nep-tra New Economics Papers
on Transition Economics
Issue of 2012‒01‒03
forty papers chosen by
J. David Brown
Heriot-Watt University

  1. Capitalizing China By Joseph Fan; Randall Morck; Bernard Yeung
  2. The Influence of Bank Ownership on Credit Supply: Evidence from the Recent Financial Crisis By Fungacova, Zuzana; Herrala, Risto; Weill, Laurent
  3. Causes of Corruption in Russia: A Disaggregated Analysis By Belousova, Veronika; Goel, Rajeev K.; Korhonen, Iikka
  4. China in the World Economy: Dynamic Correlation Analysis of Business Cycles By Jarko, Fidrmuc; Iikka, Korhonen; Ivana, Bátorová
  5. Rural Labor Absorption Efficiency in Urban Areas under Different Urbanization Patterns and Industrial Structures: The Case of China By Liwen, Chen; Zeng, Xiangquan; Yumei, Yang
  6. Competition of the mechanisms : how Chinese home appliance firms coped with default risk of trade credit? By Watanabe, Mariko
  7. Poverty Dynamics of Households in Rural China: Identifying Multiple Pathways for Poverty Transition By Katsushi S. Imai; Jing You
  8. Assessing the cost competitiveness of China’s Shipbuilding Industry By Liping Jiang; Siri Pettersen Strandenes
  9. Channels of Interprovincial Consumption Risk Sharing in the People’s Republic of China By Du, Julan; He, Qing; Rui, Oliver M.
  10. Good Governance and Bad Neighbors? The Limits of the Transformative Power of Europe By Tanja A. Börzel; Vera van Hüllen
  11. Informal workers across Europe : evidence from 30 European countries By Hazans, Mihails
  12. China’s evolving reserve requirements By Ma, Guonan; Xiandong, Yan; Xi, Liu
  13. Tracking Chinese CPI inflation in real time By Mehrotra, Aaron; Funke, Michael; Yu, Hao
  14. Kooperation oder Konfrontation? Der Aufstieg Chinas in der globalen politischen Ökonomie By ten Brink, Tobias
  15. Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters By Yue Ma; Heiwai Tang; Yifan Zhang
  16. Moving up the Quality ladder? EU-China Trade Dynamics in Clothing By Di Comite, Francesco; Rovegno, Laura; Vandenbussche, Hylke; Viegelahn, Christian
  17. What explains prevalence of informal employment in European countries : the role of labor institutions, governance, immigrants, and growth By Hazans, Mihails
  18. The Supply and Demand Factors Behind the Relative Earnings Increases in Urban China at the Turn of the 21st Century By Gao, Hang; Marchand, Joseph; Song, Tao
  19. Tax morale, eastern Europe and European enlargement By Torgler, Benno
  20. The effect of taxation on informal employment: evidence from the Russian flat tax reform By Slonimczyk, Fabian
  21. Impacts of Policy Measures on the Development of State-Owned Forests in Northeastern China: Theoretical Results and Empirical Evidence By Jiang, Xuemei; Gong, Peichen; Bostedt, Goran; Xu, Jintao
  22. Russia: Progress in Structural Reform and Framework Conditions By Yana Vaziakova; Geoff Barnard; Tatiana Lysenko
  23. Dances with Chinese data: are the reform period Chinese provincial panel data reliable? By He, Qichun
  24. Does corruption facilitate trade for the new EU members? By Horsewood, Nicholas; Voicu, Anca Monika
  25. Poland on the road to the euro: How serious is the risk of boom-bust cycles after the euro adoption? An empirical analysis By Agnieszka Stążka-Gawrysiak
  26. Growth in Hungary 1994-2008: The role of capital, labour, productivity and reallocation By Péter Harasztosi
  27. Undeclared economic activity in central and eastern Europe -- how taxes contribute and how countries respond to the problem By Leibfritz, Willi
  28. Central Banks’ Voting Records and Future Policy By Roman Horváth; Kateøina Šmídková; Jan Zápal
  29. Climate Change, Employment and Local Development in Poland By Gabriela Miranda; Randall Eberts; Elvira González; Vanessa Foo; Przemyslaw Kulawczuk
  30. An attempt to measure the trends in shadow employment in Poland By Walewski, Mateusz
  31. Public spending efficiency in the Czech Republic: Fiscal policy framework and the main spending areas of pensions and healthcare By Zuzana Smidova
  32. What drives cash demand? Transactional and residual cash demand in selected countries By Sisak Balázs
  33. Are households’ poverty levels in Mekong Delta of Vietnam affected by access to credit? By Vuong Quoc, Duy
  34. Migration as a Substitute for Informal Activities: Evidence from Tajikistan By Ilhom Abdulloev; Ira N. Gang; John Landon-Lane
  35. When Pareto meets Melitz: the inapplicability of the Melitz-Pareto model for Chinese firms By Sun, Churen; Tian, Guoqiang; Zhang, Tao
  36. One Mandarin Benefits the Whole Clan: Hometown Infrastructure and Nepotism in an Autocracy By Kieu-Trang Nguyen; Quoc-Anh Do; Anh Tran
  37. Labor institutions and their impact on shadow economies in Europe By Fialova, Kamila; Schneider, Ondrej
  38. Has Integration Promoted Business Cycle Synchronization in the Enlarged EU? By Nikolaos Antonakakis; Gabriele Tondl
  39. Enhancing the Early Childhood Development System in Yakutia (Russia): Meeting the Challenges By Jure Kotnik; Tigran Shmis
  40. Group lending or individual lending? Evidence from a randomised field experiment in Mongolia By Orazio Attanasio; Britta Augsburg; Ralph de Haas; Emla Fitzsimons; Heike Harmgart

  1. By: Joseph Fan; Randall Morck; Bernard Yeung
    Abstract: Despite a vast accumulation of private capital, China is not embracing capitalism. Deceptively familiar capitalist features disguise the profoundly unfamiliar foundations of “market socialism with Chinese characteristics.” The Chinese Communist Party (CCP), by controlling the career advancement of all senior personnel in all regulatory agencies, all state-owned enterprises (SOEs), and virtually all major financial institutions state-owned enterprises (SOEs), and senior Party positions in all but the smallest non-SOE enterprises, retains sole possession of Lenin’s Commanding Heights. This manuscript introduces the chapters comprising the NBER volume Capitalizing China (Fan and Morck, eds. 2012), which examine China’s high savings rate, banking system, financial markets, financial regulations, corporate governance, and public finances; and consider policy alternatives the CCP might consider if its goal is China’s elevation into the ranks of high income countries.
