nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒09‒05
twenty-two papers chosen by
J. David Brown
Heriot-Watt University

  1. Firm Characteristics and Informal Governance of Business Operations in the PRD, China By Frank Bickenbach; Wan-Hsin LIU
  2. Explaining Spatial Convergence of China’s Industrial Productivity By Paul Deng; Gary Jefferson
  3. Do Institutions Matter for FDI Spillovers? The Implications of China’s “Special Characteristics” By Luosha Du; Ann Harrison; Gary Jefferson
  4. From Prosperity to Depression: Bulgaria and Romania (1996/97 – 2010) By Nikolay NENOVSKY; Kiril TOCHKOV; Camelia TURCU
  5. Financial Efficiency and the Ownership of Czech Firms By Evzen Kocenda; Jan Hanousek; Michal Masika
  6. Fiscal Decentralization and Peasants' Financial Burden in China By Jing Jin; Chunli Shen; Heng-fu Zou
  7. Learning By Exporting: Evidence Based on Data of Knowledge Flows from Innovation Surveys in Estonia By Priit Vahter
  8. Real Exchange Rate, Foreign Trade and Employment: Evidence from China By Zeng, Xiangquan; Yuxue, Cui; Shisong, Qing; Yumei, Yang
  9. Fresh evidence on herding behaviour from the Chinese stock market By Paresh Kumar Narayan; Xinwei Zheng
  10. Economic Growth and Child Poverty Reduction in Bangladesh and China By Begum, Syeda Shahanara; Deng, Quheng; Gustafsson, Björn
  11. Default Predictors in Retail Credit Scoring: Evidence from Czech Banking Data By Evzen Kocenda; Martin Vojtek
  12. The Extensive Margin of International Trade: The Case of Mongolia By Chingunjav Amarsanaa; Yoshinori Kurokawa
  13. Protecting vulnerable families in Central Asia: Poverty, vulnerability and the impact of the economic crisis By Gassmann, Franziska
  14. Do Kazakh Regions Converge? By Miriam Frey; Carmen Wieslhuber
  15. Employed or inactive? Cross-national differences in coding parental leave beneficiaries in Labour Force Survey data By MIKUCKA Malgorzata; VALENTOVA Marie
  16. Volatility Transmission in Emerging European Foreign Exchange Markets By Evzen Kocenda; Vit Bubak; Filip Zikes
  17. Who Borrows and Who May Not Repay? By Alena Bicakova; Zuzana Prelcova; Renata Pasalicova
  18. Some hypothesis on commonality in liquidity: New evidence from the Chinese stock market By Paresh Kumar Narayan; Xinwei Zheng; Zhichao Zhang
  19. Major lessons for the CAP reform from the New Member States' perspective By Möllers, Judith; Csaki, Csaba; Buchenrieder, Gertrud
  20. Premarital conceptions and their resolution. The decomposition of trends in rural and urban areas in Poland 1985-2009. By Anna Baranowska
  21. Risk and the Technology Content of FDI:A Dynamic Model By Pao-Li Chang; Chia-Hui Lu
  22. Downward wage rigidity in Hungary By Gábor Kátay

  1. By: Frank Bickenbach; Wan-Hsin LIU
    Abstract: This paper describes the Chinese economic and institutional reform process as a gradual transition of an informal, relation-based governance system into a more formal and rule-based governance system. The consequences of macro-level institutional reforms on the importance of personal relationships for the firm-level governance of business operations are discussed. Theoretical considerations based on the New Institutional Economics suggest that, in a transition economy such as China, companies’ incentives to reduce the reliance on personal relationships should depend on firm characteristics such as the age, size and the internationalization of the firm. We confront these suppositions with empirical data obtained from a company survey performed among 222 (electronics industry) companies operating in the PRD, China. From this we obtain some, though often weak, evidence in favor of the suppositions
    Keywords: formal and informal institutions, relation-based governance, firm characteristics, China, company survey
    JEL: L20 L63 P0
    Date: 2011–08
  2. By: Paul Deng (Department of Economics, Copenhagen Business School); Gary Jefferson (Department of Economics, Brandeis University)
    Abstract: This paper investigates the conditions that may auger a reversal of China’s increasingly unequal levels of regional industrial productivity during China’s first two decades of economic reform. Using international and Chinese firm and industry data over the period 1995-2004, we estimate a productivity growth-technology gap reaction function. We find that as China’s coastal industry has closed the technology gap with the international frontier relative to interior regions, labor productivity growth in the coastal region has begun to slow in relation to the interior. This may serve as an early indicator of China’s initial movement toward reversing the widespread income inequality.
