nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒01‒30
34 papers chosen by
J. David Brown
Heriot-Watt University

  1. The Costs of Job Loss in Russia By Lehmann, Hartmut; Muravyev, Alexander; Razzolini, Tiziano; Zaiceva, Anzelika
  2. Can State Language Policies Distort Students' Demand for Higher Education? By Muravyev, Alexander; Talavera, Oleksandr
  3. Financial Reforms, Growth and Regional Disparity in Post-reform China By Zhicheng Liang
  4. Globalization and FDIs: determinants and competition effects in Central and Eastern European Countries By Natalia VECHIU
  5. Lost in Transition? The Returns to Education Acquired under Communism 15 Years after the Fall of the Berlin Wall By Brunello, Giorgio; Crivellaro, Elena; Rocco, Lorenzo
  6. Weather Effects in Transition By Tom Coupe; Olha Zadorozhna
  7. Women’s Labor Force Participation and Childcare Choices in Urban China during the Economic Transition By Fenglian Du; Xiao-yuan Dong
  8. The Impact of Agricultural Technology Adaption on Income Inequality in Rural China By Shijun Ding; Laura Meriluoto; W. Robert Reed; Dayun Tao; Haitao Wu
  9. Is it really different? Patterns of regionalisation in the post-Soviet Central Asia By Libman, Alexander; Vinokurov, Evgeny
  10. Is Chinese variety of capitalism really unique? By Popov, Vladimir
  11. Migration, urban population growth and regional disparity in China By Mary-Françoise Renard; Zelai Xu; Nong Zhu
  12. Recent Trends in Youth Labour Market and Youth Employment Policy in Europe and Central Asia By O'HIGGINS, Shane Niall
  13. Endogenous Discounting, Precautionary Savings and the Current Account: the Case of China By Tianding Zhang
  14. Government Size and Macroeconomic Stability: Sub-National Evidence from China By Li, Cheng
  15. Equity and public governance in health system reform : challenges and opportunities for China By Brixi, Hana; Mu, Yan; Targa, Beatrice; Hipgrave, David
  16. Assessing China's Top-Down Securities Markets By William T. Allen; Han Shen
  17. Taux de change réel et productivité en Chine By Sylviane Guillaumont Jeanneney; Ping Hua
  18. Provincial and Local Governments in China: Fiscal Institutions and Government Behavior By Roger H. Gordon; Wei Li
  19. Real Exchange Rates and China's Bilateral Exports towards Industrialized Countries By Ping Hua
  20. Appreciation of the renminbi and urban-rural income disparity By Sylviane Guillaumont Jeanneney; Ping Hua
  21. Simulating security of supply effects of the Nabucco and South Stream projects for the European natural gas market By Dieckhoener, Caroline
  22. Economic Integration, Inequality and Growth: Latin America vs. the European economies in transition By Giovanni Andrea Cornia
  23. “Leftist”, “Rightist” and Intermediate Decompositions of Poverty Variations with an Application to China from 1990 to 2003 By Florent Bresson; Kelly Labar
  24. Back on the Map - Essays on Financial Markets in the Baltic States By Soultanaeva, Albina
  25. Sources of income differences across Chinese provinces during the reform period: a development accounting exercise By Rui Hao
  26. Intergenerational Mobility in China By Kelly Labar
  27. Subnational resource curse: do economic or political institutions matter? By Libman, Alexander
  28. On the importance of growth spillovers and regional clustering in the Russian Federation? By Jens K. Perret
  29. The Impact of International Trade on Labour Markets. The Case of Outward Processing Traffic between the European Union and Central Eastern European Countries By CELI, Giuseppe
  30. An Active Margin System and its Application in Chinese Margin Lending Market By Guanghui Huang; Jianping Wan; Cheng Chen
  31. Darbaspēka migrācijas ietekme uz darba tirgu Latvijā By Skribans, Valerijs
  32. Bayesian Analysis of a Triple-Threshold GARCH Model with Application in Chinese Stock Market By Zhu, Junjun; Xie, Shiyu
  33. History of events and life-satisfaction in transition countries By Dabalen, Andrew; Paul, Saumik
  34. Dual citizenship for transborder minorities? How to respond to the Hungarian-Slovak tit-for-tat By Rainer Bauböck

  1. By: Lehmann, Hartmut (University of Bologna); Muravyev, Alexander (IZA); Razzolini, Tiziano (University of Siena); Zaiceva, Anzelika (IZA and University of Bologna)
    Abstract: This paper is the first to analyze the costs of job loss in Russia, using unique new data from the Russian Longitudinal Monitoring Survey over the years 2003-2008, including a special supplement on displacement that was initiated by us. We employ fixed effects regression models and propensity score matching techniques in order to establish the causal effect of displacement for displaced individuals. The paper is innovative insofar as we investigate as relevant outcomes fringe and in-kind benefits and the propensity to have an informal employment relationship in addition to monthly earnings, hourly wages, employment and hours worked, which are traditionally analyzed. We find that, compared to the control group of non-displaced workers (i.e. stayers and quitters), displaced individuals face a significant income loss following displacement, which is mainly due to the reduction in employment and hours worked. This effect is robust to the definition of displacement. The losses seem to be more pronounced and are especially large for older workers with labor market experience and human capital acquired in Soviet times and for workers with low education. Workers displaced from state firms experience particularly large relative losses in the short run, while such losses for workers laid off from private firms are more persistent. Turning to the additional labor market outcomes, there is a loss in terms of the number of fringe and in-kind benefits for reemployed individuals but not in terms of their value. There is also some evidence of an increased probability of working in informal jobs if displaced. These results point towards the importance of both firm-specific human capital and of obsolete skills obtained under the centrally planned economy as well as to a wider occurrence of job insecurity among displaced workers.