    JEL: G0 H11 J47 K0 N25 P2 Y2
    Date: 2011–12
  2. By: Fungacova, Zuzana (BOFIT); Herrala, Risto (BOFIT); Weill, Laurent (BOFIT)
    Abstract: This study examines how bank ownership influenced the credit supply during the recent financial crisis in Russia, where the banking sector consists of a mix of state-controlled banks, foreign-owned banks, and domestic private banks. To estimate credit supply changes, we employ an exhaustive dataset for Russian banks that covers the crisis period and apply an original approach based on stochastic frontier analysis. Our findings suggest bank ownership affected credit supply during the financial crisis and that the crisis led to an overall decrease in the credit supply. Relative to domestic private banks foreign-owned banks reduced their credit supply more and state-controlled banks less. This supports the hypothesis that foreign banks have a “lack of loyalty” to domestic actors during a crisis, as well as the view that an objective function of state-controlled banks leads them to support the economy during economic downturns.
    Keywords: bank; credit policy; foreign ownership; state ownership; stochastic frontier analysis
    JEL: D14 G21
    Date: 2011–12–16
  3. By: Belousova, Veronika (BOFIT); Goel, Rajeev K. (BOFIT); Korhonen, Iikka (BOFIT)
    Abstract: This paper examines determinants of corruption across Russian regions. Key contributions include: (i) a formal study of economic corruption determinants across Russian regions; (ii) comparisons of determinants of perceived corruption versus those of actual corruption; and (iii) studying the influence of market competition and other factors on corruption. The results show that economic prosperity, population, market competition and urbanization are significant determinants of Russian corruption. The use of alternative corruption measures reveals that economic prosperity and population have a largely similar impact on corruption perceptions and corruption incidence. However, there are significant differences in the effects of competition and urbanization.
    Keywords: corruption perceptions; corruption incidence; Russia; government; competition
    JEL: K42 O42 P37
    Date: 2011–12–14
  4. By: Jarko, Fidrmuc; Iikka, Korhonen; Ivana, Bátorová
    Abstract: We analyze globalization and business cycles in China and selected OECD countries using dynamic correlation analysis. We show that dynamic correlations of business cycles of OECD countries and China are negative at business-cycle frequencies and positive for short-run developments. Furthermore, trade and financial flows of OECD countries and China reduce the degree of business cycle synchronization within the OECD area, especially at business-cycle frequencies. Thus, different degrees of participation in globalization can explain the differences between the business cycles of OECD countries.
    Keywords: Globalization, business cycles, synchronization, trade, FDI, dynamic correlation
    JEL: E32 F15 F41
    Date: 2011–12
  5. By: Liwen, Chen (Renmin University of China); Zeng, Xiangquan (Renmin University of China); Yumei, Yang (Renmin University of China)
    Abstract: In this paper, we use Data Envelopment Analysis (DEA) to estimate how well China’s urban areas absorb migrant workers under the interaction of urbanization and industrialization. We applied an output-oriented BCC model to evaluate provincial and regional rural labor absorption efficiency in mainland China. It appears that 4 out of 31 provinces and municipals are efficient, and 2 out of 8 economic regions are efficient in absorbing migrant workers. In the southern and eastern parts of China, urban labor absorption efficiency is higher compared with the western and northern parts of China. Different urbanization patterns and industrial development strategies should be adopted in different economic areas to enhance labor absorption ability in these areas. Urban areas in many parts of China still have potential to accommodate rural migrant workers. The inter-regional flow of production factors would affect urban labor absorption efficiency.
    Keywords: rural labor absorption in urban areas, urbanization, industry structure, DEA
    JEL: J61 R23
    Date: 2011–12
  6. By: Watanabe, Mariko
    Abstract: During the transition period from a planned economy to a market economy in 1990s of China, there was a considerable accrual of deferred payment, and default due to inferior enforcement institutions. This is a very common phenomenon in the transition economies at that time. Interviews with home electronics appliance firms revealed that firms coped with this problem by adjusting their sales mechanisms (found four types), and the benefit of institutions was limited. A theoretical analysis claim that spot and integration are inferior to contracts, a contract with a rebate on volume and prepayment against an exclusive agent can realize the lowest cost and price. The empirical part showed that mechanisms converged into a mechanism with the rebate on volume an against exclusive agent and its price level is the lowest. The competition is the driving force of the convergence of mechanisms and improvement risk management capacity.
    Keywords: China, Electronic industries, Corporate accounting, Industrial management, Trade credit, Distribution channel strategy, Contract, Convergence of mechanisms
    JEL: G32 L14 L68 L81 O16 O17 D22
    Date: 2011–12
  7. By: Katsushi S. Imai (School of Social Sciences, University of Manchester, UK); Jing You (School of Agricultural Economics and Rural Development, Renmin University of China)
    Abstract: The objective of our study is to identify pattern and causes of households' transitions in and out of poverty using the long household panel data on rural China in the period 1989-2009. We propose a discrete-time multi-spell duration model that not only corrects for correlated unobserved heterogeneity across transitions and various destinations within the transition, but also addresses the endogeneity due to dynamic selection associated with household's livelihood strategies. Duration dependence is generally found to be negative for both poverty exit and re-entry. The household who chose either farming or out-migration as a main livelihood strategy was more likely to escape from this persistent poverty than those who took local non-agricultural employment, while the role of social protection, such as health insurance, was not universally good for alleviating chronic poverty. Overall, the present study emphasises the central role of agriculture in helping the chronically poor escape from poverty.
    Keywords: poverty transition, discrete-time duration model, correlated unobserved heterogeneity, dynamic selection, rural China
    JEL: C33 C41 I32 O15
    Date: 2011–12
  8. By: Liping Jiang (Department of Environmental and Business Economics, University of Southern Denmark); Siri Pettersen Strandenes (Department of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Cost has a significant impact on competitiveness within the shipbuilding industry. In China, low costs have created favourable conditions for domestic shipyards competing in the international market. However, China’s shipbuilders have been facing rising cost pressures in recent years, which may affect their industrial competitiveness. In this article, we assess China’s shipbuilding cost and its impact on the competitiveness of China’s shipbuilding industry. We make comparisons with China’s major competitors, South Korea and Japan, over the period from 2000 to 2009. First, we analyse principal factors that affect shipbuilding cost. Second, we examine the changes in China’s shipbuilding cost over the time period. Finally, we use shipbuilding cost and market share as the basis for analysing the competitiveness of the shipbuilding industry. The results reveal the sources and limiting factors of China’s cost advantage, as well as changes in its shipbuilding cost and competitiveness.
