nep-tra New Economics Papers
on Transition Economics
Issue of 2006‒11‒04
fourteen papers chosen by
Tono Sanchez
Universitat de Valencia

  1. Human Capital Externalities : Evidence from the Transition Economy of Russia By Alexander Muravyev
  2. Sophisticated discipline in a nascent deposit market: Evidence from post-communist Russia By Karas, Alexei; Pyle, William; Schoors, Koen
  3. A castle built on sand: The effects of mass privatization on stock market creation in transition economies By Fungácová , Zuzana; Hanousek, Jan
  4. Female Managers and their Wages in Central Europe By Jurajda, Stepan; Paligorova, Teodora
  5. Is the renminbi undervalued? By Jan Lemmen
  6. Trade Effects of the Europe Agreements By Julia Spies; Helena Marques
  7. The Russian-Ukrainian Earnings Divide By Constant, Amelie; Kahanec, Martin; Zimmermann, Klaus F
  8. Exchange rate policy and the relative distribution of FDI among host countries By Xing, Yuqing
  9. The fiscal framework and urban infrastructure finance in China By Ming Su; Quanhou Zhao
  10. Sources of capital structure : evidence from transition countries By Karin Jõeveer
  11. Innocenti Social Monitor 2006: Understanding Child Poverty in South-Eastern Europe and the Commonwealth of Independent States By Florence UNICEF ICDC; UNICEF Innocenti Research Centre
  12. Productivity in Estonian enterprises: the role of innovation and competition By Priit Vahter
  13. Trade reforms and welfare : an ex-post decomposition of income in Vietnam By Isik-Dikmelik, Aylin
  14. Paternity Deferments and the Timing of Births: U.S. Natality During the Vietnam War By Andrea Kutinova

  1. By: Alexander Muravyev
    Abstract: The paper tests for the existence of human capital externalities, more precisely those stemming from higher education, using a micro-level approach: the Mincerian wage regression augmented with the average level of education in a local geographical area (city). To solve identification problems arising due to endogeneity of average education the study exploits a natural experiment provided by the process of economic transition in the former communist economies. We argue that the educational structure of cities under the central planning was determined by the government rather than the market; thus the average educational attainment in cities at the end of communism can be regarded as exogenous with respect to the wages prevailing after the start of transition. The identification strategy based on the use of the pre-transition average education is applied to data from the Russia Longitudinal Monitoring Survey, RLMS. Empirical results are consistent with the presence of significant human capital (educational) externalities in the Russian economy. According to the estimates, one percent increase in the college share in a city results in the increase of city residents' wages by about 1.5 percent. The result proves to be robust to several changes in the empirical specification.
    Keywords: Human Capital Externalities, Cities, Russia
    JEL: I2 J31
    Date: 2006
  2. By: Karas, Alexei (BOFIT); Pyle, William (BOFIT); Schoors, Koen (BOFIT)
    Abstract: Using a database from post-communist, pre-deposit-insurance Russia, we demonstrate the presence of quantity-based sanctioning of weaker banks by both firms and households, particularly after the financial crisis of 1998. Evidence for the standard form of price discipline, however, is notably weak. We estimate the deposit supply function and show that, particularly for poorly capitalized banks, interest rate increases exhibit diminishing, and eventually negative, returns in terms of deposit attraction. These findings are consistent with depositors interpreting the deposit rate itself as a complementary proxy of otherwise unobserved bank-level risk.
    Keywords: market discipline; deposit market; transition; Russia
    JEL: G21 O16 P20
    Date: 2006–10–26
  3. By: Fungácová , Zuzana (BOFIT); Hanousek, Jan (BOFIT)
    Abstract: This paper deals with the relationship between mass privatization and stock market development in transition economies. The link is investigated empirically using a panel of data that includes most transition countries. Our results confirm the hypothesis that mass privatization exerted a negative influence on stock market functioning over the short and medium term. Further, it appears that stock markets in countries with mass privatization were initially perceived as mere byproducts of the privatization process. Such stock markets typically not only failed in their core mission of providing capital for the corporate sector, but generated negative investor sentiment and did little to catalyze economic growth.
