nep-tra New Economics Papers
on Transition Economics
Issue of 2012‒01‒25
25 papers chosen by
J. David Brown
Heriot-Watt University

  1. CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange By Berezinets, Irina; Ilina, Yulia; Muravyev, Alexander
  2. Where russians should live: a counterfactual alternative to Soviet location policy By Mikhailova, Tatiana
  3. Are All Migrants Really Worse Off in Urban Labour Markets? New Empirical Evidence from China By Gagnon, Jason; Xenogiani, Theodora; Xing, Chunbing
  4. The chinese financial system at the Dawn of the 21st century: An Overview By Yulu, Chen; Yong, Ma; Ke, Tang
  5. Estimating the Incidences of the Recent Pension Reform in China.Evidence from 100,000 Manufacturers By Zhigang Li; Minqin Wu
  6. Labour Market Changes, Labour Disputes and Social Cohesion in China By Fang Cai; Meiyan Wang
  7. Upgrading of Symbolic and Synthetic Knowledge Bases: Analysis of the Architecture, Engineering and Construction industry and the Automotive Industry in China By Jan van der Borg; Erwin van Tuijl
  8. Development and Sources of Labor Productivity in Chinese Provinces By Su, Biwei; Heshmati, Almas
  9. Moving off the farm: Land institutions to facilitate structural transformation and agricultural productivity growth in China By Deininger, Klaus; Jin, Songqing; Xia, Fang
  10. Capital accumulation and growth in Central Europe, 1920-2006 By Bas van Leeuwen; Peter Földvari
  11. What Can Be Learned from “Green Growth Diagnostics” for Greening the Growth Path of China? - Conceptional Issues and Industry Evidence By Harald Sander
  12. Crisis, Capital Controls and Covered Interest Parity: Evidence from China in Transformation By Jinzhao Chen
  13. Analysis of Gender Wage Differential in China's Urban Labor Market By Su, Biwei; Heshmati, Almas
  14. Coalition Formation and Agenda Setting in EU Environmental Policy after the Enlargement By Cesar Garcia Perez de Leon
  15. Living Arrangements of the Elderly in China: Evidence from CHARLS By Lei, Xiaoyan; Strauss, John; Tian, Meng; Zhao, Yaohui
  16. Unintended effects of urbanization in China: Land use spillovers and soil carbon loss By Li, Man; Wu, JunJie; Deng, Xiangzheng
  17. Peer effects, risk pooling, and status seeking: What explains gift spending escalation in rural China? By Chen, Xi; Kanbur, Ravi; Zhang, Xiaobo
  18. Investigating China's Disaggregated Processed Exports: Evidence that the RMB matters By Willem THORBECKE
  19. The dependence of the potential sustainability of a resource economy on the initial state: a comparison of models using the example of Russian oil extraction By Bazhanov, Andrei
  20. Зависимость долгосрочного роста ресурсной экономики от начального состояния: сравнение моделей на примере российской нефтедобычи By Bazhanov, Andrei
  21. Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis By Jan Babecky; Kamil Galuscak; Lubomir Lizal
  22. Firms' exporting and importing activities: is there a two-way relationship? By David Aristei; Davide Castellani; Chiara Franco
  23. Wage Mobility in East and West Germany By Riphahn, Regina T.; Schnitzlein, Daniel D.
  24. Shanghai’s Trade, China’s Growth: Continuity, Recovery, and Change since the Opium War By Wolfgang Keller; Ben Li; Carol H. Shiue
  25. Migration and Regional Convergence in the European Union By Peter Huber; Gabriele Tondl

  1. By: Berezinets, Irina (St. Petersburg State University); Ilina, Yulia (St. Petersburg State University); Muravyev, Alexander (IZA)
    Abstract: This paper investigates whether and how various characteristics of CEOs and corporate boards are related to the severity of corporate governance problems within firms. The latter is proxied by private benefits of control, which we measure for dual class stock firms using the voting premium approach. Our empirical analysis is based on data from Russia and takes advantage of the extreme corporate governance problems in the country, considerable variation in corporate governance practices across firms and over time, and presence of a large and exogenously created (during the process of privatization) group of dual class stock companies. The data are assembled from the RTS, SKRIN and SPARK databases and include over 200 firms observed in 1997-2009, with over 1000 observations in total. Our econometric analysis suggests a quadratic relationship between private benefits of control and CEO ownership with a minimum at about 4% CEO ownership, a positive association between CEO tenure and private benefits, and a quadratic in CEO age with a dip in private benefits at about 52 years of age. There is also a quadratic relationship between private benefits of control and board size, implying the optimality of medium-sized (about 9-10 directors) boards. We find no gender effects on private benefits of control.