    Keywords: Shipbuilding cost; industry competitiveness; China’s shipbuilding industry
    Date: 2011–09
  9. By: Du, Julan (Asian Development Bank Institute); He, Qing (Asian Development Bank Institute); Rui, Oliver M. (Asian Development Bank Institute)
    Abstract: This paper analyzes consumption risk sharing among provinces in the People’s Republic of China (PRC) during 1980–2007. The analysis finds that 9.4% of shocks to gross provincial product are smoothed by the interprovincial fiscal transfer system. This system also cushions a relatively large percentage of province-specific shocks in coastal areas. Using a variety of indicators, we explored nonfiscal channels of consumption risk sharing. We found that the migration of rural labor to urban areas and the remittance of migrant wages play an important role in promoting interprovincial consumption risk sharing in inland PRC provinces. In contrast, the extent of risk sharing through financial intermediation and capital markets is very limited. These factors have resulted in a low degree of risk sharing among provinces, especially during the last decade.
    Keywords: prc provinces; interprovincial fiscal transfers; consumption risk sharing
    JEL: O16 O53 R11
    Date: 2011–12–21
  10. By: Tanja A. Börzel; Vera van Hüllen
    Abstract: The EU’s Eastern Enlargement is considered to be one of the (few) successful experiments of promoting good – both effective and legitimate – governance. By contrast, the EU’s transformative power appears to be weak or non-existent vis-à-vis its (old) neighbors in the South and its (new) neighbors in the East. Both are not only marked by ‘bad governance’ but also lack a (credible) membership perspective. While the Western Balkans and Turkey have made significant progress towards good governance, both with regard to government effectiveness and democratic legitimacy, the European Neighborhood Countries (ENCs) appear to be stuck in transition or never got that far in the first place. Even when the effectiveness of their governance institutions has improved, they remain well behind the other regions and especially their democratic legitimacy is still wanting or even in decline. The paper shows that there is a correlation between an EU membership perspective and the successful transformation of neighboring countries. Therefore, it has been argued that the ineffectiveness of the European Neighbourhood Policy (ENP) is due to the lack of this ‘golden carrot’. However, we argue that the prospects of EU membership stabilizes rather than drives the move towards effective and legitimate governance in candidate countries. Thus, a membership perspective is unlikely to either turn around negative or speed up positive developments in the EU’s neighborhood. Even if the ENCs received a membership perspective, it would be unlikely to push them significantly towards democratic and effective governance as long as there is no endogenously driven process of change. Given the EU’s preference for stability and state-building, the ENP does not provide an alternative for promoting good governance either. The ENP clearly lacks transformative power and where it might have some domestic impact, it risks consolidating rather than undermining authoritarian regimes by helping to strengthen their capacities for effective governance.
    Keywords: East-Central Europe; East-Central Europe; EU-South-Eastern Europe; EU-South-Eastern Europe; Turkey; neighbourhood policy; governance
    Date: 2011–12–20
  11. By: Hazans, Mihails
    Abstract: The European Social Survey data are used to analyze informal employment in 30 countries, focusing on employees without contracts and on informal self-employed workers (who are distinguished from formal workers). Overall the size of informal employment decreases from South to West to East to North. However, working without a contract is more prevalent in Eastern Europe than in the West, except for Ireland, the United Kingdom, and Austria. Between 2004 and 2009, no cases were found when unemployment and dependent informality rates in a country went up together, suggesting that working without a contract is pro-cyclical in Europe. The dependent informality rate is inversely related to skills (measured by either schooling or occupation). Both in Southern and in Western Europe, the highest dependent informality rate is found among immigrants from Central and Eastern Europe and the Former Soviet Union, while in Eastern Europe this group is second after minorities without immigrant background. In the Southern and part of Western Europe, immigrants not covered by European Union free mobility provisions are much more likely to work without a contract than otherwise similar natives. The paper provides evidence that exclusion and discrimination plays an important role in pushing employees into informality, while this seems not to be the case for informal self-employed workers. Both on average and after controlling for a rich set of individual characteristics, informal employees in all parts of Europe are having the largest financial difficulties among all categories of the employed population (yet they fare much better than the unemployed and discouraged), while informal self-employed workers are at least as well off as formal employees. Finally, there is a negative and significant effect of individual-level satisfaction with the national government on the propensity to work without a contract in Eastern Europe, as well as in Western Europe.
    Keywords: Labor Markets,Work&Working Conditions,Labor Policies,Labor Management and Relations,Tertiary Education
    Date: 2011–12–01
  12. By: Ma, Guonan (BOFIT); Xiandong, Yan (BOFIT); Xi, Liu (BOFIT)
    Abstract: This paper examines the evolving role of reserve requirements as a policy tool in China. Since 2007, the Chinese central bank (PBC) has relied more on this tool to withdraw domestic liquidity surpluses, as a cheaper substitute for open-market operation instruments in this period of rapid FX accumulation. China’s reserve requirement system has also become more complex and been used to address a range of other policy objectives, not least being macroeconomic management, financial stability and credit policy. The preference for using reserve requirements reflects the size of China’s FX sterilisation task and the associated cost considerations, a quantity-oriented monetary policy framework challenged to reconcile policy dilemmas and tactical considerations. The PBC often finds it easier to reach consensus over reserve requirement decisions than interest rate decisions and enjoys greater discretion in applying this tool. The monetary effects of reserve requirements need to be explored in conjunction with other policy actions and not in isolation. Depending on the policy mix, higher reserve requirements tend to signal a tightening bias, to squeeze excess reserves of banks, to push market interest rates higher, and to help widen net interest spreads, thus tightening domestic monetary conditions. There are, however, costs to using this policy tool, as it imposes a tax burden on Chinese banks that in turn appear to have passed a significant portion of this cost onto their customers, mostly depositors and SMEs. However, the pass-through onto bank customers appears to be partial.
    Keywords: reserve requirements; sterilisation tools; monetary policy; net interest margin and spread; tax incidence; Chinese economy
    JEL: E40 E50 E52 E58 E60 H22
    Date: 2011–12–14
  13. By: Mehrotra, Aaron (BOFIT); Funke, Michael (BOFIT); Yu, Hao (BOFIT)
    Abstract: With recovery from the global financial crisis in 2009 and 2010, inflation emerged as a major concern for many central banks in emerging Asia. We use data observed at mixed frequencies to estimate the movement of Chinese headline inflation within the framework of a state-space model, and then take the estimated indicator to nowcast Chinese CPI inflation. The importance of forward-looking and high-frequency variables in tracking inflation dynamics is highlighted and the policy implications discussed.