    Keywords: privatization; mass privatization; emerging stock markets; stock market
    JEL: G15 G28 P34
    Date: 2006–10–26
  4. By: Jurajda, Stepan; Paligorova, Teodora
    Abstract: This paper examines the gender gaps in employment and wages among top- and lower-level managerial employees in a recent sample of Czech firms. Unlike the existing analyses of managerial gender pay gaps, we acknowledge the adverse consequences of the low and uneven representation of women for the Oaxaca-Blinder decomposition and offer an alternative set of results based on a matching procedure. Only 7% of top-level Czech managers are women and their wages are about 20 percent lower even when compared only to their comparable male colleagues.
    Keywords: gender pay gap; managers
    JEL: J31 J71 P31
    Date: 2006–10
  5. By: Jan Lemmen
    Abstract: The possible undervaluation of the renminbi is evaluated. A survey of the literature concludes toward a renminbi undervaluation of about 25% in real effective terms. This undervaluation is not expected to disappear any time soon.
    Keywords: China; exchange rates; outlook
    JEL: F31 O24 O53
    Date: 2006–10
  6. By: Julia Spies; Helena Marques
    Abstract: The eastern enlargement of the European Union (EU) brought and will bring full membership to countries whose trade barriers with the EU had to a large extent already been removed under Free Trade Agreements (FTAs) during the 1990s. We employ a theory-based new version of a gravity equation, whose specification allows for an assessment of the impact of the arrangements on extra- and intra-group imports. We find robust evidence that the agreements have substantially increased intra-group trade, in the case of the Czech and Slovak Republic at the expense of the Rest of the World (ROW).
    Keywords: Free Trade Agreements; Gravity equation; Central and Eastern Europe; Panel data
    JEL: F15 C23
    Date: 2006
  7. By: Constant, Amelie; Kahanec, Martin; Zimmermann, Klaus F
    Abstract: Ethnic differences are often considered to be powerful sources of diverse economic behaviour. In this paper, we investigate whether and how ethnicity affects Ukrainian labour market outcomes. Using micro data from the Ukrainian Longitudinal Monitoring Survey (ULMS) and Oaxaca-Blinder decomposition of earnings, we find a persistent and rising labour market divide between ethnic Russians and Ukrainians throughout Ukraine’s transition era. We establish that language rather than nationality is the key factor behind this ethnic premium favouring Russians. Our findings further document that this premium is larger among males than among females.
    Keywords: discrimination; earnings differences; ethnic premium; ethnicity; transitional labour markets
    JEL: J15 J70 J82
    Date: 2006–10
  8. By: Xing, Yuqing (BOFIT)
    Abstract: This paper examines the FDI-exchange rate nexus in the context of one FDI source and two host countries. It focuses on the effect of exchange rates on relative FDI inflows between the two host countries. The theoretical analysis shows explicitly that relative FDI inflows are a function of relative real exchange rates. In particular, if one host country devalues its currency against that of the source country more than the other does, FDI into the former country will be expected to increase relative to the other country. The theoretical inference is examined with Japanese FDI in manufacturing industries of China and ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand). The empirical results generally support the theoretical conclusion, suggesting that the real devaluation of the Chinese Yuan undercut FDI into the ASEAN-4.
    Keywords: FDI; exchange rate; China; ASEAN-4
    JEL: F14 F23 F31
    Date: 2006–10–26
  9. By: Ming Su; Quanhou Zhao
    Abstract: China has experienced more than 25 years of extraordinary economic growth. Underlying this growth has been a decentralized fiscal system, in which provinces and large cities are given the freedom to make infrastructure investments to stimulate local development, and are allowed to retain a large part of the fiscal revenues that are generated from economic activity. Although successful as a growth strategy, this policy created two problems for national fiscal management. First, it significantly reduced the central government ' s share of fiscal revenues, which fell from 34.8 percent in 1980 to 22 percent in 1992. Second, it widened economic and fiscal disparities between the rapidly growing urban coastal region and the rest of the country. Rapid growth in subnational debt (which rose 23-fold in a decade) and subnational nonperforming loans (estimated by the authors to range between US$100 billion and US$150 billion) has placed pressure on China ' s financial system. Traditionally, China has favored bank lending as a source of finance because the banking system has provided a vehicle for central political control over local debt. But as China ' s financial system matures, creditworthiness standards must become more important. The authors recommend greater use of the revenue streams from infrastructure assets as a financing source, and gradual relaxation of central political control over subnational debt. One step in this direction would permit leading cities to issue municipal bonds based on objective financial standards.