    Keywords: Inequality, Economic Growth, Productivity Convergence, Regional Disparity, Sustainability, China, International Comparison of Productivity (ICOP)
    JEL: O4 O18 O30 R11
    Date: 2011–08
  3. By: Luosha Du (University of California, Berkeley); Ann Harrison (World Bank); Gary Jefferson (Department of Economics, Brandeis University)
    Abstract: We investigate how institutions affect productivity spillovers from foreign direct investment (FDI) to China’s domestic industrial enterprises during 1998-2007. We examine three institutional features that comprise aspects of China’s “special characteristics”: (1) the different sources of FDI, where FDI is nearly evenly divided between mostly Organization for Economic Co-operation and Development (OECD) countries and the region known as “Greater China”, consisting of Hong Kong, Taiwan, and Macau; (2) China’s heterogeneous ownership structure, involving state- (SOEs) and non-state owned (non-SOEs) enterprises, firms with foreign equity participation, and non-SOE, domestic firms; and (3) industrial promotion via tariffs or through tax holidays to foreign direct investment. We also explore how productivity spillovers from FDI changed with China’s entry into the WTO in late 2001. We find robust positive and significant spillovers to domestic firms via backward linkages (the contacts between foreign buyers and local suppliers). Our results suggest varied success with industrial promotion policies. Final goods tariffs as well as input tariffs are negatively associated with firm-level productivity. However, we find that productivity spillovers were higher from foreign firms that paid less than the statutory corporate tax rate.
    Date: 2011–04
  4. By: Nikolay NENOVSKY; Kiril TOCHKOV; Camelia TURCU
    Abstract: Bulgaria and Romania are neighbouring countries, which have always been rivals. Following the decision on EU enlargement to include Bulgaria and Romania (late 1999) and with membership negotiations already started (2004), the race between the two countries gained momentum and comparisons of performances in the areas of economy and democracy became a regular practice. Around late 1990s the two countries took different trajectories, although in the direction of EU and market economy. The great divergence is lying primarily in the choice of monetary regime. While Romania continued to pursue and enhance its discretionary monetary policy and since 2005 has moved to inflation targeting, Bulgaria made an abrupt turn in mid-1997 and introduced a currency board arrangement.
    Keywords: post communist transformation, monetary regimes, global crisis, Bulgaria and Romania
    JEL: F33 F36 P20 P30
    Date: 2011–05–01
  5. By: Evzen Kocenda; Jan Hanousek; Michal Masika
    Abstract: In this paper we analyze the evolution of firm financial efficiency in the Czech Republic. Using a large panel of more than 400,000 Czech firm/years we study whether firms fully utilize their resources, how firm financial efficiency evolves over time, and how firm financial efficiency is determined by ownership structure. We employ a panel version of a stochastic production frontier model for the period 1996–2007 with time-invariant efficiency. We differentiate among various degrees of ownership concentration and their domestic or foreign origin. In a two-stage set-up we estimate the degree of firm inefficiency and then we estimate the effect of ownership structure on the distance from the efficiency frontier. Our results support the hypothesis that concentration and foreign ownership are positively related to financial efficiency.
    Keywords: financial efficiency; ownership structure; firms; panel data; stochastic frontier
    JEL: C33 D24 G32 L60 L80 M21
    Date: 2011–05–01
  6. By: Jing Jin (Central University of Finance and Economics); Chunli Shen (University of Maryland); Heng-fu Zou (Development Research Group, the World Bank)
    Abstract: This paper sheds light on the heavy financial burden on peasants in China's fiscal decentralization system. Using a political economy framework, this paper explores the tax-farming nature of China's fiscally decentralized system and examines why the system incurs a particularly heavy financial burden on peasants. Specifically, it points out that a political hierarchy financed by a tax-farming system in China, fails to contain the exploitative behavior of local officials, which results in the expenditure devolution and revenue centralization within the hierarchy. Ultimately, peasants bear the brunt of the tax burden. As the financial pressure of excessive levies and fees reaches a perilous point, peasants are resorting to violent protests. Unless a fiscally decentralized system with horizontal accountability mechanisms evolves, the country¡¯s ability to sustain a centralized polity may become increasingly undermined. A case study of township finance is used to exemplify the exploitative nature of China¡¯s fiscal decentralization system.