    Keywords: nowcasting; CPI inflation cycle; mixed-frequency modelling; dynamic factor model; China
    JEL: C53 E31 E37
    Date: 2011–12–22
  14. By: ten Brink, Tobias
    Abstract: Welche Folgen zeitigt der rasante Aufstieg Chinas? Im Anschluss an Erkenntnisse der Chinaforschung und politökonomischer Ansätze wird die Volksrepublik China als eine Variante der nachholenden (staats-)kapitalistischen Entwicklung analysiert, die an einer wirtschaftlichen und geopolitischen Aufwertung interessiert ist. Dabei verkörpert die inter- und transnationale Einbettung des neuen chinesischen Kapitalismus in ein instabiles Weltsystem trotz des Bemühens der Staatsführung um eine verantwortungsvolle Großmachtpolitik einen spannungsreichen Prozess. Zwar bleibt die chinesische Volkswirtschaft abhängig von den alten Zentren des globalen Kapitalismus. Daraus folgt jedoch nicht umstandslos eine reibungslose Zusammenarbeit. Im Gegenteil weisen aktuelle Währungsdispute mit den USA im Zuge des globalen Wirtschaftseinbruchs auf politisch vermittelte Standortkonflikte hin. Perspektiven einer konfliktarmen Integration Chinas müssen daher relativiert werden - wie zusätzlich die Führungsrolle des Landes im ostasiatischen Regionalisierungsprozess illustriert -, ohne voreilige Schlussfolgerungen hinsichtlich militärischer Zusammenstöße und eines Übergangs zu einer neuen globalen chinesischen Hegemonie zu übernehmen. Abgezielt wird darauf, die Vorteile einer politökonomischen Betrachtungsweise bei der Beantwortung einer Frage herauszustellen, die üblicherweise in einer Perspektive der Internationalen Beziehungen, das heißt fokussiert auf zwischenstaatliche Beziehungen, behandelt wird. -- What has been the impact of China's rapid rise? Referring to findings of current research on China as well as theories of political economy, this paper analyzes the People's Republic of China as a variety of a (state-led) capitalist catch-up development process that is focused on economic and geopolitical upgrading. Despite efforts by China's political leadership to act as a responsible superpower, the international and transnational embedding of the new Chinese capitalism is fraught with tension. The Chinese economy remains dependent on the old centers of global capitalism, but this has not paved the way for smooth cooperation. On the contrary, the latest currency disputes between China and the US during the global economic slump are indicative of politically charged conflicts between the world's relevant economic regions. Thus, the prospect of China being integrated harmoniously seems to be overly optimistic - as is also demonstrated by China's efforts to play a leading role in the East Asian regionalization process. At the same time, one has to be careful not to draw (the wrong) conclusions about the inevitability of military conflict and a transition towards a new global Chinese hegemony. The paper aims to highlight the advantages of a political economy approach in answering a question that has primarily been addressed from International Relations perspectives, i.e. focused on relations between states.
    Date: 2011
  15. By: Yue Ma (Lingnan University); Heiwai Tang (Tufts University, Centro Studi Luca d\'Agliano and MIT Sloan); Yifan Zhang (Lingnan University)
    Abstract: This paper analyzes the causal relations between firms’ productivity, factor intensity and export participation. Using propensity score matching techniques and firm-level panel data for Chinese manufacturing firms over the 1998-2007 period, we find strong evidence of domestic firms self-selecting into export markets with higher productivity ex ante, and enhanced productivity ex post. No such pattern is observed among foreign-invested .rms. We also find that both domestic and foreign new exporters exploit China’s low labor costs and specialize in their core competence, that is, firms become less capital-intensive after exporting, relative to the matched non-exporting counterparts in the same industry. To rationalize these results that contrast with most findings in the existing literature, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider varying capital intensity across products. Using transaction-level export data, we find evidence that Chinese exporters add new products that are more labor-intensive than existing products and drop products that are less labor-intensive, supporting the model predictions. Firms with a bigger decline in capital intensity after exporting are found to have a larger increase in measured TFP.
    Keywords: Exporters; Productivity; Factor Intensity; Multi-product Firms
    JEL: F11 L16 O53
    Date: 2011–12–27
  16. By: Di Comite, Francesco; Rovegno, Laura; Vandenbussche, Hylke; Viegelahn, Christian
    Abstract: We apply a simple method to study the relative quality of Chinese versus European products exported in the clothing sector after the end of the Multi-Fiber Arrangement. Based on the model of Foster et al (2008), we interpret the relative change of export prices and quantities sold in narrowly defined product categories as an indicator of quality shifts. Using UN Comtrade data we find that European varieties exported to the US typically sell for a higher price than identical Chinese varieties exported to the US, but this price gap is narrowing. Despite rising prices, Chinese varieties are gaining market share. This opposite movement of relative prices and quantities sold in the same destination market are a strong indication of China moving up the quality ladder in its clothing exports relative to the EU. While European ‘core’ products in clothing are stable over time, Chinese exports show strong product dynamics with exit and entry of new ‘core’ products every year and ‘core’ products changing rapidly. Both China and the EU export in every product category, resulting in an almost perfect product overlap with almost no products being exported by only one of the two.
    Keywords: Comtrade; product-level exports; quality
    JEL: F13 F14
    Date: 2011–12
  17. By: Hazans, Mihails
    Abstract: This paper looks into institutional and other macro determinants of prevalence of informal dependent employment, as well as informal self-employment, in European countries, using European Social Survey data on work without legal contract in on 30 countries, covering years 2004-2009. Consistently with theoretical predictions, quality of business environment has a significant negative impact on prevalence of both types of informal employment. The share of non-contracted employees is negatively affected by perceived quality of public services and positively related to economic growth. Informal self-employment is positively related to growth in Europe at large, as well as in Eastern and Southern Europe. The level of GDP per capita also has a positive impact on the prevalence of informal employment in Europe at large and within Eastern and Southern Europe, whilst an opposite effect is found in Western and Northern Europe. Other things equal, the share of non-contracted employees in the labor force across European countries increases with the minimum-to-average wage ratio, with union density, with the share of first and second generation immigrants, and with income inequality, but falls with stricter employment protection legislation (EPL) and higher tax wedge on labor. Thus it appears that in Europe at large, labor cost effects of EPL and taxes are weaker than their impact via perceptions of job security and law enforcement, along with tax morale and the income effect. Yet the EPL effect on informality is positive (i.e., cost-related) when either Eastern and Southern Europe or Western and Northern Europe are considered separately. Furthermore, within Western and Northern Europe, the minimum wage effect is negative, whilst within Eastern and Southern Europe, the union effect is negative; in both cases, we offer a supply side explanation.