    Keywords: costs of job loss, worker displacement, propensity score matching, Russia
    JEL: J64 J65 P50
    Date: 2010–12
  2. By: Muravyev, Alexander (IZA); Talavera, Oleksandr (University of East Anglia)
    Abstract: This paper takes advantage of a recent policy experiment in Ukraine's secondary education system to study the effect of stricter requirements for proficiency in the state language on linguistic minority students’ demand for, as well as opportunities to pursue, further studies at the university level. The reform that we consider obligated all minority students, including those studying in public schools with a full cycle of education in minority languages, to take a standardized school exit test (which is also a university entry test) in Ukrainian, the state language, thus denying them previously granted access to translated tests. Using school-level data and employing the difference-in-difference estimator we find evidence that the reform resulted in a decline in the number of subjects taken by minority students at the school exit test. There was also a notable shift in the take-up of particular subjects, with fewer exams taken by minority students in more linguistically-demanding subjects such as History, Biology, and Geography, and more exams taken in foreign languages and Math. Overall, our results suggest some distortions in the accumulation of human capital by linguistic minority students induced by the language policy.
    Keywords: language policy, economics of minorities, education, Ukraine
    JEL: I28 J15
    Date: 2010–12
  3. By: Zhicheng Liang (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: In this paper, by employing the Generalized Method of Moment (GMM) techniques and Chinese provincial level data from 1991 to 2003, we empirically investigate the relationship between finance and growth in post-reform China. We find that financial development significantly promotes economic growth in coastal regions but not in inland regions; the weak finance-growth nexus in inland provinces has exacerbated China's regional disparity.
    Keywords: Financial Development;income disparity;Chinese Economy
    Date: 2011–01–18
  4. By: Natalia VECHIU
    Abstract: Globalization and FDIs: determinants and competition effects in Central and Eastern European Countries
    Date: 2010–11
  5. By: Brunello, Giorgio (University of Padova); Crivellaro, Elena (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: Using data for 22 economies in Eastern and Western Europe, we find evidence that having studied under communism is relatively penalized in the economies of the late 2000s. This evidence, however, is limited to males and to primary and secondary education, and holds for eight CEE economies but not for the East Germans who have studied in the former German Democratic Republic. We also find that post-secondary education acquired under communism yields higher, not lower, payoffs than similar education in Western Europe.
    Keywords: returns to education, Eastern Europe
    JEL: J24
    Date: 2010–12
  6. By: Tom Coupe (Kyiv School of Economics, Kyiv Economic Institute); Olha Zadorozhna (Bocconi University)
    Abstract: This paper tests whether weather affects stock returns in the transition countries of Central and Eastern Europe and the CIS. In these countries, reliable information about the fundamentals of stocks is scarce, and hence the ‘mood’ of investors is more likely to play an important role in investment decisions. Nevertheless, our results suggest that there is little evidence of a systematic effect of weather variables on stock markets in these countries.
    Keywords: weather effects, transition countries
    JEL: G1 P2
    Date: 2010–12
  7. By: Fenglian Du; Xiao-yuan Dong
    Abstract: China’s transition from a centrally planned to a market economy has substantially eroded governmental support for childcare. This paper examines the labor force participation and childcare choices of urban Chinese women during the economic transition and explores the distributional implications of childcare reform. The analysis shows that following child care reform, access to informal caregivers became increasingly critical for women’s labor force participation. The rise of women’s dependence on informal caregivers apparently accounted for much of the decline in women’s labor force participation during the period from 1997 to 2006. In effect, child care reform heightened the tensions between income earning and child rearing for women who had no access to informal care providers and also could not afford to use formal care services.