    Keywords: CEO, corporate board, private benefits of control, dual-class stock firms, Russia
    JEL: G34
    Date: 2011–12
  2. By: Mikhailova, Tatiana
    Abstract: This paper investigates the extent of distortions in Russia's spatial economy that are inherited from the Soviet system. Using Canada as a benchmark for spatial dynamics of economic activity in a market economy, I construct the spatial allocation of population that would result in Russia, given its initial conditions and existing regional endowments, in the absence of Soviet location policy. The results show that Siberia and the Far East were overpopulated by about 14.5 million people by the end of the Soviet period. Overdevelopment of Siberia comes at the expense of the European area of the country. This discrepancy persists, even after adjusting the simulated counterfactual allocation for WWII.
    Keywords: Russia; USSR; Siberia; economic geography; Soviet location policy
    JEL: P5 R1
    Date: 2012–01–13
  3. By: Gagnon, Jason (OECD); Xenogiani, Theodora (OECD); Xing, Chunbing (Beijing Normal University)
    Abstract: The rapid and massive increase of rural-to-urban migration in China has drawn attention to the welfare of migrant workers, particularly to their working conditions and pay. This paper uses data from a random draw of the 2005 Chinese national census survey to investigate discrimination in urban labour markets against rural migrants, by comparing their earnings and the sector (formal vs. informal) they work in with those of urban residents and urban migrants. Exploiting differences in their status in the Chinese residential registration system (hukou) we find no earnings discrimination against rural migrants compared with urban residents, contrary to popular belief. In contrast, we find that urban migrants in fact gain a large wage premium by migrating. However, both rural and urban migrants are found to be discriminated out of the formal sector, working in informal jobs and lacking adequate social protection.
    Keywords: migration, China, discrimination, informal employment
    JEL: O15 R23 J24 J71
    Date: 2011–12
  4. By: Yulu, Chen; Yong, Ma; Ke, Tang
    Abstract: Based on a systematic review and summarization of China’s 30 years of financial reform and development, this paper comprehensively analyzes the past, present and future development of China’s financial system and also presents the mechanism for China’s financial development from the view of political economics. Generally, the Chinese financial system is bank-oriented. The property rights structure, led by state-owned banks, is the prominent feature of the Chinese banking system. Equity, bond, money, currency and real estate markets have been developing rapidly; however, the development rate of these markets varies, and institutional construction generally falls behind the market development. China’s financial decision-making authority belongs to the State Council, and the financial supervision system adopts the mode of “separate regulation.” China’s state-driven, progressive financial reforms have promoted the formation of the government-led financial structure, which is composed of three parts: first, monetary policy, balancing both inflation control and economic growth; second, bank credit expansion under the implicit guarantee of the state; and third, the adjustable pegged exchange rate system based on capital controls. The next phase of financial reform in China will mainly focus on the following four key goals: first, to further improve the corporate governance and the mixed operation of financial institutions; second, to construct the institution of a financial market system and improve the effectiveness of the financial markets; third, to re-integrate regulatory resources, combine macro- and micro-prudent views, and establish a comprehensive framework for financial stability; fourth, to promote the liberalization of interest rates, marketization of the exchange rate and the opening of capital accounts based on a progressive approach and to improve the openness of the financial system based on macroeconomic stability.
    Keywords: China; Financial System; Bank-oriented; Political Economics
    JEL: K0 G2 O5
    Date: 2011–07
  5. By: Zhigang Li; Minqin Wu
    Abstract: An ongoing reform in China mandates employers to contribute significant amounts to employee pension funds. The current study estimates the impact of this reform on the wage, employment and performance of firms using data from over 140,000 medium and large manufacturers in China during 2004 and 2006. We find that the nominal wages of employees were rigid but their real wages may have declined due to the pension reform. In addition, we find an interesting dichotomy in the incidences of pension reform. In localities with high agglomeration levels, firms' profits declined because the pension burden could not be fully transferred to employees. In less agglomerated jurisdictions, firms responded positively to pension reform, possibly because local governments over-subsidized the pension costs as a way to attract investment.