    Keywords: Labor Markets,Labor Policies,Debt Markets,Economic Theory&Research,Markets and Market Access
    Date: 2011–12–01
  18. By: Gao, Hang (University of Alberta, Department of Economics); Marchand, Joseph (University of Alberta, Department of Economics); Song, Tao (University of Alberta, Department of Economics)
    Abstract: Real earnings have increased for all demographic and skill groups within China’s urban labor market from the mid-1990s to the early 2000s. This paper analyzes these changes in earnings with respect to the relative supply and demand changes of each of the imperfectly substitutable labor inputs. These movements are found to be consistent with real earnings increases for some of the input groups but are inconsistent for others. This implies that China has transitioned closer to a free labor market from its planned origin. In addition, labor supply is shown to be moving towards a more educated workforce, and firm privatization and international trade are found to play significant roles in determining the labor demand movements.
    Keywords: China; earnings; labor demand; labor supply; transitional economies
    JEL: J20 P23 P31
    Date: 2011–12–01
  19. By: Torgler, Benno
    Abstract: This study tries to remedy the current lack of tax compliance research analyzing tax morale in 10 Eastern European countries that joined the European Union in 2004 or 2007. By exploring tax morale differences between 1999 and 2008, it shows that tax morale has decreased in 7 out of 10 Eastern European countries. This lack of sustainability may support the incentive based conditionality hypothesis that the European Union only has a limited ability to influence tax morale over time. The author observes that events and processes at the country level are crucial to understanding tax morale. Factors such as perceived government quality and trust in the justice system and the government are positively correlated with tax morale in 2008.
    Keywords: Taxation&Subsidies,Debt Markets,Subnational Economic Development,Emerging Markets,National Governance
    Date: 2011–12–01
  20. By: Slonimczyk, Fabian
    Abstract: The 2001 Russian tax reform reduced average tax rates for the personal income tax and the payroll or social tax. It also made the tax structure more regressive. Because individuals in the lower income bracket were for the most part not affected, it is possible to estimate the effects of the reform using a differences-in-differences approach. I study the effect of the reform on informal employment. Informality is defined using information on employment registration and self-employment. Applying parametric and semi-parametric techniques, I find evidence that the tax reform led to a significant reduction in the fraction of informal employees. Among the different forms of informality I study, the reform seems to have had the strongest effect on the prevalence of informal irregular activities. I also document stronger effects on individuals who benefited from the largest reductions in tax rates.
    Keywords: informal sector; entrepreneurship; tax reform; difference-in-difference; transition; Russia
    JEL: O17 J3 P2 H24
    Date: 2011
  21. By: Jiang, Xuemei; Gong, Peichen; Bostedt, Goran; Xu, Jintao
    Abstract: State-owned forest enterprises (SOFEs) in northeast China and Inner Mongolia play important roles both in timber production and in the maintenance of ecological security. However, since the late 1970s, forest resource and economic crises have seriously restricted these functions. Based on a theoretical and an empirical analysis of the harvest and investment behavior of the SOFEs, we examined the effects of forest policies and the socioeconomic conditions on the behavioral choices of the SOFEs. Both the extent to which SOFE supervising authorities emphasized improvement of forest resources in their annual evaluations and the increases in expenses necessary to manage SOFEs had significant impacts on harvest and investment decisions as well as development of forest resources. Promoting the management and utilization of non-timber resources, as well as reforms to increase the efficiency of forest protection and management, have reduced timber harvests as intended, which in turn has increased investment and improved forest resources. The effects have been relatively small, however. In contrast, reforms aimed at timber harvest and afforestation activities actually contributed to increasing the timber harvest, which affected the development of the forest resources negatively.
    Keywords: state-owned forest enterprise, “double crises,” sustainable forest management, forest policy
    JEL: Q23 Q28
    Date: 2011–12–22
  22. By: Yana Vaziakova; Geoff Barnard; Tatiana Lysenko
    Abstract: many policy recommendations relating to structural reform and framework conditions have been made. This paper, expanding on Annex 1.A1 in the 2011 OECD Economic Survey of the Russian Federation, provides a summary tabulation of the state of implementation of a large number of these past Survey recommendations.<P>Russie : Progrès des réformes structurelles et des conditions-cadres<BR>Au fil des 16 ans depuis la première Étude économique de la Federation Russe de l’OCDE, il y a eu beaucoup de recommandations portant sur la reforme structurelle et les conditions-cadres de l’économie. Cette étude, qui représente une élaboration de l’Annexe 1.A1 de l’Étude économique de la Federation Russe 2011, fournit un sommaire de l’état de la mise en oeuvre d’un grand nombre de ces recommandations.
    Keywords: product market regulation, competition, fiscal policy, trade, innovation, monetary policy, foreign direct investment, Russia, structural reforms, framework conditions, bank regulation, réforme structurelle, politique budgétaire, innovation, politique monétaire, concurrence, investissement direct étranger, Russie, réglementation des marchés de produits, conditions cadres, échanges, réglementation financière, propriété de l’État
    Date: 2011–12–19
  23. By: He, Qichun
    Abstract: There is a debate over the reliability of the Chinese data (e.g., Young, 2003; Holz, 2003, 2006). In this paper we test the Chinese provincial panel data for the period 1978-2002 against the predictions from the technology diffusion model. We find that the estimated coefficient on initial real GDP per worker is negative and significant, showing strong evidence of conditional convergence; the estimated coefficients on secondary school human capital investment rate and labor force growth are positive and negative respectively, significant at the 5% level, in both LSDV (Least squares dummy variables) estimation and system GMM (Generalized method of moments) estimation that overcomes the endogeneity of these variables. The test accepts that the estimate coefficients on physical capital and human capital investment rates are equal, with absolute magnitudes about half of that on labor force growth in LSDV estimation. The estimated coefficient on the FDI to GDP ratio that captures technology diffusion is insignificant in LSDV estimation but becomes significant in system GMM estimation. All these are consistent with the technology diffusion model (and the augmented Solow model). Therefore, the reform period Chinese provincial panel data may be reliable for growth regressions.