    Date: 2011
  7. By: Priit Vahter
    Abstract: This paper studies learning-by-exporting, based on survey data of knowledge flow indicators. Most of the earlier related papers investigate the effects of exporting on productivity of firms, and often find little evidence of learning effects. This study looks more in detail into the mechanism of these effects. It investigates whether exporting is associated with increase in intensity of knowledge flows to the firm from the firm’s clients, relative to other knowledge sources. I use measures of learning about the new technologies from two pooled innovation surveys and firm level exporting data of manufacturing firms in Estonia. Unlike the majority of earlier studies that use productivity data, I find evidence consistent with learning-by-exporting. Exporting in the past is associated with more learning from the firm’s clients in next periods.
    Keywords: exporting, learning, knowledge transfer, Central and Eastern Europe
    JEL: F12 L1
    Date: 2011–02–01
  8. By: Zeng, Xiangquan (Renmin University of China); Yuxue, Cui (China Institute of Industrial Relations); Shisong, Qing (China Institute for Employment Research); Yumei, Yang (Renmin University of China)
    Abstract: Coordination of macro-economic development and employment is an essential issue for China's social development, which largely depends on economic expansion, as well as integration into the global market to create jobs. Through the literature review and empirical test, this paper analyses the relationship between macro-economic policy and employment, and discusses the impact of real exchange rate and foreign trade on employment. The research indicates that a stable and competitive exchange rate policy plays an indispensable role in employment promotion, more effective than monetary and fiscal policies, while the export growth also plays a positive role in employment promotion.
    Keywords: China, employment, foreign trade, real exchange rate
    JEL: E24 O23 O24
    Date: 2011–08
  9. By: Paresh Kumar Narayan; Xinwei Zheng
    Abstract: In this paper, we examine four specific hypotheses relating to herding behavior on the Chinese stock market. These hypotheses are that: (a) herding behavior exists on the Chinese stock market; (b) herding behavior exists in the pre-September 2008 financial crisis and the crisis period (post- September 2008 period) on the Chinese stock market; (c) herding behavior exists under different market conditions (rises and declines) in China; and (d) sector-specific (commerce, conglomerate, industrial, property and public utility sectors) herding behavior exists in the pre-September 2008 financial crisis and the crisis period (post- September 2008 period) and under different market conditions (rises and declines) in China. Based on 15 years of daily data for all firms dual-listed A and B shares on the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE), we find that herding behavior exists on Chinese stock market except in the case of the Shanghai B share market. Second, in the pre-crisis period, herding behavior is existed on SHSEA, SZSEA and SZSEB. In the crisis period, herding behavior is only existed on SHSEB. Third, herding behavior is existed on SHSEA, SZSEA and SZSEB regardless of whether the market is up or down. Herding behavior on down market is higher than up market. Fourth, we find that regardless of whether the market is on the rise or on the decline, herding behavior is the highest for the industrial sector. Lastly, we find a positive and significant relationship for full sample, pre financial crisis and the crisis period and all the sectors.
    Keywords: Herding behaviour, chinese stock market
    Date: 2011–08–29
  10. By: Begum, Syeda Shahanara (Göteborg University); Deng, Quheng (Chinese Academy of Social Sciences); Gustafsson, Björn (Göteborg University)
    Abstract: This paper analyzes child poverty in Bangladesh and China during periods of rapid economic growth in both countries. It compares the extent as well as profile of child poverty in both countries. Comparisons on the extent of child poverty, over time and across countries, are made using a decomposition framework attributing child poverty differences to differences in the three components mean child income, demographic circumstances and the distribution of child income. Child poverty is found to be more extensive in Bangladesh than in China, and is very much a problem for rural children in both countries. The results show that economic growth can reduce child poverty but does not do so always. For understanding changes over time and across countries in the extent of child poverty, it can be necessary to also consider changes/differences in the distribution of child income as well as in the demographic composition.
