the distribution of income in Cyprus. Due to the absence of data required to document this effect directly, the methodology followed is based on the correlation between various macroeconomic indicators and the distribution of income.

This study is presented in detail in:

Andreou A. and P. Pashardes, ”Distributional Effects of the Economic Crisis”, Economic Policy Paper No. 08-10, Economics Research Centre, University of Cyprus, December 2010. (in Greek)
 
Current Research

Supervisor: Professor Panos Pashardes

The Size and Characteristics of Tax Evasion in Cyprus

The Economics Research Centre has estimated, in the past, the extent to which households in Cyprus under-report their income from self employment, capital income and income from agriculture using a consumer demand based method and data from the Family Expenditure Survey (FES) for the year 2003. In this paper we will use the newly released  FES data for the period 2008-2009 to update our tax evasion estimations and analyse the evolution of tax evasion in Cyprus.

The results of the study can be used by organizations and agencies who need to know the true incomes of individuals/households, but individuals/households have an incentive to hide them. Examples of such services include the Inland Revenue Department, the Grants and Benefits Service of the Ministry of Finance and the Social Welfare Services of the Ministry of Labour and Social Insurance.

 

Analysis of the effects of Public Assistance Benefit on Labour Supply in Cyprus

In this study we will analyze the labor supply, i.e. the participation and the working hours, of public assistance benefit recipients. The aim of the study is to draw policy conclusions for increasing the employment and welfare of this vulnerable population group.

We will also study the impact of the 2006 system reform for public assistance entitlement and the results will be compared with alternative system reforms that aim at increasing the welfare of public assistance recipients as well as driving them, wherever feasible and desirable, into the labor market. This can lead to the gradual reduction of the dependence on public assistance benefit and the elimination of social exclusion.

 
The results of the study are expected to lead to policy suggestions for increasing both the labor market participation and the number of working hours of public assistance recipients, taking into account the impact of the policies on individual welfare.

 

Cost and value of state schooling in Cyprus

State provision of private goods is presented in the literature as a means to mitigate market failures (i.e. imperfect information, externalities) and income redistribution. The empirical analysis of state provision in relation to consumer welfare is limited to studies that valuate the consumer willingness to pay for state provision of public or private goods. This study proposes a model based on consumer theory, where utility, in monetary units, can be estimated by the parameters of a system of consumer demand. With this approach, the value for the consumer of free state provision of private goods – like, for example, education – can be estimated using family expenditure survey data, which are comparable across countries.

 
The study will also investigate efficiency and equality issues related to the quantity and quality of state schooling in Cyprus. Specifically, we will examine how the benefit of free schooling is distributed between households and how the substitution and/or completion of state schooling with purchases from the private sector (private schools) affects the inequality in income distribution. The study will propose policy measures to reduce inefficiency and inequality.