    Keywords: Technology Diffusion; Convergence Equation; Panel Data; System GMM (Generelized method of moments)
    JEL: C23
    Date: 2011–12
  24. By: Horsewood, Nicholas; Voicu, Anca Monika
    Abstract: The paper uses a gravity model to examine the role of corruption in the direction of trade in a data set comprising OECD economies, new EU members and developing nations. Contrary to a number of studies, the findings suggest that membership of the RTAs does not always increase bilateral trade whereas reducing a country's corruption does tend to increase trade flows. The results suggest that EU membership, with the associated improvement in the perceived level of corruption, should have a positive impact on Romania and Bulgaria. --
    Keywords: trade,corruption,EU membership
    JEL: F14 F15
    Date: 2011
  25. By: Agnieszka Stążka-Gawrysiak (National Bank of Poland, Economic Institute; Warsaw School of Economics)
    Abstract: The goal of this paper is, firstly, to determine which structural characteristics of an economy make it more (or less) prone to macroeconomic booms and busts and, secondly, to empirically assess the risk of a boom-bust cycle in Poland after the euro adoption. We start from identifying booms and busts in private consumption and investment in fourteen “old” EU member states and then we seek to explain the identified boom and bust series using panel probit and pooled probit models. We then use the estimated equations to assess the probability of booms and busts in Poland over the period 2004 to 2009. Our results suggest that credit developments have been the most important driving force of booms and busts in EU-14. The relevance of international capital flows as a boom-bust transmission channel and of the cyclical heterogeneity of countries which undergo a process of monetary integration is also confirmed. We also find evidence that the fiscal channel boils down to a crowding-out effect: a reduction in the general government expenditure “makes room” for a boom in the private expenditure, and the reverse holds for busts. In turn, our results for Poland are inconclusive, which probably means that the models estimated for EU-14 are not adequate to predict the probabilities of booms and busts in this country.
    Keywords: Booms and busts, Poland, EMU enlargement, panel data analysis, probit models
    JEL: E32 E42 E63 C23
    Date: 2011
  26. By: Péter Harasztosi (Magyar Nemzeti Bank (central bank of Hungary))
    Abstract: This paper relates firm level input changes and productivity to aggregate growth of the Hungarian economy for the period 1992 to 2008. The decomposition includes manufacturing, services, agriculture and construction. Results suggest that the role of firm productivity in growth was not stable over time. It played important role in early transition and in the pre-crisis period. Inputs show an initially positive then, after 2001, decreasing contribution to growth. At the same time input reallocation shows a decreasing trend in Hungary.
    Keywords: growth decomposition, productivity, reallocation, firm level data
    JEL: O47 D24 L25
    Date: 2011
  27. By: Leibfritz, Willi
    Abstract: The paper examines the incentives and distortions created by tax policy and administration structures that motivate individuals to undeclare or under-declare work in the new EU member countries. It analyses the tax level and the tax structure"mix"of tax instruments, the special taxation regimes set up to attract workers and entrepreneurs back into the formal economy and how tax policies such as the introduction of a"flat tax"on income from labor and capital impacted workers and entrepreneurs in terms of formalizing work. It also attempts to gain some insight into the effectiveness of tax administration by comparing some input and output measures As non-tax factors can amplify the adverse effects of taxes on the labor market and reduce the effectiveness of tax reform, some of these other economic framework conditions are also discussed. This paper concludes by refining the main results and possible best practices for tackling undeclared work. The paper argues that the new EU member countries have had mixed success tackling undeclared work. While taxation matters, other underlying conditions for formal sector activity are also important. Addressing the problem of undeclared work therefore requires a broad policy approach with further improvements in tax policies, tax administration, and in general economic framework conditions for formal sector activity.
    Keywords: Taxation&Subsidies,Emerging Markets,Public Sector Economics,Debt Markets,Tax Law
    Date: 2011–12–01
  28. By: Roman Horváth (IES, Charles University Prague); Kateøina Šmídková (IES, Charles University Prague); Jan Zápal (London School of Economics)
    Abstract: We assess whether the voting records of central bank boards are informative about future monetary policy. First, we specify a theoretical model of central bank board decision-making and simulate the voting outcomes. Three different versions of model are estimated with simulated data: 1) democratic, 2) consensual and 3) opportunistic. These versions differ in the degree of informational influence between the chairman and other board members influence prior to the voting. The model shows that the voting pattern is informative about future monetary policy provided that the signals about the optimal policy rate are noisy and that there is sufficient independence in voting across the board members, which is in line with the democratic version. Next, the model predictions are tested on real data on five inflation targeting countries (the Czech Republic, Hungary, Poland, Sweden and the United Kingdom). Subject to various sensitivity tests, it is found that the democratic version of the model corresponds best to the real data and that in all countries the voting records are informative about future monetary policy, making a case for publishing the records.
    Keywords: monetary policy, voting record, transparency, collective decision-making.
    JEL: C78 D78 E52 E58
    Date: 2011–12
  29. By: Gabriela Miranda; Randall Eberts; Elvira González; Vanessa Foo; Przemyslaw Kulawczuk
    Abstract: This report presents analysis on the cases of Podlaskie and Pomorskie in Poland in the context of a transition to the green economy. This study seeks to examine the current situation in these two regions in terms of labour market, economic development, and skills provision, with a specific focus on the green economy. <p> The report analyses the impacts of climate change (including its effects on policy and regulations) on the local labour markets in Podlaskie and Pomorskie and provides policy recommendations on how make the best use of the assets in place to boost green economic activities while creating greener jobs. <p> The report examines the role that the public sector and other key labour market institutions play in facilitating the transition to a green economy. Although it is certain that the impact of this transition on jobs, on the workforce and on businesses will vary from region to region, it is also certain that those regions investing in the right skills and removing barriers to green entrepreneurship and growth will gain from this new context.
    Date: 2011–12
  30. By: Walewski, Mateusz
    Abstract: This paper presents the results of an attempt to use the combined results of the dedicated survey performed by CASE in 2007 and Polish LFS data in order to: (a) analyze the development of the shadow employment in Poland in years 2003-2008 and, (b) analyze the transition probabilities in and out of shadow employment. The estimated share of shadow workers in total employment in Poland in years 2003-2008 was increasing until 2006 and then started to decrease in the years 2007 and 2008. Other results are in line with one of the main conclusions of the CASE study from 2007 suggesting that shadow employment is more a way of coping with lack of other employment opportunities than an equivalent or even superior alternative to any legal employment contracts. On the other hand those who enter shadow employment are more active part of the group having problems with finding full time/open term employment. They are much more inclined to cope with their situation by entering some form of self-employment than to stay passive and depend on social assistance.