    JEL: H31 J13 J16 J22
    Date: 2010–10
  8. By: Shijun Ding; Laura Meriluoto (University of Canterbury); W. Robert Reed (University of Canterbury); Dayun Tao; Haitao Wu
    Abstract: This study analyzes the impact on income inequality of government efforts to increase agricultural incomes in rural China. It collects and analyzes survey data from 473 households in Yunnan, China in 2004. In particular, it investigates the effects of government efforts to promote improved upland rice technologies. Our analysis shows that farmers who adopted these technologies had incomes approximately 15 percent higher than non-adopters. Despite this relatively large increase, we estimate that the impact on income inequality was relatively slight. This is primarily due to the fact that lower-income farmers adopted the improved rice technology at rates that were roughly equivalent to those of higher-income farmers.
    Keywords: Rural economic development; Chinese economic development; upland rice; rural-urban income inequality; agricultural income policy
    JEL: O13 O18 O53 Q12
    Date: 2011–01–13
  9. By: Libman, Alexander; Vinokurov, Evgeny
    Abstract: While the regional economic integration encompassing the former Soviet Union (FSU) transpires to be inefficient, there appears to be a stronger interest in regionalism in smaller groups of more homogenous and geographically connected countries of the region, specifically, Central Asia. Using a new dataset, we find that although the economic links between the Central Asian countries are more pronounced than between that of the CIS in several key areas, this advantage has been disappearing fast over the last decade. In addition, the trend of economic integration of Central Asia strongly correlates to that of the CIS in general. Currently Central Asia should be treated as a sub-region of the post-Soviet world rather than a definite integration region.On the other hand, however, we find that Kazakhstan emerges as a new centre for regional integration, which can bear some potential for regionalism in Central Asia, and that there is an increasing trend towards greater economic interconnections with China in Central Asia. --
    Keywords: regionalisation,economic integration,post-Soviet space,Central Asia
    JEL: F13 F15 P27
    Date: 2010
  10. By: Popov, Vladimir
    Abstract: The formal comparison of similarities and differences of Chinese and Western economic models misses the most important point. The uniqueness of China is that it looks very much like a developed country today in terms of institutional capacity of the state, even though it is a developing country according to GDP per capita. Indeed, China should be compared with developing countries today or developed countries a hundred years ago, when their GDP was at the current Chinese level, and this comparison is very much in favour of China. Institutional capacity of the state, according to a narrow definition, is the ability of the government to enforce laws and regulations. While there are a lot of subjective indices (corruption, rule of law, government effectiveness, etc.) that are supposed to measure state institutional capacity, many researchers do not think they help to explain economic performance and instead consider them biased. The natural objective measures of state institutional capacity are the murder rate (noncompliance with the state’s monopoly on violence4) and the shadow economy (non-compliance with the economic regulations). China is rather unique on both measures – one of the lowest indicators in the developing world comparable to developed countries.
    Keywords: Chinese economic model;uniqueness; institutional capacity
    JEL: P30 O10 P51 O57
    Date: 2010–05
  11. By: Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Zelai Xu (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Nong Zhu (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The main objective of this paper is to study the determinants of city population growth in China during the 1990s', as well as the determinants of migrations towards cities, which constitutes the main source of urban population growth in this period. A second objective is to identify regional differences in the urban growth and migrations, that is, whether urban growth and migration patterns are different between coastal and inland provinces. Additionally, we are interested in the differences between temporary and permanent migrations towards urban areas.
    Keywords: cerdi
    Date: 2011–01–18
  12. By: O'HIGGINS, Shane Niall (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy)
    Abstract: This paper discusses the nature and characteristics of the youth labour market in Europe and Central Asia. The central concern is with the policy response to the substantial youth unemployment problem emerging with the transition to the market in Central & Eastern Europe and Central Asia( CEECA). After looking at general trends in youth labour markets, in particular the impact of the recessions and the rapid industrial restructuring which accompanied transition, the paper outlines recent developments in youth employment policy at national and international levels and reviews findings on the contributions of policy to both improving youth employment prospects (education and ALMP) and, potentially, reducing them (minimum wages and employment protection legislation).
