nep-tra New Economics Papers
on Transition Economics
Issue of 2006‒06‒24
ten papers chosen by
Tono Sanchez
Universitat de Valencia

  1. Economic liberalization with rising segmentation on China’s urban labor market By Sylvie Démurger; Martin Fournier; Li Shi; Wei Zhong
  2. Russian Natural Gas Exports to Europe : Effects of Russian Gas Market Reforms and the Rising Market Power of Gazprom By Eirik Lund Sagen; Marina Tsygankova
  3. Is China a Northern Partner to Mercosul? By Renato Galvão Flôres Junior; Masakazu Watanuki
  4. Institutions, Networks and Entrepreneurship Development in Russia: An Exploration By Ruta Aidis; Saul Estrin
  5. The role of geography and size By David Hummels
  6. Do Peers Affect Student Achievement in China%u2019s Secondary Schools? By Weili Ding; Steven F. Lehrer
  7. Who’s Afraid of Tax Competition? Harmless Tax Competition from the New European Member States By Amina Lahreche-Revil
  8. Do Institutions Matter? - An Analysis of the Russian Competition Policy in the Period of Transformation By Marina Grusevaja
  9. Responses to Monetary Policy Shocks in the East and the West of Europe: A Comparison By Marek Jarocinski
  10. Mobility, Uncertainty and Subjective Well-being in Hungary By György Molnár; Zsuzsa Kapitány

