nep-tra New Economics Papers
on Transition Economics
Issue of 2009‒09‒05
sixteen papers chosen by
J. David Brown
Heriot-Watt University

  1. Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income By Yuriy Gorodnichenko; Klara Sabirianova Peter; Dmitriy Stolyarov
  2. Misallocation and Manufacturing TFP in China and India By Chang-Tai Hsieh; Peter Klenow
  3. Does Labor Supply Respond to a Flat Tax? Evidence from the Russian Tax Reform By Denvil Duncan; Klara Sabirianova Peter
  4. Rational Cost Inefficiency in Chinese Banks By Matthews, Kent; Xiao, Zhiguo; Zhang, Xu
  5. Are all Migrants Really Worse off in Urban Labour Markets?: New empirical evidence from China By Jason Gagnon; Theodora Xenogiani; Chunbing Xing
  6. Parent-Child Co-residence and Bequest Motives in China By Ting Yin
  7. The Roles of Commercial Credit and Direct Subsidies in Czech Agriculture During Early Transition By Janda, Karel
  8. Economic and Poverty Impacts of Agricultural, Trade and Factor Market Reforms in China By Zhai, Fan; Hertel, Thomas
  9. Migration, Self-selection, and Income Distributions: Evidence from Rural and Urban China By Xing, Chunbing
  10. Bank Productivity in China 1997-2007: An Exercise in Measurement By Matthews, Kent; Zhang, Nina
  11. Are Union Members Happy Workers after All? Evidence from Eastern and Western European Labor Markets By Georgellis, Yannis; Lange, Thomas
  12. Shocking aspects of monetary integration (SVAR approach) By Mirdala, Rajmund
  13. Gender, corruption and sustainable growth in transition countries By Michailova, Julija; Melnykovska, Inna
  14. Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic By Holger Görg; Henning Mühlen; Peter Nunnenkamp
  15. Going Separate Ways? School-to-Work Transitions in the United States and Europe By Glenda Quintini; Thomas Manfredi
  16. Oligopsony Power in the Ukrainian Milk Processing Industry: Evidence from the Regional Markets for Raw Milk By Perekhozhuk, Oleksandr; Grings, Michael; Glauben, Thomas

  1. By: Yuriy Gorodnichenko; Klara Sabirianova Peter (Andrew Young School of Policy Studies, Georgia State University); Dmitriy Stolyarov
    Abstract: We construct key household and individual economic variables using a panel micro data set from the Russia Longitudinal Monitoring Survey (RLMS) for 1994-2005. We analyze cross-sectional income and consumption inequality and find that inequality decreased during the 2000-2005 economic recovery. The decrease appears to be driven by falling volatility of transitory income shocks. The response of consumption to permanent and transitory income shocks becomes weaker later in the sample, consistent with greater self-insurance against permanent shocks and greater smoothing of transitory shocks. Comparisons of RLMS data with official macroeconomic statistics reveal that national accounts may underestimate the extent of unofficial economic activity, and that the official consumer price index may overstate inflation and be prone to quality bias.
    Keywords: inequality, income, consumption, transition, Russia.
    Date: 2009–06–01
  2. By: Chang-Tai Hsieh; Peter Klenow
    Abstract: Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing establishments to quantify the potential extent of misallocation in China and India compared to the U.S. Compared to the U.S., we measure sizable gaps in marginal products of labor and capital across plants within narrowly-defined industries in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the U.S., we calculate manufacturing TFP gains of 30-50% in China and 40-60% in India.
    Date: 2009–02
  3. By: Denvil Duncan (Andrew Young School of Policy Studies, Georgia State University); Klara Sabirianova Peter (Andrew Young School of Policy Studies, Georgia State University)
    Abstract: We exploit the exogenous change in marginal tax rates created by the Russian flat tax reform of 2001 to identify the effect of taxes on labor supply of males and females. We apply the weighted difference-in-difference regression approach and instrumental variables to the labor supply function estimated on individual panel data. The mean regression results indicate that the tax reform led to a statistically significant increase in male hours of work but had no effect on that of females. However, we find a positive response to tax changes at both tails of the female hour distribution. We also find that the reform increased the probability of finding a job among both males and females. Despite significant variation in individual responses, the aggregate labor supply elasticities are trivial and suggest that reform-induced changes in labor supply were an unlikely explanation for the amplified personal income tax revenues that followed the reform.