    Keywords: transition; youth employment; ALMP
    JEL: J13 J23 P27
    Date: 2011–01–18
  13. By: Tianding Zhang (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The relationship between the current account and the macroeconomic development remains an important issue in an open economy. Recently, global current account imbalances, and more specifically the large deficit in the United States and the surplus in China and other Asian economies, continue to draw considerable attention in both policy makers and academics. The macroeconomic effects induced by China's current account surplus, especially the big trade balance surpluses against the United States, and the related adjustment policy in the rebalance will affect the China's economic growth and development in the future. China's external current account surpluses are not unrelated to problems with its internal imbalances. This paper focuses on the saving channel. In particular, the objective of this paper is to study the relationship between precautionary savings and China's current account surplus.
    Keywords: Precautionary Savings;Current Account;Endogenous Discounting
    Date: 2011–01–18
  14. By: Li, Cheng
    Abstract: Both theoretical predictions of Keynesian view and a large body of empirical studies on developed countries suggest that business cycle fluctuations can be partially smoothed by counter-cyclical fiscal policies. Our paper extends this strand of literature by considering the nexus between output fluctuations and government size in the context of Chinese fiscal federalism. Using a sample of 29 Chinese provinces for the period of 1994-2007, we fail to provide consistent evidence for the stabilizing effect of fiscal policies. In particular, we find that under the tax assignment system (fen shui zhi), neither the central government’s fiscal transfers nor the provincial budgetary and extra-budgetary revenues help reduce economic volatility. Such results are shown to be robust across different model specifications, volatility measures and estimation techniques.
    Keywords: business cycles; government size; fiscal federalism; China
    JEL: E62 E32 H5
    Date: 2010
  15. By: Brixi, Hana; Mu, Yan; Targa, Beatrice; Hipgrave, David
    Abstract: Achieving the objective of China's current health system reform, namely equitable improvements in health outcomes, will be difficult not least because of the continuously growing income disparities in the country. The analysis in this paper shows that since 2000, disparity in selected health outcomes has been declining across provinces, largely due to earmarked central government allocations. By contrast, public expenditure on health is increasingly regressive (positively correlated with local income per capita) across provinces, and across prefectures and lower levels within provinces. The increasing inequity in public expenditure at sub-national levels indicates that incentives, responsibilities, and resources at sub-national levels are not well aligned with China's national priorities. To address the weaknesses in equity and efficiency that characterize China's health system and health outcomes, China's health system reform may require complementary reforms to improve governance for public service delivery across sectors.
    Keywords: Health Monitoring&Evaluation,Population Policies,Public Sector Economics,Health Systems Development&Reform,Health Economics&Finance
    Date: 2011–01–01
  16. By: William T. Allen; Han Shen
    Abstract: China’s securities markets are unlike those of Amsterdam, London or New York. Those markets evolved over centuries from myriad interactions among those seeking finance on the one hand and savers seeking rewarding investments on the other. Such spontaneous securities markets did emerge throughout China in the 1980s following the start of economic liberalization, but these spontaneous markets were closed by the government in favor of new and tightly controlled exchanges established in the early 1990s in Shanghai and Shenzhen. These new markets, have been designed to and largely limited to, serving state purposes, that is to assist in the financing of the state sector of the economy. Rather than evolving in a bottom-up pattern, they are controlled, top-down securities markets. This essay reviews as of June 2010, the development of these markets, the economic functions they perform, the regulatory structure that controls and shapes them, and the governance mechanisms - legal and otherwise - that controls the management of the PRC listed companies. These markets represent a signal accomplishment of the Chinese leadership in producing in less than twenty years’ modern, albeit not yet fully developed, securities markets. Whether they can be further developed to serve more basic economic role than they have been permitted to play is a question with which the essay concludes.
    JEL: K2 K22 O53 O57
    Date: 2011–01
  17. By: Sylviane Guillaumont Jeanneney (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Ping Hua (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This article investigates the impact that the appreciation and the stability of the real exchange rate in China between 1993 and 2001 have exerted on productivity growth. We give theoretical arguments explaining the impact of the real exchange rate on productivity via its effects either on efficiency growth or on technical progress. Then for the twenty-nine Chinese provinces we calculate the growth of the productivity and of its two components, using DEA Malmquist index. Finally we present a panel estimation of productivity growth and we show that the negative effects of the appreciation of the real exchange rate are greater than the positive ones.
