nep-tra New Economics Papers
on Transition Economics
Issue of 2010‒08‒21
seven papers chosen by
J. David Brown
Heriot-Watt University

  1. Intergenerational Transfer of Human Capital under Post-War Distress: The Displaced and the Roma in the Former Yugoslavia By Kahanec, Martin; Yuksel, Mutlu
  2. Current State and Prospects of the Russian Energy Sector By Vasily Astrov
  3. The Impact of the Global Economic and Financial Crisis on Central Eastern and SouthEastern Europe (CESEE) and Latin America By Sonsoles Gallego; Sándor Gardó; Reiner Martin; Luis Molina; José María Serena
  4. Testing for the Option Value of Migration By Lilo Locher
  5. Consumption in developed and emerging economies. By Kadish, Peter
  6. A control function approach to estimating dynamic probit models with endogenous regressors, with an application to the study of poverty persistence in China By Giles, John; Murtazashvili, Irina
  7. Household Decision Making in Rural China: Using Experiments to Estimate the Influences of Spouses By Fredrik Carlsson; Haoran He; Peter Martinsson; Ping Qin; Matthias Sutter

  1. By: Kahanec, Martin (IZA); Yuksel, Mutlu (IZA)
    Abstract: In this chapter, we investigate the effects of vulnerability on income and employment in Bosnia and Herzegovina, Croatia, Montenegro and Serbia using a unique 2004 UNDP dataset. Treating the collapse of the former Yugoslavia as a natural experiment, we compare three groups that have been differently affected by the wars and post-war distress: the majority as the benchmark, the ex-ante and ex-post vulnerable Roma people, and the ex-ante equal but ex-post vulnerable refugees and internally displaced people (RIDPs). Our findings reveal significant negative effects of vulnerability on income and employment. RIDPs seem to be about as negatively affected as Roma across the four states, which indicate that vulnerability inflicted by relatively recent displacement may have similar effects as vulnerability rooted deep in the past. When we look at education as one of the key determinants of socio-economic outcomes, both groups exhibit similarly substandard educational outcomes of children and significant inertia in intergenerational transfer of human capital. Our findings highlight the need for policies that not only tackle vulnerability as such, but address the spillover effects of current vulnerability on future educational attainment.
    Keywords: vulnerability, labor market, education, Roma, refugees, internally displaced people, discrimination, integration
    JEL: I21 I12 J24 N34
    Date: 2010–08
  2. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Russia and four other CIS countries – Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan – are important energy producers and possess substantial reserves, particularly as far as natural gas is concerned. Russia alone accommodates about one quarter of the global gas reserves and has established itself – along with Saudi Arabia – as one of the world’s two leading oil exporters. However, Russia’s relations with OPEC so far have been largely a history of non-cooperation, and the prospects of future cooperation appear equally problematic. The prospects of the Russian energy sector are to be seen against the background of the newly adopted ‘Energy Strategy until 2030’. The key problems tackled in the Energy Strategy are the so far generally insufficient exploration and investments in the new hydrocarbon fields. This is due to a number of factors such as the rising state involvement in the oil sector, the confiscatory tax regime, and the low domestic tariffs for gas. Deposits in the traditional energy-producing regions are largely depleted, while the fields which would enable maintaining or raising production volumes in the years to come lie predominantly in remote and technologically and climatically challenging areas. Their development would require the creation of appropriate production, transport and social infrastructure. The related total investments over the period until 2030 are estimated at some USD 1 3 trillion, implying that a substantial boost from the current investment levels is needed. In addition, the development of offshore gas deposits would require the construction of LNG plants, the expertise for which within the Russian gas industry has been very limited so far. Therefore, attracting more foreign investment and related know-how, and more private capital in general, appears to be indispensable for the government plans to materialize. Intensifying the existing ‘Energy Dialogue’ between Russia and the EU and deepening the mutual investment penetration would be highly instrumental in achieving these goals. The government’s target is to increase, by the year 2030, oil production by 10% and gas production by some 40%, with half of the latter to be provided by the so-called ‘independent’ (from Gazprom) producers. The increase in the oil output would be largely channelled to domestic consumption, whereas half of the additionally produced gas should be exported: gas exports are to rise by about 50%. The rise in domestic gas consumption will be constrained by the planned tariff hikes, which should facilitate the substitution of gas by coal and nuclear energy, and induce energy-saving behaviour. The announced target is to lower the energy intensity of the economy by about three times and bring it close to the levels observed in developed countries with similar climatic conditions. Domestic gas savings resulting from higher energy efficiency, but also reduced flaring and leakages, should further improve Russia’s gas export prospects – along with the increased supplies