    Keywords: labor supply, personal income tax, flat tax, labor supply elasticity, difference-in-difference, regression discontinuity, wage endogeneity, employment participation, Russia, transition.
    Date: 2009–06–01
  4. By: Matthews, Kent (Cardiff Business School); Xiao, Zhiguo; Zhang, Xu
    Abstract: According to a frequently cited finding by Berger et al (1993), X-inefficiency contributes 20% to cost-inefficiency in western banks. Empirical studies of Chinese banks tend to place cost-inefficiency in the region of 50%. Such estimates would suggest that Chinese banks suffer from gross cost inefficiency. Using a non-parametric bootstrapping method, this study decomposes cost-inefficiency in Chinese banks into X-inefficiency and allocative-inefficiency. It argues that allocative inefficiency is the optimal outcome of input resource allocation subject to enforced employment constraints. The resulting analysis suggests that allowing for rational allocative inefficiency; Chinese banks are no better or worse than their western counterparts.
    Keywords: Bank Efficiency; China; X-inefficiency; DEA; Bootstrapping
    JEL: D23 G21 G28
    Date: 2009–09
  5. By: Jason Gagnon; Theodora Xenogiani; Chunbing Xing
    Abstract: The rapid and massive increase in rural-to-urban worker flows to the coast of China has drawn recent attention to the welfare of migrants working in urban regions, particularly to their working conditions and pay; serious concern is raised regarding pay discrimination against rural migrants. This paper uses data from a random draw of the 2005 Chinese national census survey to shed more light on the discrimination issue, by making comparisons of earnings and the sector of work between rural migrants on one hand, and urban residents and urban migrants on the other. Contrary to popular belief, we find no earnings discrimination against rural migrants compared to urban residents. However, rural migrants are found to be discriminated in terms of the sector in which they work, with a vast majority working in the informal sector lacking adequate social protection.<BR>L’augmentation rapide et massive des mouvements ruraux-à-urbains d’ouvriers vers la côte de la Chine a appelé à l’attention récente le bien-être des migrants travaillant dans des régions urbaines, en particulier vis-à-vis de leurs conditions de travail et de salaire ; la préoccupation a d’autant plus augmenté concernant la discrimination de salaire contre les migrants ruraux. Ce document emploie des données d’un tirage aléatoire du recensement national chinois de 2005 pour éclaircir la question de la discrimination en faisant des comparaisons de revenus et de secteur de travail entre les migrants ruraux d’une part, et les résidents et migrants urbains de l’autre. Contrairement à la croyance populaire, nous ne trouvons aucune discrimination de revenus entre migrants ruraux et résidents urbains. Cependant, les migrants ruraux s’avèrent être distingués en termes de secteur dans lequel ils travaillent, une grande majorité d’entre eux travaillant dans le secteur informel, caractérisé par un manque d’accès à une protection sociale adéquate.
    Keywords: migration, China, Chine, informal employment, migration, emploi informel, discrimination, discrimination
    JEL: J24 J71 O15 R23
    Date: 2009–06–30
  6. By: Ting Yin (Institute of Social and Economic Research, Osaka University)
    Abstract: In this paper, I discuss the actual conditions and the determinants of co-residence between older parents and their children in China, especially the impact of bequest motives on parent-child co-residence, using micro data from the gSurvey of Living Preferences and Satisfaction,h conducted at Osaka University. More specifically, I use three subsamples of older respondents (those who live in urban areas, those who live in rural areas, and the pooled sample of both) to analyze the impact of bequest motives and other factors on the probability of parent-child co-residence. The results are as follows: Bequest motives are strong in China, with more than 60 percent of respondents having a bequest motive, and the parent-child co-residence rate is also high (just under 60 percent). Bequest motives do not have a significant impact on the probability of parent-child co-residence in any of the three samples. However, in urban areas of China, if older parents own their own homes, the probability that they co-reside with their children increases as the value of their home increases. In rural areas of China and in the country as a whole, the coefficient of parental income is positive and significant in some cases, meaning that children are more likely to live with their parents if parental income is higher. All of these results suggest that, in both urban and rural areas of China, the Chinese are selfishly motivated and the life-cycle model applies.
