nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2010‒11‒20
two papers chosen by
Koen Schoors
Ghent University

  1. Essays on Russia’s Economic Transition By Solanko, Laura
  2. The Impact of Crises on Youth Unemployment of Russian Regions: An Empirical Analysis By Olga Demidova; Marcello Signorelli

  1. By: Solanko, Laura (Bank of Finland Research)
    Abstract: This study comprises an introductory section and three essays analysing Russia’s economic transition from the early 1990s up to the present. The papers present a combination of both theoretical and empirical analysis on some of the key issues Russia has faced during its somewhat troublesome transformation from state-controlled command economy to market-based economy. The first essay analyses fiscal competition for mobile capital between identical regions in a transition country. A standard tax competition framework is extended to account for two features of a transition economy: the presence of two sectors, old and new, which differ in productivity; and a non-benevolent regional decision-maker. It is shown that in very early phase of transition, when the old sector clearly dominates, consumers in a transition economy may be better off in a competitive equilibrium. Decision-makers, on the other hand, will prefer to coordinate their fiscal policies. The second essay uses annual data for 1992–2003 to examine income dispersion and convergence across 76 Russian regions. Wide disparities in income levels have indeed emerged during the transition period. Dispersion has increased most among the initially better-off regions, whereas for the initially poorer regions no clear trend of divergence or convergence could be established. Further, some – albeit not highly robust – evidence was found of both unconditional and conditional convergence, especially among the initially richer regions. Finally, it is observed that there is much less evidence of convergence after the economic crisis of 1998. The third essay analyses industrial firms’ engagement in provision of infrastructure services, such as heating, electricity and road maintenance. Using a unique dataset of 404 large and medium-sized industrial enterprises in 40 regions of Russia, the essay examines public infrastructure provision by Russian industrial enterprises. It is found that to a large degree engagement in infrastructure provision, as proxied by district heating production, is a Soviet legacy. Secondly, firms providing district heating to users outside their plant area are more likely to have close and multidimensional relations with the local public sector.
    Keywords: Russia; transition; regional issues; tax competition; infrastructure
    JEL: H20 H50 N90 P20
    Date: 2010–11–11
  2. By: Olga Demidova; Marcello Signorelli
    Abstract: The main purpose of this paper is to estimate the influence of the 1998 and 2008 crises on the youth unemployment rates (age class 20-29) in Russian regions. The investigation is founded on the panel data for 78 Russian regions during 1997–2008 provided by ROSSTAT (the main Russian State statistical organization). We compare the level and dynamics of the youth unemployment in various Russian regions and try to solve three main questions. Are there any special features of the youth unemployment in comparison with overall unemployment? How the 1998 crisis did change - and how the 2008 crisis is going to change - the youth unemployment dynamics? What can we learn from the impact of 1998 crisis and what is the main difference with the impact of the 2008 crisis? With the help of the obtained results we define some preliminary policy suggestion.
    Keywords: financial crises, regional youth unemployment, Russian labour market.
    JEL: R23 E24
    Date: 2010–10–01

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