    Keywords: China;DEA Malmquist index;productivity;real exchange rate
    Date: 2011–01–18
  18. By: Roger H. Gordon; Wei Li
    Abstract: What are the incentives faced by local officials in China? Without democratic institutions, there is no mechanism for local residents to exercise “voice”. Given the hukou registration system, local residents have little opportunity to threaten “exit” if they are unhappy with local taxes and spending. This paper explores an alternative source of incentives, starting from the premise that local officials aim to maximize the jurisdiction’s fiscal residual (profits), equal to local tax revenue minus expenditures on public services. In a Tiebout setting with mobile households, this objective should lead to efficient provision. What happens, though, if firms and economic activity but not people are mobile? The paper examines the incentives faced by local Chinese officials in this context, and argues that the forecasted behavior helps to explain both the successes and the problems arising from local government activity in China.
    JEL: H7 O17 O38 O53 P16 P2 P43
    Date: 2011–01
  19. By: Ping Hua (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: A bilateral export demand function is developed to study the effects on the Chinese bilateral exports of three real exchange rates, corresponding respectively to the price-competitiveness of Chinese products on the market of the considered import country (traditional effect), on China's other export markets (pricing-to-market effect), and to the price-competitiveness of Chinese competitors on the market of the considered import country (third-export-country effect). This function is then applied for Chinese real bilateral exports towards eleven industrialized countries over the period from 1991 to 2004. The econometric results confirm the effects of the three real exchange rates on the Chinese bilateral exports.
    Keywords: bilateral exports;China;real exchange rates
    Date: 2011–01–18
  20. By: Sylviane Guillaumont Jeanneney (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Ping Hua (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Although poverty has been significantly decreased in China over the last twenty years, this decrease has been highly unequal across the provinces and has brought increased disparity in urban and rural per capita income. We studied the impact of exchange rate policy on urban-rural per capita income, which was marked by strong real depreciation before 1994 followed by moderate appreciation before stabilizing. We concluded that in the inland provinces where poverty is hardest, real appreciation has attenuated disparity whereas real depreciation had accentuated disparity. This result argues for a revaluation of the renminbi.
    Keywords: income inequality;real exchange rate;China;Urban-rural inequality
    Date: 2011–01–17
  21. By: Dieckhoener, Caroline (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: Due to the increasing European import dependency, significant additional natural gas volumes will be required. In addition to the Nord Stream pipeline, the Nabucco and South Stream pipeline are projects planned for the next decade to provide further gas supplies to the European market. <p> As one of the European Union’s energy policies’ foci is security of supply, the question can be raised if and how these projects contribute to this objective not only in terms of diversification but also in case of supply disruptions such as occurred in 2009 during the Russia-Ukraine gas crisis. <p> This paper discusses the impact of these two major gas import pipeline projects on the South-Eastern Europe gas supply and analyzes their effects on gas flows and marginal cost prices in general and in case of gas supply disruptions via Ukraine in a model-based analysis with the European natural gas infrastructure and dispatch model TIGER.
    Keywords: Natural gas; security of supply; Nabucco; South Stream; Europe; linear-optimization; transport infrastructure
    JEL: C61 L95 Q34 Q41
    Date: 2010–12–27
  22. By: Giovanni Andrea Cornia
    Abstract: This paper presents a simple theoretical framework to explain variations in income inequality over time and between countries. It also analyses the factors responsible for the widespread rise in inequality during the neo-liberal reforms of 1980-2000 in the fields of trade, foreign direct investment (FDI) and capital flows, and the rise in migration. Finally, it compares the decline in inequality observed in most of Latin America over 2000-2008 with the steady increase of inequality in many European transition economies during this period despite their return to robust growth. The paper argues that such divergence is explained by differences in policies.
    Keywords: policy reforms, neo-liberalism, international economic integration, income inequality, Latin America, transition economies of Europe
    JEL: D31 E24 E62 F20 F41 I20 O54 P27
    Date: 2011–01
  23. By: Florent Bresson (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Kelly Labar (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper investigates the influence of invariance axioms in the decomposition of observed poverty variations into growth and inequality effects. After a complete and critical review of the invariance axioms suggested in the literature, we show that few information is needed for the ordering of the effects respectively obtained through scale, translation and intermediate invariance. Using Chinese data for the period 1990-2003, we find that some commonly observed results of the decomposition are contingent to the invariance axiom choices whilst other are robust to changes in ethical preferences.