    Keywords: Incidence, Pension, China
    JEL: H32 H55 J2
    Date: 2011–12
  6. By: Fang Cai; Meiyan Wang
    Abstract: Jobs are important in maintaining social cohesion. Employment provides income, but also a sense of self-worth and a meeting place for social interactions that weave the social fabric. With over 200 million unemployed globally, the number of jobs created has taken centre stage, especially in countries hit hard by the economic crisis. And yet, labour relations have become tense in many parts of the world, including those still experiencing economic growth. In 2010, China witnessed a marked increase in strikes, labour disputes and even suicides in the workplace. Understanding the economic and institutional determinants of good labour relations matters for designing and implementing better labour market policies.<p>The increase in labour disputes in China coincided with the end of the era of surplus labour. While labour was abundant in rural hinterlands, manufacturing firms could rely on cheap labour as migrant workers would still be better off than if they stayed at home. As it became increasingly difficult for manufacturing firms in urban centres and the coastal provinces to recruit labour, wages were bid up throughout the economy. This process however, was all but smooth, as the increase in labour disputes shows. What is needed is a set of labour market institutions that help the transition in labour markets to be not only efficient, but also peaceful and equitable.<p>This paper by Cai Fan and Wang Meiyan, from the Institute of Population and Labour Economics of the Chinese Academy of Social Sciences, documents the increase in labour disputes in China and seeks to understand their determinants. The main finding is that the increase in disputes is linked to a change in regime in the labour market with the end of surplus labour. The paper therefore calls for further advances in establishing labour market institutions to adapt to the new labour market situation. The paper finds that disputes result from a better awareness of rights on the part of workers and that they are more common in thriving and export-oriented areas. The authors go on to discuss the Chinese government’s responses to the growing problem, from pro-active labour market policy to increasing the importance of collective contracts. In doing so, this paper provides an important building block in the understanding of the role of labour market institutions for social cohesion.
    Date: 2012–01–05
  7. By: Jan van der Borg (Department of Economics, University Of Venice Cà Foscari); Erwin van Tuijl (HIS and RHV, Erasmus University Rotterdam)
    Abstract: The degree and the way of upgrading differ widely per industry. This article tries to give some new insights in these differences by linking the concept of upgrading to that of the knowledge base. Moreover, we try to identify barriers to upgrading as well as the appropriate spatial scale on which upgrading takes place, again for different knowledge bases. We support our argument by analysing the process of upgrading in two industries in China: the AEC industry (in Beijing and Shanghai) and the automotive industry (in Shanghai). Within these industries we focus on upgrading on two levels: within firms and within projects. Our findings for both industries suggest that the principal ways of upgrading of the symbolic knowledge base are joint brainstorming in internal and external project teams and labour mobility. Major factors that hinder the upgrading of symbolic knowledge include the development stage of China, the Chinese educational system and tensions about duplication of western designs. Upgrading of the synthetic knowledge base takes mainly place via inter-company training programmes of foreign firms, technology transfer and labour mobility on the long run. A possible barrier for upgrading of synthetic knowledge, especially in the automotive industry, is that foreign firms tend to keep certain engineering activities in their home base because of the risk of knowledge leakage. However, this is changing quickly as many foreign carmakers and their suppliers invest in engineering centres in China due to an increasing demand for cars, to governmental regulations and to intensifying competition.
    Keywords: Urban development, upgrading, automotive industry, AEC industry, knowledge economy, China.