    Keywords: Banks & Banking Reform,Urban Economics,Public & Municipal Finance,Municipal Financial Management,Intergovernmental Fiscal Relations and Local Finance Management
    Date: 2006–11–01
  10. By: Karin Jõeveer
    Abstract: This study explores the significance of firm-specific, country institutional and macroeconomic factors in explaining the leverage variation of a sample of firms from nine Eastern European countries. Countryspecific factors are the most prominent determinants of leverage variation for small unlisted companies while firm-specific factors explain most of the leverage variation in listed and large unlisted companies. Half of the leverage variation related to country factors is explained by known macroeconomic and institutional factors while the other half by unquantifiable institutional differences
    Keywords: capital structure, Eastern Europe
    JEL: G32
    Date: 2006–10–10
  11. By: Florence UNICEF ICDC; UNICEF Innocenti Research Centre
    Abstract: This is a study of child poverty in a fast-changing region. Since 1998 almost all countries of the South-Eastern Europe and Commonwealth of Independent States region have shown signs of economic recovery. The numbers of people living in income poverty has fallen, living standards have generally improved and opportunities for many children in the region have expanded. This signals a turning point in the dramatic decline in social and economic conditions experienced by most children in the region in the early 1990s. Yet there is a serious risk that a part of the new generations of children born since the start of the transition is being left behind. The study shows that not all children are benefiting from the economic growth and that Governments in the region need to give higher policy priority to tackling disadvantage and deprivation endured by children. Pursuing a child rights perspective, the study set outs to measure and understand better the nature and scale of child poverty, as distinct from adult poverty; it highlights the large disparities in child well-being which have emerged in this period of economic expansion, between countries, between regions within countries, and between families; it points to ways in which governments in the region could more effectively address marginalisation and disparities among children. The Innocenti Social Monitor 2006 provides practical examples of ways in which children can be given distinct attention and visibility in the analysis of poverty and in policy priorities, while also stressing that data collection has to be improved and made more accessible in order to allow the impact of policies on children to be effectively assessed and addressed.
    Keywords: Child Poverty; Economic Indicators;; Baltic States; Central Europe; Eastern Europe;
    JEL: I38 P36
    Date: 2006
  12. By: Priit Vahter
    Abstract: This paper provides some stylised facts about differences in labour productivity and total factor productivity (TFP) in Estonian firms and about the role of selected determinants of productivity differences. Enterprise level panel data of the whole population of Estonian firms from years 1995-2002 is used. It appears that the variation of productivity indicators in Estonia is much greater than in Western Europe. Although there is a lot of entry and exit of firms, there is not much movement within the productivity distribution of surviving .rms. It is found that both innovation and less concentrated market structure seem to be positively related to higher productivity of firms
    Keywords: productivity, competition, innovation, market structure
    JEL: G3 L2 O31 O4
  13. By: Isik-Dikmelik, Aylin
    Abstract: This paper analyzes the impact of trade reforms on household welfare. In particular, it studies the importance of each of the links that together constitute the impact using data from the Vietnamese experience in the 1990s. The implementation of trade reforms in the 1990s, most noteworthy of which was the liberalization of rice, resulted in substantial improvement in welfare as evidenced by the drastic decline in poverty. Using analytical and empirical methods, the author examines the role of each channel (direct versus indirect) in this improvement for different groups of households. Results indicate that the growth has been broad based and pro-poor. Poorer households experienced more growth for each and every group analyzed. And contrary to the standard literature, net buyer households had more growth compared with net sellers, emphasizing the importance of indirect links. Decomposition of the growth shows that for rural households, both the direct effect and the multiplier effect drive growth while the multiplier effect was key in urban areas. The importance of the secondary effects underscores the need for a broader model to estimate the impact of trade reforms fully.
    Keywords: Rural Poverty Reduction,Economic Theory & Research,Small Area Estimation Poverty Mapping,Inequality,Consumption
    Date: 2006–11–01
  14. By: Andrea Kutinova (University of Canterbury)
    Abstract: During the conflict in Vietnam, married men with dependents could obtain a deferment from the draft. In 1965, following President Johnson's Executive Order 11241 and a subsequent Selective Service System announcement, the particulars of this policy changed substantially in a way which provided strong incentives for childless American couples to conceive a first-born child. This study examines the effects of the intervention on the decision to start a family. In my empirical analysis, I extract data from the Vital Statistics for the period 1963-1968 and employ a difference-in-differences methodology. The estimated magnitude of the effect is substantial.
    Keywords: Timing of Births; Draft; Vietnam War
    JEL: J18
    Date: 2006–04–04

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