    Keywords: Labor Markets,Labor Policies,Labor Standards,Work&Working Conditions,Labor Management and Relations
    Date: 2011–12–01
  31. By: Zuzana Smidova
    Abstract: The Czech fiscal position is generally sound and policy making is prudent. However, the fiscal framework was not strong enough to contain spending in the upturn and it would benefit from independent budget oversight. An anchor for the fiscal policy would be helpful, in the form of an explicit debt target coupled with corresponding spending ceilings and deficit targets. The ongoing fiscal consolidation, spending pressures and an already relatively high average tax burden necessitate public sector efficiency improvements. There is scope for improvement in the management of government spending, mainly by enhancing transparency, introducing performance-oriented budget indicators at both central and local levels, improving the management of state-owned enterprises and developing the procurement practices of the public sector. Legislated increases in the retirement age will improve pension system sustainability. A new defined contribution tier is being introduced which should help to diversify future retirement income. At the same time, there is uncertainty about the number of participants who will decide to divert their contribution to the new tier and hence about the implications for revenues in the existing defined benefit pension tier. Also, attention should be taken regarding administrative costs of the new tier, since these can have a significant impact on future replacement rates and therefore public support for it. With more emphasis on private savings, the financial literacy of the population also needs to be stepped up. In healthcare the authorities plan to continue improving the multi-insurer model through incremental reforms such as limiting pharmaceutical costs and improving provider-payment system. The potential for efficiency improvement in healthcare network planning and better care management should be explored, while ensuring that insurers and health providers are given the correct incentives. This working paper relates to the 2011 Economic Survey of the Czech Republic,<P>Efficience des dépenses publiques en République tchèque : cadre de politique budgétaire et principales zones de dépenses dans le domaine des retraites et des soins de santé<BR>La situation des finances publiques tchèques est globalement saine et la politique budgétaire est prudente. Cependant, le cadre budgétaire n'a pas permis de contenir les dépenses durant la phase ascendante du cycle et il pourrait être renforcé par une meilleure application des plafonds de dépenses à moyen terme et par la mise en place d'un mécanisme indépendant de supervision des finances publiques. La politique budgétaire gagnerait à avoir un point d'ancrage sous la forme d'un objectif d'endettement explicite assorti des objectifs de déficit et plafonds de dépenses correspondants. L'effort d'assainissement budgétaire en cours, la pression des dépenses et une charge fiscale moyenne déjà relativement lourde sont autant de facteurs qui nécessitent une amélioration de l'efficience du secteur public. Il est possible d'améliorer la gestion des dépenses publiques, principalement en favorisant une plus grande transparence, en adoptant des indicateurs budgétaires axés sur les résultats au niveau central et au niveau local, en renforçant la gouvernance des entreprises publiques et en perfectionnant les procédures de passation des marchés publics. Le relèvement programmé de l'âge de la retraite améliorera la viabilité du système de retraite. Le nouveau régime à cotisations définies qui va être mis en place devrait permettre de diversifier les sources de revenu des futurs retraités. En même temps, il est difficile de dire combien de personnes décideront de transférer une partie de leurs cotisations vers le nouveau régime et quelles retombées cela aura sur les recettes du régime à prestations définies. Par ailleurs, il faudrait faire attention aux frais administratifs du nouveau régime, car ces charges peuvent avoir une incidence non négligeable sur les taux futurs de remplacement et donc sur l'adhésion du public. Compte tenu du rôle accru dévolu à l'épargne-retraite privée, il faut aussi améliorer les connaissances financières de la population. Dans le domaine de la santé, les autorités ont l'intention de continuer à améliorer graduellement le modèle à assureurs multiples, avec des mesures progressives visant par exemple à limiter les dépenses en médicaments et à perfectionner le système de paiement des prestataires. Il faudrait explorer les possibilités de gains d'efficience dans la planification du réseau de santé et dans la gestion des soins, tout en veillant à offrir aux assureurs et aux prestataires de soins les incitations qui conviennent. Ce document de travail se rapporte à l’Étude économique de l’OCDE sur la République tchèque 2011,
    Keywords: budgets, public finances, pensions, health care, Czech Republic, fiscal frameworks, local governments, finances publiques, soins de santé, République tchèque, collectivités locales, cadre budgétaire
    JEL: H51 H55 H57 H61 H72
    Date: 2011–11–21
  32. By: Sisak Balázs (Magyar Nemzeti Bank (central bank of Hungary))
    Abstract: The goal of this study is to determine the reasons behind high cash demand in several Central European countries, especially Hungary. We distinguish between legal and illegal cash demand in an attempt to model the former. In our approach, legal cash demand can be explained by transactional and saving motives (hoarding). We apply both direct calculation and an econometric approach in order to isolate transactional demand. Regarding the econometric approach, a number of different models are estimated to eliminate, as far as possible, endogeneity bias. We examine transactional and residual cash stock (legal hoarding and illegal cash demand) of several Central European and Western countries that have their own currency (did not introduce euro). We find that transactional cash demand is strongly influenced by the level of improvement of the payment system. There are explicit signs that interest rates negatively influence nontransactional cash demand. However, we find examples where this is not the case. In these instances, the increase of non-transactional cash demand may be caused by illegal cash demand.
    Keywords: cash demand, shadow economy, payment system, panel econometrics
    JEL: E26 E41 E42 C23
    Date: 2011
  33. By: Vuong Quoc, Duy
    Abstract: This paper investigates the impact of access to formal credit on household poverty in Mekong Delta (MD) – Vietnam. The analysis is based on some indicators of household poverty such as households’ total assets, educational costs, healthcare costs, food consumption, non-farm expenses, off-farm expenses and total income. Based on the given indicators, a comparison is made between borrowers and non-borrowers in a sample of 325 households using the Matching Methods. The findings suggest that the borrowers are better off in education expenditure, healthcare expenses, and total income than those of non-borrowers. The results show that access to formal credit is likely to reduce poverty levels among rural households in Mekong Delta.
    Keywords: Formal credit; propensity score matching; household welfare; individual and group based lending
    JEL: G2 O2 I3 E5
    Date: 2011
  34. By: Ilhom Abdulloev (Rutgers University); Ira N. Gang (Rutgers University & Fellow of IZA, OEI, CReaM); John Landon-Lane (Rutgers University)
    Abstract: How is migration related to informal activities? They may be complementary since new migrants may have difficulty finding employment in formal work, so many of them end up informally employed. Alternatively, migration and informality may be substitutes since migrants' incomes in their new locations and income earned in the home informal economy (without migration) are an imperfect trade-off. Tajikistan possesses both a very large informal sector and extensive international emigration. Using the gap between household expenditure and income as an indicator of informal activity, we find negative significant correlations between informal activities and migration: the gap between expenditure and income falls in the presence of migration. Furthermore, Tajikistan's professional workers ability to engage in informal activities enables them to forgo migration, while low-skilled non-professionals without post-secondary education choose to migrate instead of working in the informal sector. Our empirical evidence suggests migration and informality substitute for one another.