    JEL: L2 R00 R3 O3
    Date: 2011
  8. By: Su, Biwei (Korea University); Heshmati, Almas (Korea University)
    Abstract: As China exhibited unprecedented rapid economic growth ever since its reform and openness, the development and sources of labor productivity has gradually come to the forefront. This paper studies the development and the source of labor productivity in 31 Chinese provinces during the period of 2000-2009. The labor productivity is investigated through an examination at both the levels and the growth rate. Particularly, we first look at the production function relationship, to see the contribution of labor and other production factors to the gross domestic product. Then, a number of possible determinants are defined. They are regressed on the level and the growth rate of labor productivity to shed light on their relationships. Controlled for unobserved time-specific and province-specific effects, the fixed effects model with heteroskedasticity robust adjustments have been used for the estimation of three functions. Regional breakdown shows severe disparity in the economy where three municipal cities have the highest labor productivity among other regions. Subsequently, we summarize the different sources and their contributions to labor productivity and provide several policy suggestions.
    Keywords: development, labor productivity, labor productivity growth, provinces, China
    JEL: C23 J24 R23 O15
    Date: 2011–12
  9. By: Deininger, Klaus; Jin, Songqing; Xia, Fang
    Abstract: Agriculture has made major contributions to China's economic growth and poverty reduction, but the literature has rarely focused on the institutional factors that might underpin such structural transformation and productivity. This paper aims to fill that gap. Drawing on an 8-year panel of 1,200 households in six key provinces, it explores the impact of government land reallocations and formal land-use certificates on agricultural productivity growth, as well as the likelihood of households to exit from agriculture or send family members to the non-farm sector. It finds that land tenure insecurity, measured by the history of past land reallocations, discourages households from quitting agriculture. The recognitionof land rights through formal certificates encourages the temporary migration of rural labor. Both factors have a large impact on productivity (at about 30 percent each), mainly by encouraging market-based land transfers. A sustained increase in non-agricultural opportunities will likely reinforce the importance of secure land tenure, which is a precondition for successful structural transformation and continued economic attractiveness of rural areas.
    Keywords: Labor Policies,Rural Development Knowledge&Information Systems,Economic Theory&Research,Economic Growth,Rural Poverty Reduction
    Date: 2012–01–01
  10. By: Bas van Leeuwen; Peter Földvari
    Abstract: Central and Eastern Europe is a region with widely divergent development paths. Up to WWII, these countries experienced comparable growth patterns. Yet, whereas Austria and West Germany remained part of the capitalist West and underwent periods of rapid growth, other countries, under state-socialist regimes, experienced on average far lower growth rates. The lack of data, however, often limits the possibilities of a detailed, quantitative analysis. In this paper, we use a new dataset on physical and human capital in seven Eastern and Central European countries for the period 1920-2006 to calculate the effect on economic growth. We analyse the effect of including the quality of education in human capital. This allows us to perform a growth accounting analysis with the several production factors for Central Europe between 1920 and the present. The difference in growth path across countries is partly explained by differences in efficiency.
    Keywords: Eastern Europe, human capital, physical capital, growth accounting, efficiency, long run growth
    Date: 2011–12
  11. By: Harald Sander (Professor of Economics and International Economics & Director of the Institute of Global Business and Society, Cologne University of Applied Sciences Professor of Economics at Maastricht School of Management)
    Abstract: It is evident that China’s manufacturing‐based growth model increasingly contradicts local, regional and global environmental imperatives. It is therefore of high importance to identify cost‐efficient strategies for greening the growth path of China. On 25 May 2011 the OECD has launched a “Green Growth Strategy” and proposed a “Green Growth Diagnostics” approach to identify the binding constraints on green growth. This paper discusses the usefulness of this approach for identifying the binding constraints to green growth in general as well as for the special case of China. It is argued that the approach is best applied at the industry level after some adjustments to identify binding constraints to the ‘greening’ of certain industries. The workings of the approach are illustrated for the case of the Chinese energy sector.
    JEL: Q54 O11 O13
    Date: 2011–11
  12. By: Jinzhao Chen (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper aims to investigate the intensity and the effectiveness of the capital controls in China from 2003 to 2010, with special attention to the period of financial turbulence that erupted in the summer of 2007. We employ a two-regime threshold autoregressive model to study the Renminbi yield differential between the onshore interest rate and its non-deliverable forward (NDF)-implied offshore interest rate. We find that the de facto intensity of capital controls measured by the threshold increases over time, even during the period of financial turbulence. Moreover, a slightly lower speed of adjustment to the threshold implies that the capital controls are effective in this context.