  1. By: Sylvie Démurger (HIEBS, The University of Hong Kong and CNRS (France)); Martin Fournier (GATE, Université Lyon 2 (France))); Li Shi (School of Economics and Business, Beijing Normal University); Wei Zhong (Institute of Economics, Chinese Academy of Social Sciences (Beijing))
    Abstract: The massive downsizing of the state-owned sector and the concomitant impressive growth of the private sector at the end of the 1990s have altered the nature of the Chinese labor market. By bringing in more competition and market mechanisms, they have contributed to increasing labor turnover and competitiveness in market wages. Using two urban household surveys for 1995 and 2002, this paper analyzes the evolution of labor market segmentation in urban China, by applying an extended version of Oaxaca-Blinder decomposition methods. During the 7-year period, the sharp increase in earnings for all workers however shows substantial differences across ownership, economic sectors, and regions. We find strong evidence of a multi-tiered labor market along these three major lines and highlight increasing segmentation within each of the three dimensions, the gap between the privileged segments of the labor market and the most competitive segments widening over time.
    Keywords: labor market, earnings differentials, segmentation, China.
    JEL: J31 J41 P23 O53
    Date: 2006
  2. By: Eirik Lund Sagen; Marina Tsygankova
    Abstract: Gazprom, the dominant gas company in Russia, is widely believed to be the key supplier of gas to Europe in the foreseeable future. However, there are numerous uncertainties and challenges within the Russian and European gas industry that may alter the allocation of Gazprom´s gas sales between domestic and export markets. In this paper we use both theoretical and numerical models to study potential effects on Russian gas exports from changes in Russian domestic gas prices and the production capacities in 2015. We also investigate whether the liberalization of the European gas markets may provide incentives for Gazprom to induce monopoly power in its export markets. Our main findings suggest that both increased domestic gas prices and sufficient production capacities are vital to maintain Gazprom´s market share in Europe over the next decade. At low domestic prices, Gazprom may even have difficulties to carry out its long-term export commitments. However, if export possibilities are ample due to both lower domestic demand at higher prices and high overall production capacities, a large share of spot trades in Europe may encourage Gazprom to exercise market power in its export markets.
    Keywords: Russia, Natural gas, production capacity, export, Western Europe, price, numerical model
    JEL: F17 D42 Q31 Q38
    Date: 2006
  3. By: Renato Galvão Flôres Junior (EPGE/FGV); Masakazu Watanuki
    Date: 2006–06
  4. By: Ruta Aidis (SSEES, University College London and FEE, University of Amsterdam); Saul Estrin (London Business School and IZA Bonn)
    Abstract: In this paper we explore the ways in which institutions and networks influence entrepreneurial development in Russia. By utilizing new Global Entrepreneurship Monitor (GEM) data collected in 2001, we investigate the effects of the weak institutional environment in Russia in terms of three dimensions: on the rate of productive entrepreneurial activity measured in terms of start-ups and existing business owners; on the characteristics of business owners; and on business financing. In addition, the analysis explores the effectiveness of Russia’s informal networks for circumventing the weak institutional environment for business development. Our results indicate that Russia’s business owners share many of the same characteristics as business owners in advanced western countries, though education is not associated with entrepreneurial activity. However, the main differences are in the sources of financing and the fact that relatively few individuals engage in productive entrepreneurial activity. Our results support the notion of the limited effectiveness of Russia’s networks for supporting entrepreneurial activity in its weak institutional environment.
    Keywords: entrepreneurship, institutions, networks, Russia
    JEL: J23 M13
    Date: 2006–06
  5. By: David Hummels
    Abstract: This report focuses on issues for Latin America and the Caribbean from China's expanding presence in the world economy, with a particular interest in questions related to China's size and proximity to markets.The authors begin with a basic overview of facts, including a characterization of trade and trade growth for China and Latin America and the Caribbean (LAC). Next, the following issues are addressed: Relative proximity of China and LAC countries to major markets. Detailed data on shipping costs to address the size of the import wedge, the price of goods at the exporter's departure port telative to the importing destination and the size of the sourcing wedge and its determinants. LAC's proximity to the US market. Overview of literature discussing the importance of country size
    Keywords: Trade, Goods transport, Transport costs, China, Latin America
    JEL: F13 F16
    Date: 2006–04
  6. By: Weili Ding; Steven F. Lehrer
    Abstract: Peer effects have figured prominently in debates on school vouchers, desegregation, ability tracking and anti-poverty programs. Compelling evidence of their existence remains scarce for plaguing endogeneity issues such as selection bias and the reflection problem. This paper firmly establishes a link between peer performance and student achievement, using a unique dataset from China. We find strong evidence that peer effects exist and operate in a positive and nonlinear manner; reducing the variation of peer performance increases achievement; and our semi-parametric estimates clarify the tradeoffs facing policymakers in exploiting positive peers effects to increase future achievement.
    JEL: I2 Z13 P36
    Date: 2006–06
  7. By: Amina Lahreche-Revil
    Abstract: This paper investigates the tax sensitivity of foreign direct investment (FDI) in the context of EU enlargement to Eastern European countries. Using two alternative specifications of a gravity equation, it shows that the E25 is heterogeneous as far as FDI location determinants are concerned. However, the results are at odds with usual consensus:while tax differentials do impact on FDI in the EU15, they are shown to have had no impact on the new member states during the period of analysis (1990-2002). Similarly, other factors such as unit labor costs and price-competitiveness fail to explain FDI inflows to the new EU member states. Simulation exercises run on statutory taxation attend to assess empirically the impact of various tax convergence scenarios. They are shown to imply limited changes in FDI inflows, on the basis of FDI flows and tax differentials observed in 2002.
    Keywords: Tax competition; FDI; EU enlargement; Eastern Europe; transition; convergence
    JEL: F21 F36 H25 H87
    Date: 2006–06
  8. By: Marina Grusevaja
    Date: 2006–06
  9. By: Marek Jarocinski (Universitat Pompeu Fabra, Barcelona and CASE - Center for Social and Economic Research, Warsaw)
    Abstract: This paper compares responses to monetary shocks in the EMU countries (in the pre-EMU sample) and in the New Member States (NMS) from Central Europe. The small-sample problem, especially acute for the NMS, is mitigated by using a Bayesian estimation procedure which combines information across countries. A novel identification scheme for small open economies is used. The estimated responses are quite similar across regions, but there is some evidence of more lagged, but ultimately stronger price responses in the NMS economies. This contradicts the common belief that monetary policy is less effective in post-transition economies, because of their lower financial development. NMS also have a probably lower sacrifice ratio, which is consistent with the predictions of both the imperfect information model of Lucas (1973) and the New-Keynesian model of Ball et al. (1988).
    Keywords: monetary policy transmission, Structural VAR, Bayesian estimation, exchangeable prior
    JEL: C11 C15 C33 E40 E52
    Date: 2006–05–17
  10. By: György Molnár (Institute of Economics, Hungarian Academy of Sciences); Zsuzsa Kapitány (Institute of Economics, Hungarian Academy of Sciences)
    Abstract: In this paper subjective well-being measured by survey questions on life and material satisfaction is investigated. Our context is Hungary, between 2000 and 2002. We identify some basic variables that have important effect on how individuals perceive well-being in competitive pressure situation, namely, relative income mobility, subjective mobility, relative income position and subjective wealth position. We find that perception of changes in the relative income, wealth, and labour market positions, and the future prospects of these variables effect strongly on subjective well-being. Analysing the deviation between the objective and subjective trends of these variables and the reactions of households under these influences, we find that the objective trends of income and income mobility are very important with respect to satisfaction, but how people perceive their past relative income and income mobility, and their prospect of upward mobility in the future are what really determine satisfaction. The majority of respondents underestimate the real size of changes in their past financial positions, and the uncertainty of the competitive pressure situation is what really leads to this underestimation.
    Keywords: Mobility, Subjective Mobility, Subjective Well-being
    JEL: D12 D63 I31 P36
    Date: 2006–06–13

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