    Keywords: informal, migration, remittances, Tajikistan
    JEL: O17 J61 P23
    Date: 2011–12
  35. By: Sun, Churen; Tian, Guoqiang; Zhang, Tao
    Abstract: This paper realizes the Melitz-Pareto model using firm-level data from 40 Chinese manufacturing industries from 1998 and 2007. Under the hypothesis that the productivity of firms in each industry follows a Pareto distribution, we show that the domestic sales of non-exporters and the foreign sales of exporters in each industry also follow a Pareto distribution, respectively. We then estimate industrial productivity Pareto distributions, and cut-offs of domestic sales of non-exporters and foreign sales of exporters for each industry. Together this yields all the parameters of the Melitz-Pareto model. Our result shows that the Melitz-Pareto model may not fully apply to Chinese firms.
    Keywords: Melitz-Pareto model; Pareto distribution; productivity heterogeneity; export
    JEL: D23 F12
    Date: 2011–10–31
  36. By: Kieu-Trang Nguyen (SPEA, Indiana University, Bloomington, IN 47401, U.S.A); Quoc-Anh Do (School of Economics, Singapore Management University, Singapore 178903); Anh Tran (SPEA, Indiana University, Bloomington, IN 47401, U.S.A)
    Abstract: This paper studies nepotism by government officials in an authoritarian regime. We collect a unique dataset of political promotions of officials in Vietnam and estimate their impact on public infrastructure in their hometowns. We find strong positive effects on several outcomes, some with lags, including roads to villages, marketplaces, clean water access, preschools, irrigation, and local radio broadcasters, as well as the hometown’s propensity to benefit from the State’s “poor commune support program”. Nepotism is not limited to only top-level officials, pervasive even among those without direct authority over hometown budgets, stronger when the hometown chairperson’s and promoted official’s ages are closer, and where provincial leadership has more discretionary power in shaping policies, suggesting that nepotism works through informal channels based on specific political power and environment. Contrary to pork barrel politics in democratic parliaments, members of the Vietnamese legislative body have little influence on infrastructure investments for their hometowns. Given the top-down nature of political promotions, officials arguably do not help their tiny communes in exchange for political support. Consistent with that, officials favor only their home commune and ignore their home district, which could offer larger political support. These findings suggest that nepotism is motivated by officials’ social preferences directed towards their related circles, and signals an additional form of corruption that may prevail in developing countries with low transparency.
    Keywords: nepotism, infrastructure construction, official’s hometown, political connection,political promotion, social preference, directed altruism
    JEL: O12 H54 H72 D72 D64
    Date: 2011–12
  37. By: Fialova, Kamila; Schneider, Ondrej
    Abstract: This paper analyzes the role of labor market institutions in explaining the development of shadow economies in European countries. The analysis uses several alternative measures of the shadow sector, and examines the effects of labor institutions on the shadow sector in two specific regions: new and old European Union member countries, as their respective shadow sectors exhibited a different development in the past decade. Although the share of the shadow economy in gross domestic product averaged 27.5 percent in the new member countries in 1999-2007, the respective share in the old member states stood at 17.9 percent. The paper estimates the effects of labor market institutions on two sets of shadow economy indicators -- shadow production and shadow employment. Comparing alternative measures of the shadow sector allows a more granulated analysis of labor market institution effects. The results indicate that the one institution that unambiguously increases shadow economy production and employment is the strictness of employment protection legislation. Other labor market institutions -- active and passive labor market policies, labor taxation, trade union density, and the minimum wage setting -- have less straightforward and statistically robust effects and their impacts often diverge in new and old European Union member countries. The differences are not robust enough, however, to allow for rejecting the hypothesis of similar effects of labor market institutions in new and old European Union member states.
    Keywords: Labor Markets,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Debt Markets
    Date: 2011–12–01
  38. By: Nikolaos Antonakakis; Gabriele Tondl
    Abstract: This paper examines whether European integration, manifesting itself in increased trade and FDI linkages, new specializations and economic policy coordination, contributed to the synchronization of business cycles in the enlarged EU. We estimate the effects on bilateral growth rate correlations in 1995-2008 in a simultaneous equations model which permits to model endogenous relationships and unveil direct and indirect effects. Trade and FDI prove to have a strong impact on synchronization, specifically between incumbent and new EU members. More coordinated fiscal policies and, particularly in EU 15, the alignment of monetary policies promoted synchronization. Nevertheless, flexible exchange rates remained important adjustment instruments for the new member states. Increasing manufacturing specialization is not counteracting synchronization. The achieved EU income convergence, a declared objective of EU policy, supported business cycle synchronization.
    Keywords: Business cycles, transmission channel, FDI, trade, monetary union, EU
    JEL: E30 E52 E62 F15 F42 F44
    Date: 2011–12
  39. By: Jure Kotnik; Tigran Shmis
    Abstract: The Yakutia Republic is currently working to update its early childhood development (ECD) system. Its goal is to ensure a high quality environment for early learning and child care and to enable higher enrolment levels.
    Keywords: early childhood, pre-school facilities, economical, construction techniques, models, designs
    Date: 2011–12
  40. By: Orazio Attanasio (Institute for Fiscal Studies and University College London); Britta Augsburg (Institute for Fiscal Studies); Ralph de Haas; Emla Fitzsimons (Institute for Fiscal Studies); Heike Harmgart (Institute for Fiscal Studies)
    Abstract: <p>Although microfinance institutions across the world are moving from group lending towards individual lending, this strategic shift is not substantiated by sufficient empirical evidence on the impact of both types of lending on borrowers. We present such evidence from a randomised field experiment in rural Mongolia. We find a positive impact of access to group loans on food consumption and entrepreneurship. Among households that were offered group loans the likelihood of owning an enterprise increases by ten per cent more than in control villages. Enterprise profits increase over time as well, particularly for the less-educated. For individual lending on the other hand, we detect no significant increase in consumption or enterprise ownership. These results are in line with theories that stress the disciplining effect of group lending: joint liability may deter borrowers from using loans for non-investment purposes. Our results on informal transfers are consistent with this hypothesis. Borrowers in group-lending villages are less likely to make informal transfers to families and friends while borrowers in individual-lending villages are more likely to do so. We find no significant difference in repayment rates between the two lending programs, neither of which entailed weekly repayment meetings.</p>
    Keywords: Microcredit; group lending; poverty; access to finance; randomised field experiment
    JEL: G21 D21 I32
    Date: 2011–12

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