    Keywords: Bequest motives; parent-child co-residence; life-cycle hypothesis; altruism model; strategic bequest motive.
    JEL: D91 E21
    Date: 2009–08
  7. By: Janda, Karel
    Abstract: This paper provides an econometric estimation of the influence of individual social-economic, natural, and technological determinants of the credit provision for the agriculture in the case of the Czech Republic. The regression model is based on the microeconomic model of the maximization of the bank’s profit. The results of this paper show that the support of agricultural credit provided by Guarantee Fund goes primarily to the areas with a good conditions for the development of agricultural production. On the other hand, the direct government subsidies are targeted primarily to the areas with non-favourable natural conditions.
    Keywords: Subsidies; Guarantees; Rural Development
    JEL: R51 Q14
    Date: 2009–08–29
  8. By: Zhai, Fan; Hertel, Thomas
    Keywords: Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,
    Date: 2009–06
  9. By: Xing, Chunbing
    Abstract: As massive rural residents leave their home countryside for better employment, migration has profound effects on income distributions such as rural-urban income gap and inequalities within rural or urban areas. The nature of the effects depend crucially on who are migrating and their migrating patterns. In this paper, we emphasize two facts. First, rural residents are not homogeneous, they self-select to migrate or not. Second, there are significant differences between migrants who successfully transformed their hukou status (permanent migrants) and those did not (temporary migrants). Using three coordinated CHIP data sets in 2002, we find that permanent migrants are positively selected from rural population especially in terms of education. As permanent migration takes more mass from the upper half of rural income density, both rural income level and inequalities decrease, the urban-rural income ratio increases at the same time. On the contrary, the selection effect of temporary migrants is almost negligible. It does not have obvious effect on rural income level and inequalities.
    Keywords: migration; self-selection; China
    JEL: O15
    Date: 2009–06
  10. By: Matthews, Kent (Cardiff Business School); Zhang, Nina
    Abstract: This study examines the productivity growth of the nationwide banks of China and a sample of city commercial, banks for the eleven years to 2007. Estimates of total factor productivity growth are constructed with appropriate confidence intervals, using a bootstrap method for the Malmquist index. The study adjusts for the quality of the output by accounting for the non-performing loans on the balance sheets of the banks and tests for the robustness of the results by examining alternative sets of outputs. The productivity growth of the state-owned commercial banks (SOCBs) is compared with the joint-stock banks (JSCBs) and city commercial banks (CCBs). The results show that average total factor productivity for the joint-stock banks was better than that of the state-owned banks for some models of measurement but not others. But the average city commercial banks improved its productivity growth both in terms of frontier shift and efficiency gain throughout the whole period. The study also shows that individual state-owned and joint-stock banks did improve their productivity growth and defined an improving production frontier. Most other banks lagged behind so that the gap between the inefficient banks and the most efficient banks widened. While individual banks improved their productivity growth there is no evidence that the average productivity growth of Chinese banks as a whole improved in the run-up to WTO.
    Keywords: Bank Efficiency; Productivity; Malmquist index; Bootstrap
    JEL: D24 G21
    Date: 2009–09
  11. By: Georgellis, Yannis; Lange, Thomas
    Abstract: Based on data from the European Values Study (EVS), we compare the determinants of job satisfaction and the impact of union membership in Eastern and Western European labor markets. Correcting our regressions for union endogeneity and controlling for individual characteristics, values and beliefs, and important aspects of a job, we find a positive association between unionization and job satisfaction. This is contrary to the dominant view of the impact of unionization on job satisfaction suggesting that there is a strong, negative relationship between the two variables. We also uncover distinct attitudinal differences between Eastern and Western European employees, highlighting persistent influences of former communist labor relations.