    Keywords: child poverty, economic growth, Bangladesh, China
    JEL: I32 J13 J15
    Date: 2011–08
  11. By: Evzen Kocenda; Martin Vojtek
    Abstract: Credit to the private sector has risen rapidly in European emerging markets but its risk evaluation has been largely neglected. Using retail-loan banking data from the Czech Republic we construct two credit risk models based on logistic regression and Classification and Regression Trees. Both methods are comparably efficient and detect similar financial and socio-economic variables as the key determinants of default behavior. We also construct a model without the most important financial variable (amount of resources) that performs very well. This way we confirm significance of socio-demographic variables and link our results with specific issues characteristic to new EU members.
    Keywords: credit scoring, discrimination analysis, banking sector, pattern recognition, retail loans, CART, European Union
    JEL: B41 C14 D81 G21 P43
    Date: 2011–04–01
  12. By: Chingunjav Amarsanaa; Yoshinori Kurokawa
    Abstract: Using the Kehoe and Ruhl (2009) methodology, we investigate whether the variety of traded goods, the extensive margin of trade, has actually changed in a transition economy, such as Mongolia, as predicted by recent theoretical models. We find large increases in the extensive margin of Mongolia's  trade  with major trade partners such as Japan from 1997 to 2002, when Mongolia was undergoing significant structural reforms. We also find large increases in the extensive margin for the Mongolia-China and Mongolia-EU pairs after trade liberalizations  due  to  China's  accession  to  the  World Trade Organization (WTO) (2001) and Mongolia's   eligibility for the EU Generalized Systems of Preferences (GSP+) scheme (2005). We, however, find no increases in the extensive margin for the Mongolia-Russia pair during the period 2002 to 2007, when there was no major change in the trade regime of these two countries. The results support Kehoe  and  Ruhl's  hypothesis that the extensive margin growth is driven by trade liberalization or structural change but not by the usual turbulence of business cycles. For each episode, we also check if the extensive margin growth in Mongolia, which is measured by the Kehoe and Ruhl methodology, is actually a consequence of the increases in the trade volumes of previously zero or little traded goods and what areas of goods contributed to this extensive margin growth.
    Date: 2011–08
  13. By: Gassmann, Franziska (Maastricht Graduate School of Governance, Maastricht University)
    Abstract: Since the end of 2007, countries in Central Asia have been struck by two major consecutive shocks: the food and fuel price increase in 2007-08, and the global economic and financial crisis that began at the end of 2008. Households, both poor and not poor, are directly and adversely affected by the crisis. The multi-dimensionality of the crises and the volatile economic environment challenge the ability of vulnerable households to cope and to maintain their living standards. Social protection programmes play an important role in the response to a crisis. This paper provides an overview of the social and economic vulnerabilities of households with children in the five Central Asian countries, and assesses the ability of national social protection systems to address these, with the main focus on the role of non-contributory cash transfers financed from general government revenues. The paper concludes that the existing social cash transfer systems are not effective in addressing the needs of poor and vulnerable children and families in Central Asia. Limited coverage together with limited funding reduces the potential poverty reduction impact of the programmes. The paper discusses potential strategies for improving existing systems by consolidating and protecting government spending, streamlining existing benefits and transfers, improving the identification of beneficiaries and strengthening administration, monitoring and evaluation systems.
    Keywords: social protection, social assistance, economic crisis, poverty reduction, Central Asia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, Uzbekistan
    JEL: I31 I32 I38 O15
    Date: 2011
  14. By: Miriam Frey (Osteuropa-Institut, Regensburg (Institut for East European Studies)); Carmen Wieslhuber
    Abstract: Even though Kazakhstan is one of the most successful transition countries in Central Asia it has been neglected in the literature on regional convergence. This paper fills this gap with an empirical analysis of the growth process on the regional level using annual gross regional product (GRP) data for the period 1998–2008 for the 16 Kazakh regions. In particular, we look at the sigma- and absolute beta-convergence. Given the growing variation in GRP over time, sigma-convergence cannot be found for Kazakhstan. The data show that there is also no evidence for absolute sigma-convergence. In contrast, the Kazakh regions even seem to diverge.
