nep-tra New Economics Papers
on Transition Economics
Issue of 2007‒11‒24
seventeen papers chosen by
J. David Brown
Heriot-Watt University

  1. Wage determination and wage inequality inside a Russian firm in late transition: Evidence from personnel data - 1997 to 2002 By T. Dohmen; H. Lehmann; M. E. Schaffer
  2. Regional Unemployment and Human Capital in Transition Economies By Stepán Jurajda; Katherine Terrell
  3. Occupational Gender Composition and Wages in Romania: From Planned Equality to Market Inequality? By Daniela Andrén; Thomas Andrén
  4. The Growth of Poor Children in China 1991-2000: Why Food Subsidies May Matter By Lars Osberg; Jiaping Shao; Kuan Xu
  5. The Internal Control System of Russian Corporations By Naohito Abe; Tatiana G. Dolgopyatova; Ichiro Iwasaki
  6. Safety Net Still in Transition: Labour Market Incentive Effects of Extending Social Support in Poland By Peter Haan; Michal Myck
  7. The economic effects of Croatia's accession to the EU By Arjan Lejour; Andrea Mervar; Gerard Verweij
  9. Growth diagnostics for a resource-rich transition economy : the case of Mongolia By Gooptu, Sudarshan; Ianchovichina, Elena
  10. External Relationship of Russian Corporations By Svetlana Avdasheva; Victoria Golikova; Fumikazu Sugiura; Andrei Yakovlev
  11. The Rural Urban Wage Gap in the Industrialization of Russia, 1884-1910 By Leonid Borodkin,; Brigitte Granville; Carol Scott Leonard
  12. Why Are Saving Rates of Urban Households in China Rising? By Marcos Chamon; Eswar Prasad
  13. How relevant is targeting to the success of an antipoverty program ? By Ravallion, Martin
  14. Do Institutions Matter for Technological Change in Transition Economies? The Case of the Russia’s 89 regions and republics By Brigitte Granville; Carol Scott Leonard
  15. No Education, No Good Jobs? Evidence on the Relationship between Education and Labor Market Segmentation By Carmen Pagés; Marco Stampini
  16. CAUSES OF BANKRUPTCY IN EUROPE AND CROATIA By Novak, Branko; Sajter, Domagoj
  17. The Role of the Human Capital and Managerial Skills in Explaining the Productivity Gaps between East and West By Wolfgang Steffen; Johannes Stephan

  1. By: T. Dohmen; H. Lehmann; M. E. Schaffer
    Date: 2007–09
  2. By: Stepán Jurajda (CERGE-EI, CEPR and IZA); Katherine Terrell (University of Michigan, CEPR and IZA)
    Abstract: Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital and labor mobility patterns. The evidence suggests that regions with high inherited skill endowments attract skilled workers as well as FDI. This mobility pattern, which helps explain the lack of convergence in regional unemployment rates, is consistent with the presence of complementarities in skill and capital. Nevertheless, we find no supporting evidence of human capital wage spillovers implied by the complementarities story. Unemployment of the least-skilled workers appears lower in areas with a higher share of college-educated labor and future research is needed to see if this finding as well as the observed migration pattern arise from different adjustments to regional shocks by education level brought about in part by Central European labor-market institutions, such as guaranteed welfare income raising effective minimum wages.
    Keywords: unemployment, human capital, regional labor markets, transition economies, labor mobility, complementarities, spillovers, Czech Republic, Hungary, Romania, Ukraine
    JEL: E24 J0 J61
    Date: 2007–11
  3. By: Daniela Andrén (Göteborg University); Thomas Andrén (Göteborg University and IZA)
    Abstract: In Romania, the communist regime promoted an official policy of gender equality for more than 40 years, providing equal access to education and employment, and restricting pay differentiation based on gender. After its fall in December 1989, the promotion of equal opportunities and treatment for women and men did not constitute a priority for any of the governments of the 1990s. Given that both the economic mechanisms and the institutional settings changed radically, the question is if this affected gender equality. This paper analyzes both gender and occupational wage gaps in Romania before and during the first years of transition from a planned to a market economy. The results suggest that the communist institutions did succeed in eliminating the gender wage differences in female- and male-dominated occupations, but not in gender-integrated occupations, for which the gender wage gap was about 32%. During the transitions years, this gap decreased to 20-24%, while the gender wag gap in male and female-dominated occupations increased to 15%.