    Keywords: Poverty;inequality effect;growth effect;Decomposition;scale invariance;translationinvariance;intermediate invariance;China
    Date: 2011–01–18
  24. By: Soultanaeva, Albina (Department of Economics, Umeå University)
    Abstract: This thesis consists of five self-contained papers, which are all related to the financial markets in the three Baltic States, Estonia, Latvia and Lithuania. Paper [I] studies the impact of news from the Moscow and New York stock exchanges on the returns and volatilities of the Baltic States' stock market indices using a time series model that accounts for asymmetries in the conditional mean and variance functions. We find that news from New York has stronger effects on returns in Tallinn. High-risk shocks in New York have a stronger impact on volatility in Tallinn, whereas volatility in Vilnius is more influenced by high-risk shocks from Moscow. Riga does not seem to be affected by news arriving from abroad. Paper [II] suggests a nonlinear and multivariate time series model framework that enables the study of simultaneity in returns and in volatilities, as well as asymmetric effects arising from shocks and exogenous variables. The model is employed to study the three Baltic States' stock exchanges. Using daily data, we find recursive structures, with returns in Riga, directly depending on returns in Tallinn and Vilnius, and Tallinn on Vilnius. For volatilities, both Riga and Vilnius depend on Tallinn. Paper [III] studies the link between political news, and the returns and volatilities in the Baltic States' stock markets. We find that domestic and foreign non-Russian political news led, on average, to lower uncertainty in the stock markets of Riga and Tallinn in 2001-2003. At the same time, political risk from Russia increased the volatility of the stock market in Tallinn. There is a weak relationship between political risk and the stock market volatility in the Baltic countries in 2004-2007. Paper [IV] studies the impact of market jumps on the time varying return correlations between stock market indices in the Baltic countries. An EARJI-EGARCH model facilitating direct modeling of the time varying return correlations is introduced. The empirical results indicate that there are quite a large number of identified jumps in the emerging Baltic States' stock markets. Isolated market jumps in one of the markets generally have no or small effects on the time-varying correlations. In contrast, simultaneous jumps of equal sign increase the average correlation, in some cases by as much as 100 percent. In Paper [V] the hypothesis that financial development promotes economic growth is tested for the three Baltic countries using a time series approach that allows for interactions between the countries. We find that economic growth is a positive function of financial development, proxied by the amount of bank credit to the private sector, in the long run. The results also show that there is long run interaction between the three Baltic countries.
    Keywords: Financial Markets; Time series; GARCH; Asymmetry; News
    JEL: C22 G14 G15 O16
    Date: 2011–01–21
  25. By: Rui Hao (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: China's rapid and uneven growth since 1978 has not eliminated but even re- inforced the persistent income inequality across provinces. While existing literature focuses mainly on the provincial variation in growth performance using cross-province growth regressions or growth accounting, few efforts has been made to directly study the differences in income levels across provinces. This paper explores the proximate causes of cross-province income differences in the framework of development accounting. Rather than assuming a priori values for output elasticities of capital and labor, we estimate them from an aggregate production function using panel data. The accounting results show that differences in total factor productivity (TFP) and in physical capital intensity are both important sources of cross-province income differences, each accounting for roughly half of the variation of income levels.Differences in human capital accumulation explain only a small amount of income differences across provinces. The results are robust to whether or not the assumption of constant returns to scale is imposed, and are valid in the long run. We do not exclude the possibility that interaction between factor accumulation and TFP plays an important role in determining cross-province income differences.
    Keywords: Income differences;Development accounting;China
    Date: 2011–01–18
  26. By: Kelly Labar (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: In this paper, I study the intergenerational mobility of education and income in China. Using the CHNS database which gives information on parental educational attainment and income level, I show that there is a relatively high intergenerational mobility in China, compared to other developed and developing countries. Even if parents' social characteristics influence the child's ones, the transmission of parents' educational and income level remains low. Nevertheless, I stress a growing impact of parents' income on the determination of children educational attainment, what can be an increasing factor of income inequality in the future. Moreover, I emphasize that parents' farming activity plays an important and significant negative role in the child's educational level.
    Keywords: cerdi
    Date: 2011–01–18
  27. By: Libman, Alexander
    Abstract: The absence or the presence of the resource curse is often explained by the specifics of political and institutional factors. The aim of this paper is to study this effect looking separately at economic and political institutions and at their interaction. Unlike most empirical papers in the literature, this paper considers the intra-national variation of institutional environment and access to political decision-making, using a dataset of the Russian regions. It shows that subnational variation of the quality of institutions indeed matters for the effects of resources. Economic institutions follow the traditional 'resource curse' results: resources have a negative impact on growth if the quality of institutions is low. On the other hand, increasing level of democracy has negative consequences for regions with substantial resources. Finally, this paper studies the differentiation between the resource-extracting regions and regions, exporting, but not extracting resources, in terms of the conditional resource curse. --
    Keywords: subnational variation,conditional resource curse,democracy,economic institutions,transition economies
    JEL: O13 P28 Q48
    Date: 2010
  28. By: Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal)
    Abstract: Regions differ from each other not only in their economic structure but concerning the impact they have on their neighbors. In the present study interregional spillover activities are analyzed for the regions of the Russian Federation. Instead of knowledge spillovers, more general growth spillovers are accounted for. The time period observed in this study is 1994 to 2008, therefore a large part of the Russian transition period. Using the local Moran's I statistic as a measure of regional spillover activity reveals that only limited spillover activity is present. Additionally, to account for the range of these spillovers, an approach introduced by Bottazzi and Peri (2003) is implemented. It is shown that the spillovers' reach is very limited if present at all.