from Central Asia and particularly Turkmenistan, where Russia has been recently successful in advancing its presence. The Russian government’s target of exporting up to 20-25% of energy to the potentially promising Asian-Pacific region (including China) by 2030 mirrors the EU’s stated objective of diversifying its energy supplies away from Russia. However, so far the results in this respect appear to have been mixed at best. While the geographical diversification of Russian oil exports has been slowly advancing, the diversification of gas exports has been constrained by the price disagreements with China and the limited progress with LNG. Given the envisaged sizeable overall increase in Russian gas exports, such diversification – even if successful – is unlikely to ‘crowd out’ Russian gas exports to Europe. This implies that Europe will almost certainly remain Russia’s biggest energy export market in the medium and long run.
    Keywords: Russia, country and industry studies of trade, international relations, hydrocarbon fuels, government policy, gas utilities, energy
    JEL: F14 F59 L71 L78 L95 Q4
    Date: 2010–06
  3. By: Sonsoles Gallego (Banco de España); Sándor Gardó (Oesterreichische Nationalbank); Reiner Martin (European Central Bank); Luis Molina (Banco de España); José María Serena (Banco de España)
    Abstract: This paper reviews the impact of the global economic and financial crisis on two distinct emerging market regions: Central, Eastern and Southeastern Europe (CESEE) and Latin America. Similar to other emerging economies, both regions were initially surprisingly resilient as the crisis gathered momentum. They were, however, both strongly affected by the sharp retrenchment in capital inflows and the collapse of global demand that followed the demise of Lehman Brothers in September 2008. Notwithstanding differences in the channels of transmission and the intensity of the propagation, the short-term outcome in 2009 was one of the deepest recessions in decades. As both regions differ in several important respects, the question arises how structural and institutional features as well as policies before and during the crisis have affected the transmission of global events to the two regions under review.
    Keywords: Financial crisis, Central, Eastern and Southeastern Europe, Latin America
    JEL: F15 F32 G15 G18 H30
    Date: 2010–07
  4. By: Lilo Locher
    Abstract: Using uncertainty about the future returns to migration, the option value theory of migration can explain low migration rates in spite of huge wage differences. This paper presents the theory in a simple two-period framework and uses ethnic Germans in the CIS to find empirical support for it. Since July 1990, ethnic German immigration from Eastern Europe and the CIS is restricted by means of a protracted application mechanism. In our data on ethnic Germans in Russia and Kazakhstan in the 1990s, we use information on the stage of the application process, migration intentions and ethnicity to construct close proxies for the option value of postponing migration and for migration costs. The link between the two is shown to be as theory predicts. [IZA Discussion Paper No. 405]
    Keywords: Migration, option theory, ethnic Germans
    Date: 2010
  5. By: Kadish, Peter
    Abstract: In what follows various econometric technique is applied to determine the source of consumption growth with historical retrospective to equity and real estate markets as well comparative analysis of US consumer and Chinese consumer is presented.
    Keywords: Consumer credit; Wealth; Consumption
    JEL: E21
    Date: 2010–08
  6. By: Giles, John; Murtazashvili, Irina
    Abstract: This paper proposes a parametric approach to estimating a dynamic binary response panel data model that allows for endogenous contemporaneous regressors. This approach is of particular value for settings in which one wants to estimate the effects of an endogenous treatment on a binary outcome. The model is next used to examinethe impact of rural-urban migration on the likelihood that households in rural China fall below the poverty line. In this application, it is shown that migration is important for reducing the likelihood that poor households remain in poverty and that non-poor households fall into poverty. Furthermore, it is demonstrated that failure to control for unobserved heterogeneity would lead the researcher to underestimate the impact of migrant labor markets on reducing the probability of falling into poverty.
    Keywords: Rural Poverty Reduction,Population Policies,Achieving Shared Growth,Debt Markets,Regional Economic Development
    Date: 2010–08–01
  7. By: Fredrik Carlsson; Haoran He; Peter Martinsson; Ping Qin; Matthias Sutter
    Abstract: Many economic decisions are made jointly within households. This raises the question about spouses’ relative influence on joint decisions and the determinants of relative influence. Using a controlled experiment (on inter-temporal choice), we let each spouse first make individual decisions and then make joint decisions with the other spouse. We use a random parameter probit model to measure the relative influence of spouses on joint decisions. In general, husbands have a stronger influence than wives. However, in richer households and when the wife is older than the husband, we find a significantly stronger influence of the wife on joint decisions.
    Keywords: household decision making, spouses, relative influence, random parameter model, field experiment, time preferences
    JEL: C91 C92 C93 D10
    Date: 2010–07

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