    Keywords: occupational segregation, gender wage gap, occupational wage gap
    JEL: J24 J31 J71 J78 P26 P27
    Date: 2007–11
  4. By: Lars Osberg; Jiaping Shao; Kuan Xu (Department of Economics, Dalhousie University; Department of Economics, Dalhousie University; Department of Economics, Dalhousie University)
    Keywords: height-for-age; child heath; growth; inequality; poverty; food subsidies; China
    Date: 2007–11–19
  5. By: Naohito Abe; Tatiana G. Dolgopyatova; Ichiro Iwasaki
    Abstract: The vast majority of Russian corporations, including many manufacturing and communications firms, are still compelled to become closed joint-stock companies that lack a modern democratic mechanism in order to attract capital from a wide range of private investors. This is due to factors such as significant insider ownership, a strong orientation among managers toward closed organizations, slumping needs for corporate finance, and underdeveloped local financial institutions. The impact of ownership structure on corporate-form choice by Russian firms exists, even if we assume that the two elements are determined endogenously. Under these circumstances, however, a significant number of closed companies attempt to develop more open internal organizational structures that are virtually the same as those in open companies. Nonetheless, such an institutional coupling of a closed corporate form and an open internal organizational structure is far from effective in resolving the imminent governance problems facing Russian corporations, such as the prevention of infighting among executives and outside shareholders and the implementation of discipline among top management.
    Keywords: Russia, corporate form, organizational behavior, institutional complementarity
    Date: 2007–01
  6. By: Peter Haan (DIW Berlin); Michal Myck (DIW Berlin, IFS and IZA)
    Abstract: Many aspects of the economic transition which started in 1989 in Poland are by now complete. However, the route Polish governments have so far taken concerning the system of support for low-income families still implies very different poverty alleviation schemes compared to those found in many developed countries. We examine the Polish system of social assistance in a comparative context with Germany and focus on its implications for financial incentives to work. The paper shows the effect of extending the financial support system for poorest families in Poland on labour market incentives. We demonstrate that assumptions concerning sharing of resources among families within households have significant implications on the resulting financial incentives and importantly change the implied consequences of the reforms. This is the case especially for single-adult families. 74% of single adults without children, and 53% of lone parents in Poland live in multi-family households.
    Keywords: work incentives, social assistance, within-household sharing, transition
    JEL: J21 I38 D13
    Date: 2007–11
  7. By: Arjan Lejour; Andrea Mervar; Gerard Verweij
    Abstract: We explore the economic implications of the possible accession of Croatia to the European Union. We focus on two main changes associated with the EU-membership: accession to the internal European Market and institutional reforms in Croatia triggered by the EU-membership. consumption per capita in Croatia is estimated to rise by about 2.5% as a result of accession to the internal market. In particular the textile and wearing apparel sectors expand. If Croatia succeeds in reforming its domestic institutions in response to the EU-membership, income levels in Croatia could increase even more. In particular, tentative estimates suggest that GDP per capita in Croatia could even rise by additional 8%. Overall, the macroeconomic implications for the existing EU countries are negligible.
    Keywords: Regional economic integration; General equilibrium model; Gravity equations; Institutional reform; Croatia
    JEL: F13 F15
    Date: 2007–10
  8. By: Tanasie, Anca; Fratostiteanu , Cosmin
    Abstract: For most Eastern European countries that experienced former communist regimes, the EU accession and the use of European symbols – such as the EURO currency – represents both the integration into a strong and efficient economic system, but also the guarantee of a system based on real democratic values. Romania has been the first of this category of states, that has expressed the real and strong attachment for the European Union, its symbols and values. This paper wishes to analyze the key elements concerning Romania’s accession to the EMU and finally the EURO adoption: Romania’s actual macroeconomic situation, the situation of the real and nominal convergence to the accession criteria – in a fuzzy clustering approach in order to determine optimum sequencing of the Euro adoption and the envisaged official calendar for the EURO adoption.
