nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2018‒01‒29
eight papers chosen by

  1. EXPORT AND PRODUCTIVITY IN GLOBAL VALUE CHAINS: COMPARATIVE EVIDENCE FROM LATVIA AND ESTONIA By Konstantins Benkovskis; Jaan Masso; Oleg Tkacevs; Priit Vahter; Naomitsu Yashiro
  2. The impact of non-cognitive skills and risk preferences on rural-to-urban migration: Evidence from Ukraine By Sinem H. Ayhan; Kseniia Gatskova; Hartmut Lehmann
  3. Getting Incentives Right: Human Capital Investment and Natural Resource Booms By Gerhard Toews; Alexander Libman
  4. Informal Employment Relationships and the Labor Market: Is there Segmentation in Ukraine? By H. Lehmann; N. Pignatti
  5. Beyond Conflict: Long-Term Labour Market Integration of Internally Displaced Persons in Post-Socialist Countries By Ivlevs, Artjoms; Veliziotis, Michail
  6. Recent Developments in Trade, Investment and Finance of China’s Belt and Road By Alicia Garcia-Herrero; Jianwei Xu
  7. Shock Contagion, Asset Quality and Lending Behavior By Tho Pham; Oleksandr Talavera; Andriy Tsapin
  8. In which countries and schools do disadvantaged students succeed? By Francesco Avvisati