    Keywords: Unions; job satisfaction; EVS
    JEL: M54 J5
    Date: 2009–06
  12. By: Mirdala, Rajmund
    Abstract: One of the most challenging areas relating to the European Monetary Union (EMU) enlargement is the question of new member countries’ vulnerability to exogenous shocks related to euro adoption. Even if well prepared, and also considering the business cycles of the EMU candidate countries became more correlated as the result of persisting convergence toward the old EU member countries, their real output will be still vulnerable to the exogenous structural disturbances. The responsiveness of the new EMU member countries’ real output to the exogenous shocks may of course differ in intensity and durability. If we also assume a possibly low shocks correlation in these countries, the overall short-term wealth effect of the EMU membership may be rather low or even negative at all. In the paper we analyze the impact of three common exogenous structural shocks on the real output development in the new EMU member countries (Cyprus, Malta, the Slovak Republic and Slovenia) in the period 1999-2008 using SVAR (structural vector autoregression) approach. In order to meet this objective we decompose the variability of the real GDP in these countries to permanent and temporary shocks (we assume three types of shocks - nominal (liquidity), demand and supply shocks). Impulse-response functions will be also computed so that we can estimate the behaviour of the real output after structural one standard deviation innovations. The relevant outcomes of the analysis we compare with the results of the tests for the whole euro area (represented here by old EU member countries - EU-12 group). This approach helps us to understand the common as well as differing features of the real output determination in the new EMU member countries and old EU member countries.
    Keywords: exogenous shocks; real output; structural vector autoregression; variance decomposition; impulseresponse function
    JEL: C32 E52
    Date: 2009–06
  13. By: Michailova, Julija; Melnykovska, Inna
    Abstract: Numerous studies have found negative connection between corruption level and economic development. At the same time few of them demonstrate correlation between women representation in politics and corruption level. This paper analyzes correlation between gender and corruption for a specific sample of countries, sharing common cultural and historical legacy – transition countries. Relationship between higher number of women in parliament and decreasing level of corruption is supported by data. Relations with other forms of women social activity were found to be insignificant. Contribution of this paper to the research literature on this topic is twofold. First analysis on gender and corruption in transition economies has previously not been done. Second, this study could also be used for the practical policies on fighting corruption by application of gender quotas.
    Keywords: Gender; Corruption; Growth; Transition countries.
    JEL: H11 O10 K42 J16
    Date: 2009–05–12
  14. By: Holger Görg; Henning Mühlen; Peter Nunnenkamp
    Abstract: In addition to firm and industry characteristics, the heterogeneity of foreign direct investment (FDI) has to be taken into account when analyzing the determinants of outward FDI. We combine two firm-specific datasets on German firms with subsidiaries and joint ventures in the Czech Republic, compared to a control group of German firms without FDI in this host country. The impact of firm and industry characteristics on FDI decisions is assessed by estimating two-step Heckman models. We find that larger, more productive and more experienced firms are more likely to invest in the Czech Republic. Firm characteristics also affect the size of FDI in manufacturing. The relevance of both firm and industry characteristics critically depends on whether FDI is horizontal or vertical
    Keywords: multinational enterprises, firm heterogeneity, industry characteristics, sector-specific FDI, vertical and horizontal FDI
    JEL: F23 L25
    Date: 2009–08
  15. By: Glenda Quintini; Thomas Manfredi
    Abstract: This paper derives school-to-work transition pathways in the United States and Europe between the late 1990s and the early 2000s. To do so, it uses Optimal Matching, a technique developed to sequence DNA. The key advantage of using this technique is that, rather than focusing on a specific point in time or a single destination, such as employment, inactivity or unemployment, they convey information on all activities undertaken by youth over the transition period, their sequence and their persistence. Strong similarities are found between the United States and Europe. However, pathways in the United States are characterised by significantly more dynamism than in Europe: youth in employment tend to change jobs more frequently while inactive or unemployed youth are more likely to experience several short spells rather than a single long one. School-to-work transition pathways in the United States also involve