    Keywords: Russian Federation, Spillovers, Spatial Economectrics, Clustering
    JEL: R11 R15
    Date: 2011–01
  29. By: CELI, Giuseppe (Dipartimento di Scienze Economiche - Università di Bari)
    Abstract: In this paper we are trying to evaluate the differential impact of Outward Processing Traffic (OPT) flows with respect to the final trade flows on the labour markets of EU countries. In particular, two EU countries are investigated, Germany and Italy, because of their relevance on total EU-CEEC OPT flows and because they embody two different models of outsourcing towards CEECs. The factor content of trade (FCT) analysis conducted at both levels of inter-industry trade and intra-industry trade signals a more relevant impact of OPT flows than final flows. In particular, results suggest that the labour market effects of intra-industry trade flows deriving from the vertical disintegration of production add significantly to the estimated factor market impact of trade.
    Keywords: intra-industry trade; EU-CEEC trade; vertical disintegration; quality differentiation; labour market effects of international trade
    JEL: F14 F15
    Date: 2011–01–18
  30. By: Guanghui Huang; Jianping Wan; Cheng Chen
    Abstract: In order to protect brokers from customer defaults in a volatile market, an active margin system is proposed for the transactions of margin lending in China. The probability of negative return under the condition that collaterals are liquidated in a falling market is used to measure the risk associated with margin loans, and a recursive algorithm is proposed to calculate this probability under a Markov chain model. The optimal maintenance margin ratio can be given under the constraint of the proposed risk measurement for a specified amount of initial margin. An example of such a margin system is constructed and applied to $26,800$ margin loans of 134 stocks traded on the Shanghai Stock Exchange. The empirical results indicate that the proposed method is an operational method for brokers to set margin system with a clearly specified target of risk control.
    Date: 2011–01
  31. By: Skribans, Valerijs
    Abstract: After entering the European Union (EU) Latvia faced new possibilities in international labor market. In 2004 several member states opened their labor markets to workers from Latvia. The largest amount of labor force went to Ireland, Great Britain and Sweden. In these countries salaries were substantially higher than in Latvia, which contributed to labor migration from Latvia. The migration process has a significant influence on the labor market in Latvia: on the one hand it reduced the amount of unemployed, but, on the other hand, it caused workforce deficit in certain professions, as well as substantially influenced the level of salaries in the whole economy. These processes will also influence the future development of Latvia; therefore the research of these issues is very topical for Latvia. It is also important internationally, because in other countries, especially in the new EU member states, similar processes take place, and it is possible to elaborate a common EU labor force migration model by consolidating migration data of particular member states. Common EU labor force migration model would also be suitable for developed EU member states, in order to estimate the incoming flow of labor force and its influence on the development of national economy. Aim of this paper is to investigate the influence of labor migration on the labor market in Latvia. In order to reach the aim, several tasks are set: to determine and to investigate the factors influencing labor market and labor migration; to consolidate influencing factors in a common system and to form labor market and labor migration system dynamic explanatory and forecasting model, based on it; to forecast the most important parameters of labor migration and labor market in Latvia. This paper shows system dynamic model of labor market and labor migration in Latvia. The hypothesis of the research is: labor migration is determined primarily by the payment level in the countries under consideration and the indicator derived from it – payment differences in the countries compared; as well as employment level, unemployment level, number of work places (market capacity) and number of vacant work places. Secondary factors influencing migration may be costs connected with labor migration, formal legal barriers to migration and personal propensity to migrate. Statistics on the labor market in Latvia are not complete; there is also no common view of experts on determinant processes. In such circumstances market forecasting with quantitative methods is problematic. One approach is to simulate indicators and to estimate their influence on national economy. The model has three parts: growth (expansion) of labor force, division and migration sub models. The sub model for growth of labor force is based on division of population in various categories during transition to a working age population. Division by level of education is further used in labor market analysis in which worker groups are formed according to the education level. The paper represents mutual interaction of groups of workers as well as labor migration. The results show sensitivity of the model factors to propensity of personnel for labor migration. The elaborated model and the results represented in this paper show that separate processes in national economy such as employment, unemployment and wages can be connected not with economic situation, but with the equalization processes in the EU. Under these circumstances it could be inefficient to fight with the increase of wages in Latvia, also to decrease wages, because in the long-term it can cause more severe problems in the development of national economy.