    Date: 2011–08
  15. By: MIKUCKA Malgorzata; VALENTOVA Marie
    Abstract: In survey research the parental leave beneficiaries are usually coded as either employed or inactive. One of the exceptions is the European Labor Force Survey (EU-LFS), which (from 2006) includes parental leave among other forms of being employed but temporarily not working. This paper explores classification of parental leave takers in EU-LFS, focusing on cross-country discrepancies and their consequences. Our results show that classification rules differ cross-nationally: in some countries parental leave takers are considered inactive, in others – employed but temporarily not working. In particular in the Czech Republic, Estonia, Hungary and Slovakia the EU-LFS data do not reflect the actual use of parental leaves because beneficiaries are coded as inactive. We estimate the actual number of mothers on parental leave in these countries and show that EU-LFS employment rates of women aged 18-40 are biased downwards 2-7 percentage points; for mothers of children aged 0-2 the bias reaches 12-45 percentage points . Our study shows the limited comparability of EU-LFS employment rates, warns about possible bias in cross-national studies and shows the importance of transparent and consistent survey measurement of employment status.
    Keywords: parental leave; labor market status; employment status; cross-country comparability; Labour Force Survey; Czech Republic; Estonia; Hungary; Slovakia
    JEL: J21 J28 J48
    Date: 2011–08
  16. By: Evzen Kocenda; Vit Bubak; Filip Zikes
    Abstract: This paper studies the dynamics of volatility transmission between Central European (CE) currencies and the EUR/USD foreign exchange using model-free estimates of daily exchange rate volatility based on intraday data. We formulate a flexible yet parsimonious parametric model in which the daily realized volatility of a given exchange rate depends both on its own lags as well as on the lagged realized volatilities of the other exchange rates. We find evidence of statistically significant intra-regional volatility spillovers among the CE foreign exchange markets. With the exception of the Czech and, prior to the recent turbulent economic events, Polish currencies, we find no significant spillovers running from the EUR/USD to the CE foreign exchange markets. To measure the overall magnitude and evolution of volatility transmission over time, we construct a dynamic version of the Diebold-Yilmaz volatility spillover index and show that volatility spillovers tend to increase in periods characterized by market uncertainty.
    Keywords: Foreign exchange markets; Volatility; Spillovers; Intraday data; Nonlinear dynamics; European emerging markets
    JEL: C5 F31 G15
    Date: 2011–07–01
  17. By: Alena Bicakova; Zuzana Prelcova; Renata Pasalicova
    Abstract: We use Household Budget Survey data to analyze the evolution of the household credit market in the Czech Republic over the period 2000–2008. We next merge our data with the Statistics on Income and Living Conditions in 2005–2008, in order to test the validity of the standard debt burden measure as a predictor of default. We propose an alternative indicator – the adjusted debt burden (ADB), defined as the ratio of loan repayments to discretionary income, constructed as net income minus the living minimum, which turns out to be a superior predictor of default risk. Limited by the data, we use a fairly broad concept of default, namely, the inability to make loan repayments on time. Based on the distribution of default risk across the levels of the adjusted debt burden, we suggest that a 30% ADB threshold should be used as the definition of overindebtedness, with an average default risk of 17%. Finally, we show that overindebtedness and local economic shocks are closely related, suggesting that default risk should be always considered in the context of regional economic conditions.
    Keywords: household credit; debt burden; repayment; regional default risk
    JEL: D12 D14 G21 R29
    Date: 2011–07
  18. By: Paresh Kumar Narayan; Xinwei Zheng; Zhichao Zhang
    Abstract: In this paper, we examine four specific hypotheses relating to commonality in liquidity on the Chinese stock markets. These hypotheses are: (a) that market-wide liquidity determines liquidity of individual stocks; (b) that liquidity varies with firm size; (c) that sectoral-based liquidity affects individual stock liquidities differently; and (d) that commonality in liquidity has an asymmetric effect. Based on a two-year dataset on the Shanghai and Shenzhen stock exchanges comprising of over 34 and 48 million transactions respectively, we find strong support for commonality in liquidity and a greater influence of industry-wide liquidity in explaining liquidity of individual stocks. Moreover, our results suggest that of the three main sectors – financial, industrial, and resources – industrial sector‟s liquidity is most important in explaining individual stock liquidities. Finally, we do not find any evidence of size effects, and document an asymmetric effect of market-wide liquidity on liquidity of individual stocks.