    Keywords: Romania; Euro; monetary convergence; fuzzy clustering
    JEL: F47 F33 F36
    Date: 2007–11–20
  9. By: Gooptu, Sudarshan; Ianchovichina, Elena
    Abstract: This paper uses a growth diagnostics approach à la Hausmann, Rodrik, and Velasco (HRV) to identify the most ' binding ' constraints to private sector growth in Mongolia - a small, low-income, mineral-rich, transition economy. The approach of applying the HRV methodology is useful in those cases where a lack of data prevents us from estimating shadow prices to identify the most ' binding ' constraint to growth. We find that although Mongolia is not liquidity constrained and has grown rapidly in recent years, economic growth has been narrowly based. Investment has flowed mainly into a small number of firms operating in mining and construction. The low level of private investment in sectors outside mining and construction has been due to low returns - a result of costly and unreliable transportation services; lengthy and complex transit proc edures, including customs and trade rules; distortionary taxes; coordination failures, at both domestic and international levels; and growing corruption. Poor financial intermediation is also a problem that has kept the cost of finance high, although lower than in previous years. Alleviating these binding constraints will ensure that Mongolia maintains the path towards sustained, broad-based growth.
    Keywords: Transport Economics Policy & Planning,Debt Markets,Economic Theory & Research,,Emerging Markets
    Date: 2007–11–01
  10. By: Svetlana Avdasheva; Victoria Golikova; Fumikazu Sugiura; Andrei Yakovlev
    Date: 2007–01
  11. By: Leonid Borodkin,; Brigitte Granville; Carol Scott Leonard
    Abstract: This paper presents econometric evidence of integration in rural and urban wages in Russia’s Northwest in the late tsarist era. Using the Autoregressive Distributed Lag (ARDL) approach to co-integration and error correction modelling, we show the flexibility of the rural wage in response to the lagged rural/urban wage ratio. Applying the model developed by Boyer and Hatton (1994) and Hatton and Williamson (1991a, 1991b, 1992), we show the similarity of the wage gap in northwest Russia in the late tsarist era to that during industrialization in the US, England and Western Europe. Although our evidence does not necessarily describe country-wide trends, it does support for an industrializing region the more positive view of the degree and nature of late tsarist economic growth. Growth was not slowing down, and there is little evidence of constraints on migration by traditional agrarian institutions.
    Date: 2007–09
  12. By: Marcos Chamon (International Monetary Fund); Eswar Prasad (Cornell University and IZA)
    Abstract: From 1995 to 2005, the average urban household saving rate in China rose by 8 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. The age profile of savings has an unusual U-shaped pattern, with saving rates being the highest among the youngest and oldest households. We find that financial underdevelopment, as reflected in constraints on borrowing and low returns on financial assets, partially accounts for this pattern. Moreover, overall saving rates have increased across all demographic groups. We argue that this can be explained by the rising private burden of expenditures on housing, education, and health care.
    Keywords: household savings, age and cohort profiles of savings, borrowing constraints, precautionary savings, financial development, demographics
    JEL: D12 E21 O16
    Date: 2007–11
  13. By: Ravallion, Martin
    Abstract: Policy-oriented discussions often assume that " better targeting " implies larger impacts on poverty or more cost-effective interventions. The literature on the economics of targeting warns against that assumption, but evidence has been scarce. The paper begins with a critical review of the strengths and weaknesses of the targeting measures found in practice. It then exploits an unusually large micro data set for China to estimate aggregate and local-level poverty impacts of the country ' s main urban antipoverty program. Standard measures of targeting are found to be uninformative, or even deceptive, about impacts on poverty and cost-effectiveness in reducing poverty. In program design and evaluation, it would be better to focus directly on the program ' s outcomes for poor people than to rely on prevailing measures of targeting.
    Keywords: Services & Transfers to Poor,Poverty Monitoring & Analysis,Population Policies,Poverty Impact Evaluation,Poverty Reduction Strategies
    Date: 2007–11–01
  14. By: Brigitte Granville; Carol Scott Leonard
    Abstract: Within the mechanism of endogenous growth, this paper empirically investigates the impact of financial capital on economic growth for a panel of 60 developing countries, through the channel of domestic capital formation. By estimating the model for different income groups, it is found that while private FDI flows exert beneficial complementarity effects on the domestic capital formation across all income-group countries, the official financial flows contribute to increasing investment in the middle income economies, but not in the low income countries. The latter appears to demonstrate that the aid-growth nexus is supported in the middle income countries, whereas the misallocation of official inflows is more likely to exist in the low income countries, suggesting that aid effectiveness remains conditional on the domestic policy environment.