    Keywords: Covered Interest Parity ; Capital Control ; China ; Threshold Autoregressive model ; GARCH effect ; Financial Crisis
    Date: 2012–01–17
  13. By: Su, Biwei (Korea University); Heshmati, Almas (Korea University)
    Abstract: This paper estimates the gender wage gap and its composition in China's urban labor market using the 2009 survey data from the Chinese Family Panel Studies. Several estimation and decomposition methods have been used and compared. First, we examine the gender wage gap using ordinary least square regression method with a gender dummy variable. Then, we apply Oaxaca (1973) decomposition method with different weighting systems to analyze the logarithmic wage differential. To be more specific, we prove the existence of sample selection bias caused by the female's labor force participation. We eliminate it by using the Heckman's two-step procedure. Empirical results reveal that male workers generally receive a higher wage than female workers, and a great deal of this difference is unexplained. Meanwhile, this unexplained part, which is usually referred to as discrimination turns out to be higher when the adjustment is made for the selection bias. A further breakdown of the wage gap shows that among all the individual characteristics, occupations explain the largest share of the wage gap, followed by their working experience. On the other hand, education acts as a contributor for discrimination in the labor market.
    Keywords: discrimination, wage gap, decomposition, gender, Chinese labor market
    JEL: J70 J31 J16 J78
    Date: 2011–12
  14. By: Cesar Garcia Perez de Leon
    Abstract: The eastern enlargement of the EU has greatly increased the heterogeneity in the configuration of preferences of European member states. This scenario was expected to significantly difficult the capacity of the legislative process to take decisions. However, the decision-making in the EU has shown a remarkable capacity of adaptation in the face of the entrance of new members. This article argues that this adaptation is indeed normal. I introduce a mixed model of coalitional bargaining and agenda setting which explains legislative decision making in the face of preference heterogeneity. The model shows how coalition formation incorporates the preference variations infused by new member states in surplus winning coalitions adopting moderate compromises and how the intervention of a supranational EP influences the final decision towards more advanced legislation. The application of the model to the area of environmental policy shows that under the conditions of preference heterogeneity of the enlargement context, the EU legislative process is likely to generate legislation at medium levels of policy change, appeasing the risk for deadlock but also restraining the introduction of more integrationist legislation.
    Keywords: enlargement; environmental policy
    Date: 2011–12–31
  15. By: Lei, Xiaoyan (Peking University); Strauss, John (University of Southern California); Tian, Meng (Peking University); Zhao, Yaohui (Peking University)
    Abstract: Recent increases in Chinese elderly living alone or only with a spouse has raised concerns about elderly support, especially when public support is inadequate. However, using rich information from the China Health and Retirement Longitudinal Study, we find that the increasing trend in living alone is accompanied with a rise in living close to each other. This type of living arrangement solves the conflicts between privacy/independence and family support. This is confirmed in further investigation: children living close by visit their parents more frequently. We also find that children who live far away provide a larger amount of net transfers to their parents, a result consistent with responsibility sharing among siblings. Having more children is associated with living with a child or having a child nearby, while investing more in a child's schooling is associated with greater net transfers to parents.
    Keywords: living arrangement, coresidence, proximity of children, CHARLS
    JEL: J12 J14
    Date: 2011–12
  16. By: Li, Man; Wu, JunJie; Deng, Xiangzheng
    Abstract: This paper uses a national-level geographic information system database on land use, weather conditions, land quality, soil organic carbon (SOC), topographic features, and economic variables to analyze the major drivers of land use change and the resulting impact on soil carbon storage in China. The framework developed in this study includes two main components. One is a spatial panel multinomial logit land use model that takes into account the spatial and temporal dependence of land use choices explicitly. The other is a statistical causal evaluation model that estimates the effect of land use change on SOC density. Results indicate that local economic growth, as measured by county-level gross domestic product, was a major cause of urban development and grassland conversions. Rapid expansion of road networks, promoted by massive public investment, increased the conversion of forests, grassland, and unused land to crop production and urban development. Urbanization had significant secondary ripple effects in terms of both indirect land use change and soil carbon loss. Some of the soil carbon loss may be irreversible, at least in the short run.