    Keywords: Commonality in Liquidity; Asymmetric Information; Size Effects; Chinese
    JEL: G10 G15
    Date: 2011–08–29
  19. By: Möllers, Judith; Csaki, Csaba; Buchenrieder, Gertrud
    Abstract: The current discussion regarding the reform of the Common Agricultural Policy (CAP) is challenging due to the varying needs and interests of the old and new member states (NMS) of the European Union (EU). The NMS still display tremendous disparities in most structural and socio-economic indicators compared to the EU15 average, implying that further sectoral restructuring is needed. The Structural Change in Agriculture and Rural Livelihoods (SCARLED) project, which ran from 2007 until 2010, offers rich empirical insights with a specific focus on these processes in the NMS. This policy brief summarises the projectʼs main policyrelevant results. SCARLED offers three key lessons for CAP reform. First, it claims that the current, uniform CAP only partially addresses the needs of NMS. Second, the regionʼs agriculture still requires support to enhance competitiveness, albeit for a limited time. Third, the issue of small, subsistence-based farms in the region needs to be recognised. However, approaches aiming at poverty alleviation in such subsistence-based households, but also in landless rural households, need to look beyond the agricultural sector. The wider rural economy and improving education, as well as rural-urban linkages, need to be included in any povertyrelated policy approach, be it at the national or the EU level. --
    Date: 2011
  20. By: Anna Baranowska (Institute of Statistics and Demography, Warsaw School of Economics.)
    Abstract: The share of out-of-wedlock births used to be small in Poland till the beginning of the nineties, but within the last two decades it has increased fourfold. So far, there have been no attempts to identify the mechanisms beyond this change. This paper presents the first systematic evidence on changes in proportion of out-of-wedlock births in rural and urban areas of Poland in 1985-2009. The increase of proportion of out-of-wedlock births may be driven by two different processes. First, it may be a consequence of changing balance between marital and premarital conceptions. Second, the share of out-of-wedlock births may rise due to a drop in incidence of shotgun weddings. The aim of this paper is to compare the contribution of these two processes based data from Birth Register. The decomposition of trends in non-marital childbearing is carried out for rural and urban areas separately because the local community context can be expected to affect both fertility and nuptiality behaviour. The results suggest that in the periods when the proportion out-of-wedlock births in Poland was increasing most rapidly, this increase was related mainly to a decline in the share of women marring in the event of premarital conception. Specifically, between 2000-2003, in towns the declining propensity for legitimation was responsible for 87% of the rise in nonmarital childbearing, whereas in rural areas only 77% of change in proportion of out-ofwedlock births could be ascribed to this factor. Since the probability that a premarital conception led to a shotgun marriages remained higher in villages than in the towns, out-ofwedlock births were spreading at higher pace in urban than in rural areas.
    Keywords: nonmarital childbearing, out-of-wedlock births, shotgun weddings, rural population
    JEL: J11 J13
    Date: 2011
  21. By: Pao-Li Chang (School of Economics, Singapore Management University); Chia-Hui Lu (Department of Economics and Finance, City University of Hong Kong)
    Abstract: This paper incorporates risk into the FDI decisions of rms. The risk of FDI failure increases with the gap between the South's technology frontier and the technology complexity of a firm's product. This leads to a double-crossing sorting pattern of FDI firms of intermediate technology levels are more likely than others to undertake FDI. It is with the attempt to relax the upper bound of the technology content of FDI, we argue, that many FDI policies are created. The theory's predictions are consistent with the empirical pattern of FDI in China by US and Taiwanese manufacturing rms.
    Keywords: Foreign Direct Investment,Technology,Risk,spillover,Dynamic
    JEL: F21 F23 O24 O33
    Date: 2011–08
  22. By: Gábor Kátay (Magyar Nemzeti Bank, Department of Economics, 1850 Budapest, Szabadság tér 8-9, Hungary.)
    Abstract: Following the approach recently developed for the International Wage Flexibility Project (IWFP), the paper presents new estimates of downward real and nominal wage rigidity for Hungary. Results suggest that nominal rigidity is more prominent in Hungary than real rigidity. When compared to other countries participating in the IWFP, Hungary ranks among the countries with the lowest degree of downward real rigidity. The estimated downward nominal rigidity for Hungary is higher, the measure is close to but still below the overall cross-country average. Using the same methodology, the paper also con…firms the widespread view that the wage growth bargained at the national level has little compulsory power in Hungary. On the other hand, the minimum wage remains an important source of potential downward wage rigidity in Hungary. JEL Classification: C23, E24, J3, J5.
    Keywords: Downward nominal and real wage rigidity, wage change distributions, wage flexibility.
    Date: 2011–08

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