  1. By: Konstantins Benkovskis; Jaan Masso; Oleg Tkacevs; Priit Vahter; Naomitsu Yashiro
    Abstract: This paper investigates the effect of export entry on productivity, employment and wages of Latvian and Estonian firms in the context of global value chain (GVC). Like in many countries, exporting firms in Latvia and Estonia are more productive, larger, pay higher wages and are more capital intensive than non-exporting firms. While this is partly because firms that are originally more productive and have better performances are more likely to enter export, Latvian and Estonian firms also realise more than 23% and 14% higher labour productivity level as the result of export entry. Export entry also increases employment and average wages. Gains in productivity and employment are particularly large when firms enter exports that are related to participation in knowledge-intensive activities found in the upstream of GVC. For instance, Latvian firms that start exporting intermediate goods or non-transport services (which include knowledge intensive services) enjoy significantly higher productivity gains than those starting to export final goods or transport services. These findings underscore the importance of innovation policies that strengthen firms’ capabilities to supply highly differentiated knowledge-intensive goods and services to GVC.
    Keywords: productivity, global value chain, export, Latvia, Estonia
    JEL: F12 F14 O19 O57
    Date: 2018
  2. By: Sinem H. Ayhan (University of Münster); Kseniia Gatskova; Hartmut Lehmann
    Abstract: This paper provides evidence on the impacts of non-cognitive skills and attitudes towards risk on the decision to migrate from rural to urban areas. Our analysis is based on a unique four-wave panel of Ukrainian Longitudinal Monitoring Survey for the period between 2003 and 2012. Adopting the Five Factor Model of personality structure, and using it in the evaluation of noncognitive skills, our results suggest that such personality traits as openness to new experience and the willingness to take risks increase the probability of migration. On the other hand, the non-cognitive skills conscientiousness and extraversion are found to be negatively associated with the propensity to migrate. The effects are statistically and quantitatively significant, and mainly driven by movements from rural areas into cities. Our results are robust to several sensitivity checks, including tests for reverse causality.
    Keywords: migration, non-cognitive skills, Big Five, risk attitudes
    JEL: J61 D03 D81 R23
    Date: 2017–09
  3. By: Gerhard Toews; Alexander Libman
    Abstract: The accumulation of human capital is usually considered an important corner stone in a country’s economic development. While the use of resource rents to improve an educational system and, thus, increase the level of human capital appears to be an attractive option, resource rich economies frequently struggle with an efficient management of resource revenues. In this paper, we ask whether private individuals can at least partly compensate for government’s failures by analysing the consequences of a resource boom on private demand for education. To do this we use the Household Budget Survey of Kazakhstan covering the period of 2001–2005. The oil boom provides us with the necessary exogenous variation to establish causality. We show that, in resource-rich districts of Kazakhstan, the resource boom increases the probability of employment in the formal sector for the educated labour force and the likelihood that households pay tuition fees for tertiary education. We are able to refute the conjecture that our effect is driven merely by the growing income of the households, by the growing supply of educational opportunities or by the immigration of educated households.
    Keywords: Resource Booms, Education
    JEL: Q33 I25
    Date: 2017–10
  4. By: H. Lehmann; N. Pignatti
    Abstract: One of the most important factors that determine individuals’ quality of life and wellbeing is their position in the labor market and the type of jobs that they hold. When workers are rationed out of the formal segment of the labor market against their will, i.e., the labor market is segmented, their quality of life is limited, and their wellbeing is reduced. When they can freely choose between a formal or informal employment relationship, i.e., the labor market is integrated, their wellbeing can reach high levels even in the presence of informal employment. We, therefore, test whether the Ukrainian labor market is segmented along the formal-informal divide, slicing the data by gender and age. The analysis that we perform consist in the analysis of short-term and medium-term transitions between five employment states, unemployment and inactivity. We also analyze wage gaps of mean hourly earnings and across the entire hourly earnings distribution, controlling for time-invariant unobserved heterogeneity. According to our results segmentation is present for dependent employees: for a large part of informal employees informal employment is used as a waiting stage to enter formal salaried employment and is not voluntarily chosen. As far as self-employment is concerned the evidence is mixed regarding in the Ukrainian labor market. This heterogeneity in outcomes implies that not all informal work is associated with a low quality of life and reduced wellbeing in post-transition economies.
    JEL: J31 J40 P23
    Date: 2018–01
  5. By: Ivlevs, Artjoms (University of the West of England, Bristol); Veliziotis, Michail (University of Southampton)
    Abstract: The break-ups of the former Soviet Union and Yugoslavia were accompanied by some of the worst military conflicts in modern history, claiming lives of thousands of people and forcibly displacing millions. We study how people displaced by war and conflict within these countries fare on the labour market in the long term – 10 to 15 years after their displacement. Our conceptual framework draws on the theory of cumulative disadvantage and the notion of unemployment 'scarring'. Data come from the Life in Transition II survey, conducted in post-conflict, post-socialist countries in 2010 (n=10,328). Multiple regression analysis reveals a significant long-term labour market disadvantage of forced displacement: people who fled conflict 10-15 years ago are more likely to be long-term unemployed, experience a recent job loss and work informally. We also find that people affected by conflict (both displaced and non-displaced) are more willing to acquire further education and training. These results are not uniform across demographic groups: displaced women consistently experience a greater labour market disadvantage than displaced men, and people affected by conflict in the younger age group (18-34) are particularly keen to acquire extra education and training. Overall, our results highlight a long-lasting vulnerability of the forcibly displaced in developing and transition economies, and advance the emerging literature on the effects of internal displacement on labour market outcomes and human capital accumulation. We also discuss how forced internal displacement extends the theory of cumulative disadvantage.
    Keywords: internally displaced persons, post-socialist countries, conflict, labour market outcomes, education, cumulative disadvantage
    JEL: D74 J64 M53
    Date: 2017–12
  6. By: Alicia Garcia-Herrero (Chief Economist for Asia Pacific, NATIXIS; Department of Economics , The Hong Kong University of Science and Technology; Institute of Emerging Market Studies, The Hong Kong University of Science and Technology); Jianwei Xu (Beijing Normal University)
    Abstract: This paper makes a mid-term assessment for China’s Belt and Road Initiative (BRI) from the perspective of trade, investment and finance, respectively. We will discuss the economic progress of the Belt and Road Initiative from the trade, investment and financial perspectives, respectively. Trade is most accessible field for China to breakthrough as it can be instantly affected by short-term policies such as removing tariff or non-tariff barriers. Our findings also confirm the rapid progress in trade, though the development was not equally distributed in the area, with the ASEAN, Middle East, South Asia and Russia constitute the largest trade share with China. Our analysis on the BRI’s spillover effect on the US and the EU reveals that the BRI plan poses actually very little substitution effect but under some scenarios even positive impact on the EU-China trade. We especially assess the impacts on the EU, which sits at the other end of the BRI area, and find that better connectedness within the BRI area will bring higher economic benefits to the EU than free trade agreements.
    Date: 2018–01
  7. By: Tho Pham (School of Management, Swansea University); Oleksandr Talavera (School of Management, Swansea University); Andriy Tsapin (National Bank of Ukraine; National University of Ostroh Academy)
    Abstract: We use the geopolitical conflict in eastern Ukraine as a negative shock to bank assets and examine the shock's impact on the banking sector. We find banks were more severely affected by the conflict if they had more loans outstanding in the conflict areas before the shock. These banks, consequently, are more likely to experience an increase in troubled assets and a reduction in credit supply. Further analysis offers evidence of the "flight to headquarters" effect in credit allocation wherein more affected banks cut lending by a greater amount in markets located farther from headquarters.
    Keywords: geopolitical shock, credit allocation, asset quality, flight to headquarters, difference-in-differences
    JEL: G01 G21
    Date: 2018–01
  8. By: Francesco Avvisati (OECD)
    Abstract: PISA 2015 data show that, on average across OECD countries, as many as three out of four students from the lowest quarter of socio-economic status reach, at best, only the baseline level of proficiency (Level 2) in reading, mathematics or science. While in Canada, Denmark, Estonia, Finland, Germany, Hong Kong (China), Ireland, Japan, Korea, the Netherlands, Norway, Singapore, Slovenia and Viet Nam, more than 30% of disadvantaged students scored at Level 3 or above in all PISA subjects in 2015, and can thus be considered “academically resilient”. Students who perform at Level 3 begin to demonstrate the ability to construct the meaning of a text and form a detailed understanding from multiple independent pieces of information when reading. They can work with proportional relationships and engage in basic interpretation and reasoning when solving mathematics problems; and they can handle unfamiliar topics in science. Such skills are the foundations for success and further learning later in life. PISA data collected over a decade (in 2006, 2009, 2012 and 2015) show that several countries have been able to increase the share of academically resilient students among those in the bottom quarter of socio-economic status.
    Date: 2018–01–29

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