    Keywords: Land use, propensity score-matching, road density, soil organic carbon, spatial panel,
    Date: 2011
  17. By: Chen, Xi; Kanbur, Ravi; Zhang, Xiaobo
    Abstract: It has been widely documented that the poor spend a significant proportion of their income on gifts even at the expense of basic consumption. We test three competing explanations of this phenomenon—peer effect, status concern, and risk pooling—based on a census-type primary household survey in three natural villages in rural China and on detailed household records of gifts received on major occasions. We show that gift-giving behavior is largely influenced by peers in reference groups. Status concern is another key motive for keeping up with the Joneses in extending gifts. In particular, poor families with sons spend more on gift giving in proportion to their income than their rich counterparts, in response to the tightening marriage market. In contrast, risk pooling does not seem to be a key driver of the observed gift-giving patterns. However, we show that large windfall income triggers the escalation of competitive gift-giving behavior.
    Keywords: ceremony, gift giving, Peer effect, risk pooling, social network, status seeking,
    Date: 2011
  18. By: Willem THORBECKE
    Abstract: China's trade surplus is entirely in processing trade. Processed exports are final goods produced using parts and components coming from East Asian supply chain countries. Many claim that because much of the value added of China's processed exports comes from East Asian countries, exchange rates in supply chain countries should affect China's processed exports and the renminbi should not. To investigate these issues, this paper disaggregates processed exports into their two main categories—processing with imported materials (PWIM) exports and processing and assembly (PAA) exports. For PWIM exports, much of the value added comes from China, while for PAA exports, most of the value-added comes from supply chain countries. Dynamic ordinary least squares (DOLS) results indicate that East Asian exchange rates affect both types of exports and that the renminbi significantly affects PWIM exports but not PAA exports. Since PWIM exports are now six times the value of PAA exports, these results indicate that the renminbi matters for aggregate processed exports.
    Date: 2012–01
  19. By: Bazhanov, Andrei
    Abstract: The studies of the International Monetary Fund offer a model for recommending sustainable budget policy to oil-exporting countries including Russia. The model does not contain any resource as a factor of production and assumes that Russian oil reserves will be exhausted by the middle of the 21st century. The current paper examines the sustainability of open and closed models, which are calibrated on Russia's data and include a resource as a factor of production. The open-model case shows that monotonic economic growth is impossible given the current state of the Russian economy. This paper offers an approach for estimating changes that improve long-term sustainability.
    Keywords: nonrenewable resource; weak sustainability; open imperfect economy; Russian oil extraction
    JEL: Q32 Q38 O13
    Date: 2011–12–15
  20. By: Bazhanov, Andrei
    Abstract: The studies of the International Monetary Fund offer a model for recommending sustainable budget policy to oil-exporting countries including Russia. The model does not contain any resource as a factor of production and assumes that Russian oil reserves will be exhausted by the middle of the 21st century. The current paper examines the sustainability of open and closed models, which are calibrated on Russia's data and include a resource as a factor of production. The open-model case shows that monotonic economic growth is impossible given the current state of the Russian economy. This paper offers an approach for estimating changes that improve long-term sustainability.
    Keywords: nonrenewable resource; weak sustainability; open imperfect economy; Russian oil extraction
    JEL: Q32 Q38 O13
    Date: 2011–12–15
  21. By: Jan Babecky; Kamil Galuscak; Lubomir Lizal
    Abstract: Using a large panel of Czech manufacturing firms with 50 or more employees, we update the firm-level labour demand elasticity estimates for 2002-2009. The economic crisis of 2008-2009 provides a source of variation needed for getting estimates that cover not only times of growth, but also a period of economic contraction. We find that in normal times (until 2007), the short-term elasticity is -0.53 with respect to wages and 0.43 with respect to sales, while the long-term elasticities are close to or below unity, standing at -0.94 for wages and 0.76 for sales. Both the wage and sales elasticities increased during the crisis, suggesting that firms became demand constrained, but only the sales elasticity is significantly different. The long-term wage elasticity close to -1 in the period before and during the crisis suggests that firms’ employment decisions are made within fixed budgets. Finally, we find that the inclusion of workers hired through temporary work agencies does not significantly affect the results, indicating that firms take into account total labour when deciding on employment and that hired workers are used as an equal labour demand channel with lower adjustment costs. As a robustness check, our results are qualitatively comparable with the narrative evidence from an ad-hoc firm-level survey on wage and price formation conducted in 2007 and 2009 within the ESCB Wage Dynamics Network.