less time spent in unemployment than in Europe. The share of school-leavers involved in pathways dominated by employment is larger in the United States than in Europe and non-employment traps are less frequent in the United States. The most successful European countries in terms of school-to-work transitions are those where apprenticeships are widespread. On the other hand, European countries with a high incidence of temporary work among youth have a significantly smaller share of youth belonging to pathways dominated by employment and a larger share of youth in pathways characterised by frequent job changes separated by long unemployment spells. At the individual level, qualifications, gender, ethnicity and motherhood are found to influence the probability of disconnecting from the labour market and education for a prolonged period of time. Overall, the analysis shows the potential of Optimal Matching as a descriptive tool for the study of school-to-work transitions. It also tentatively explores how pathways obtained through Optimal Matching could be used for further analysis to draw policy-relevant conclusions. At present, data availability appears to be the main barrier to fully exploiting this novel technique.<BR>Cet article analyse les trajectoires de transition de l’école à l’emploi aux États-Unis et en Europe entre la fin des années 1990 et le début des années 2000. Pour ce faire, il utilise « l’Optimal Matching », une technique développée pour l’analyse des séquences d’ADN. Le principal atout de cette technique est qu’au lieu de se concentrer sur un moment spécifique ou sur une seule activité, telle que l’emploi, l’inactivité ou le chômage, elles véhiculent de l’information sur toute les activités entreprises par les jeunes pendant la période de transition, leur chronologie et leur persévérance. On constante de nombreuses similarités entre les États-Unis et l’Europe. Toutefois, les trajectoires aux États-Unis sont caractérisées par beaucoup plus de dynamisme qu’en Europe : les jeunes occupés ont tendance à changer d’emploi plus fréquemment et les épisodes de chômage sont plus souvent cours et répétés que de longue durée. Les trajectoires de transition de l’école à l’emploi aux États-Unis sont aussi caractérisées par moins de temps passé au chômage qu’en Europe. La proportion de jeunes quittant l’école qui entame des trajectoires dominées par l’emploi est plus importante aux États-Unis qu’en Europe et les pièges du non-emploi sont moins fréquents aux États-Unis. Les pays européens les plus performants en termes de transitions de l’école à l’emploi sont ceux où l’apprentissage est le plus répandu. D’autre part, les pays européens à forte incidence de l’emploi temporaire parmi les jeunes, présentent une part plus faible de jeunes dans les trajectoires dominées par l’emploi et une part plus importante de jeunes dans les trajectoires marquées par plusieurs changements d’emploi séparés par de longs épisodes de chômage. Au niveau individuel, le niveau de qualification, le sexe, l’origine ethnique et la maternité influencent la probabilité de se déconnecter du marché du travail et du système éducatif pour une période prolongée. Globalement, l’analyse montre le potentiel de l’Optimal Matching comme outil descriptif dans l’étude des transitions de l’école à l’emploi. Cet article tente également d’utiliser les trajectoires obtenues avec l’application de l’Optimal Matching pour en tirer des conclusions politiques. La disponibilité de données est actuellement la principale barrière à l’exploitation à part entière de cette nouvelle technique.
    JEL: J21 J22 J64
    Date: 2009–08–20
  16. By: Perekhozhuk, Oleksandr; Grings, Michael; Glauben, Thomas
    Abstract: Most of the studies based on the New Empirical Industrial Organization (NEIO) approach use the industry data to estimate the degree of market power at the national level. Yet, only a few empirical studies presented the results that measure the degree of market power at the regional level and found the existence of market power in the regional markets. While the fact is that there is an extensive evidence for the existence of potential oligopsony market power in the Ukrainian milk processing industry (price cartels and geographic market sharing among milk processing enterprises, interference of the state authorities, higher concentration on regional markets), the estimation results of the market structure model at the national level did not produce any evidence suggesting the exercise of oligopsony power (the estimated parameter of oligopsony power is close to zero and statistically insignificant). The objective of this study is to estimate the degree of oligopsony power in the regional market for raw milk. The estimation results of the market structure model at the regional level indicate the existence of oligopsony power in nine out of the twenty three regions of Ukraine.
    Keywords: New Empirical Industrial Organization (NEIO); Oligopsony Power; Ukraine;
    JEL: L11 L13
    Date: 2009–06–11

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