    Date: 2007–09
  15. By: Carmen Pagés (Inter-American Development Bank and IZA); Marco Stampini (Sant’ Anna School of Advanced Studies)
    Abstract: This paper assesses labor market segmentation across formal and informal salaried jobs and self-employment in three Latin American and three transition countries. It looks separately at the markets for skilled and unskilled labor, inquiring if segmentation is an exclusive feature of the latter. Longitudinal data are used to assess wage differentials and mobility patterns across jobs. To study mobility, the paper compares observed transitions with a new benchmark measure of mobility under the assumption of no segmentation. It finds evidence of a formal wage premium relative to informal salaried jobs in the three Latin American countries, but not in transition economies. It also finds evidence of extensive mobility across these two types of jobs in all countries, particularly from informal salaried to formal jobs. These patterns are suggestive of a preference for formal over informal salaried jobs in all countries. In contrast, there is little mobility between self-employment and formal salaried jobs, suggesting the existence of barriers to this type of mobility or a strong assortative matching according to workers’ individual preferences. Lastly, for both wage differentials and mobility, there is no statistical difference across skill levels, indicating that the markets for skilled and unskilled labor are similarly affected by segmentation.
    Keywords: labor mobility, segmentation, barriers to entry, skills, informality, Latin America, transition economies
    JEL: J21 J24 J31 J63
    Date: 2007–11
  16. By: Novak, Branko; Sajter, Domagoj
    Abstract: Bankruptcy is an interesting object of research, being habitually perceived as a shocking and scandalous event, tarnishing management reputation, stigmatizing its owners, and regularly leading to a dishonourable death of the company, leaving outstanding debts in legacy. Its interdisciplinary character makes it even more challenging and extends the reasons for researching it in depth. Apart from these motives, recently a number of researchers significantly contributed to this field, and some of them will be presented in this paper. On its way to becoming a member of the EU, the Croatian economy (and society in general) extensively compares its characteristics with the existing members. Since Croatian bankruptcy law is for the most part transferred from the corresponding German Insolvenzordnung (Insolvency law), German experiences in this field are especially interesting for Croatian bankruptcy researchers. Even though being a part of the EU, the United Kingdom’s Anglo-Saxon legislative theory and practice is relatively different from those of mainland Europe, therefore making it attractive for comparison. This triangle of country-specific bankruptcy features, where Germany and the United Kingdom embody rich diversity of the European Union, and Croatia symbolizes new member states (although not yet being a constituent) with their particular transition traits, is fit into Ooghe and Waeyaert’s (2004) universal, conceptual failure model. Thus, first presented will be a general bankruptcy cause model. Ooghe and De Prijcker (2006) presented four main types of failure processes. Their findings of bankruptcy causes are based on a case study of bankrupt Belgian companies but can be generalized as universal bankruptcy causes. They are examined in the second section. According to this model country-specific (the United Kingdom, Germany and Croatia) insolvency causes will be studied. Euler Hermes Kreditversicherung and the Center for Insolvency and Reorganization at the University of Mannheim published in November 2006 a comprehensive study of bankruptcy causes. This research and its results are exhibited in the third section, as well as an overview of the less recent Wieselhuber & Partner (2003) study of the insolvency causes and success factors of reorganization from the insolvency. At the same time the Euler Hermes and the Center for Insolvency and Reorganization study was being finalized, unacquainted with it, a somewhat similar research was being conducted in Croatia. Our research of bankruptcy causes in Croatia is presented in the fourth section. Finally, the concluding remarks will summarize the main findings of this paper.
    Keywords: Bankruptcy; insolvency; cause; Croatia; Europe
    JEL: E69 K29 P21 G32 K42 O52 E61 P52
    Date: 2007–08–01
  17. By: Wolfgang Steffen; Johannes Stephan
    Abstract: This paper assess determinants of productivity gaps between firms in the European transition countries and regions and firms in West Germany. The analysis is conducted at the firm level by use of a unique database constructed by field work. The determinants tested in a simple econometric regression model are focussed upon the issue of human capital and modern market-oriented management. The results are novel in as much as a solution was established for the puzzling results in related research with respect to a comparison of formal qualification between East and West. Furthermore, the analysis was able to establish that the kind of human capital and expertise mostly needed in the post-socialist firms are related to the particular requirements of a competitive marketbased economic environment. Finally, the analysis also finds empirical support for the role of capital deepening in productivity catch-up, as well as the case that the gaps in labour productivity are most importantly rooted in a more labour-intense production, which does not give rise to a competitive disadvantage.
    Keywords: Productivity gap, Central East Europe, East Germany, firm-level analysis 1
    JEL: L6 M2
    Date: 2007–11

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