    Keywords: darba alga; nodarbinātība; bezdarbs; migrācija; modelēšana; sistēmdinamika
    JEL: C00 C90 J80 C53 F50 J31 J10 E27 J60 E24 C50 C20 J21 J00
    Date: 2010
  32. By: Zhu, Junjun; Xie, Shiyu
    Abstract: We construct one triple-threshold GARCH model to analyze the asymmetric response of mean and conditional volatility. In parameter estimation, we apply Griddy-Gibbs sampling method, which require less work in selection of starting values and pre-run. As we apply this model in Chinese stock market, we find that 12-days-average return plays an important role in defining different regimes. While the down regime is characterized by negative 12-days-average return, the up regime has positive 12-days-average return. The conditional mean responds differently between down and up regime. In down regime, the return at date t is affected negatively by lag 2 negative return, while in up regime the return responds significantly to both positive and negative lag 1 past return. Moreover, our model shows that volatility reacts asymmetrically to positive and negative innovations, and this asymmetric reaction varies between down and up regimes. In down regime, volatility becomes more volatile when negative innovation impacts the market than when positive one does, while in up regime positive innovation leads to more volatile market than negative one.
    Keywords: Threshold; Griddy-Gibbs sampling; MCMC method; GARCH
    JEL: G15 C22 C11
    Date: 2010–06–18
  33. By: Dabalen, Andrew; Paul, Saumik
    Abstract: Using Life in Transition Survey data for 27 transition countries, the findings of this paper suggest that higher life satisfaction is correlated with lesser experience of unpleasant events such as labor market shock or economic distress, mostly in the recent past. Social capital such as trust, participation in civic groups, and financial stability lead to higher satisfaction, whereas lower relative position to a reference group leaves one with lower life satisfaction. The paper also finds substantial regional variation in life satisfaction between European, Balkan, and lower and middle-income Commonwealth of Independent States. Finally, after controlling for various events that took place during the interview and the nature of refusal of the respondents across countries, the authors show that reported life satisfaction is lower if the emotional state is negative during the interview.
    Keywords: Health Monitoring&Evaluation,Disease Control&Prevention,Inequality,Labor Policies,Markets and Market Access
    Date: 2011–01–01
  34. By: Rainer Bauböck
    Abstract: On 26 May Hungary and Slovakia both amended their citizenship laws. Hungary removed a residence requirement for naturalisation, opening thereby the door to naturalisation of ethnic Hungarian minorities in neighbouring states, while Slovakia decided that any Slovak citizen voluntarily acquiring the citizenship of a foreign country would be deprived of her or his Slovak citizenship. Rainer Bauböck argues in his kickoff contribution that even if both laws do not violate EU law or the Council of Europe’s Convention on Nationality, they ought to be seen as highly problematic and indefensible from a democratic conception of citizenship. There is a remarkable consensus among the contributors that the Slovak policy is indeed not acceptable. The controversy focuses therefore on assessing the legitimacy of the Hungarian offer of dual citizenship for its kin minorities. Peter Spiro, Andrei Stavila and Florian Bieber express various degrees of discomfort with the motivations behind the Hungarian policy, but emphasise its democratic legitimacy or potentially beneficial effects for the members of the minority, whereas Mária Kovács, Gábor Egry and André Liebich highlight the nationalist goals behind the Hungarian policy or its devaluation of a democratic conception of membership. For Joachim Blatter, a republican conception of citizenship should promote political participation across borders, while Kovács sees dual citizenship as a first step towards enfranchising an external electorate in order to entrench a nationalist majority in Hungary. Erin Jenne and Stephen Deets regard Victor Orbán’s move primarily as a dog and pony show for domestic voters and Eniko Horváth argues that, although a policy of extending dual citizenship to transborder minorities may cause international tensions, the present law is less tainted by suspect ethnic discrimination than the 2001 Hungarian Status Law. Rainer Bauböck’s concluding rejoinder argues that migrants and transborder minorities differ in their democratic claims to citizenship in an external home country.
    Date: 2010–10–15

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