    Keywords: Czech Republic, elasticity, firm-level data, labour demand, sales elasticity, wage elasticity, the crisis of 2008-2009.
    JEL: C23 J23 J33 P23
    Date: 2011–12
  22. By: David Aristei; Davide Castellani; Chiara Franco
    Abstract: The literature on firm heterogeneity and trade has highlighted that most trading firms tend to engage in both importing and exporting activities. This may be due to some common sunk costs or to a true state dependence. This paper provides some evidence that helps sort this issue out. Using firm level data for a group of 27 Eastern European and Central Asian countries from the World Bank Business Environment and Enterprise Performance Survey (BEEPS) over the period 2002-2008, we estimate a bivariate probit model of exporting and importing. The main finding is that there is a positive correlation between import and export at the level of the firm, but after controlling for size (and other firm level characteristics) importing have a positive effect on exporting, but exporting to not increase the probability of importing. The evidence is thus consistent with the presence of common sunk costs and with a one-way link between importing and exporting. The positive effect of import on export is mainly due to an increase in firm productivity and product innovation.
    Keywords: Exports, Imports, Firm heterogeneity, Eastern European and Central Asian countries
    JEL: F14 F21 F23
    Date: 2011–12–15
  23. By: Riphahn, Regina T. (University of Erlangen-Nuremberg); Schnitzlein, Daniel D. (DIW Berlin)
    Abstract: This article studies the long run patterns and explanations of wage mobility as a characteristic of regional labor markets. Using German administrative data we describe wage mobility since 1975 in West and since 1992 in East Germany. Wage mobility declined substantially in East Germany in the 1990s and moderately in East and West Germany since the late 1990s. Therefore, wage mobility does not balance recent increases in cross-sectional wage inequality. We apply RIF (recentered influence function) regression based decompositions to measure the role of potential explanatory factors behind these mobility changes. Increasing job stability is an important factor associated with the East German mobility decline.
    Keywords: wage mobility, earnings mobility, income mobility, Germany, East Germany, inequality, transition matrix, Shorrocks index, administrative data
    JEL: J30 J31 J60 D63
    Date: 2011–12
  24. By: Wolfgang Keller; Ben Li; Carol H. Shiue
    Abstract: In this paper, we provide aggregate trends in China’s trade performance from the 1840s to the present. Based on historical benchmarks, we argue that China’s recent gains are not exclusively due to the reforms since 1978. Rather, foreign economic activity can be understood by developments that were set in motion in the 19th century. We turn our focus to Shanghai, currently the world’s largest port. Shanghai began direct trade relations with western nations starting in 1843. By 1853, Shanghai already accounted for more than half of China’s foreign trade. In tracking the levels and growth rates of the city’s net and gross imports and exports, foreign direct investment, and foreign residents over more than a century, we find that Shanghai’s level of bilateral trade today with the United States, the United Kingdom, or Japan, for example, are by no means high given Shanghai’s 19th century experience. This paper argues that a regional approach that embeds national trading destinations within an international trading system provides a meaningful approach to understanding the history of China’s trade.
    JEL: F10 F22 F23 N81 N83 N85 N95 O43
    Date: 2012–01
  25. By: Peter Huber (WIFO); Gabriele Tondl
    Abstract: We offer an empirical, econometric analysis of the impact of migration on the EU 27's NUTS-2 regions in the period 2000-2007. While our results indicate that migration had no statistical impact on regional unemployment in the EU it had a significant impact on both per-capita GDP and productivity. The coefficients suggest that a 1 percent increase in immigration to immigration regions increased per-capita GDP by about 0.02 percent and productivity by about 0.03 percent. For emigration regions a 1 percent increase in the emigration rate leads to a reduction of 0.03 percent in per-capita GDP and 0.02 percent in productivity. Since immigration regions are also often regions with above-average GDP and productivity while emigration regions in Europe practically all have below-average GDP, migration seems to induce divergence rather than convergence.
    Keywords: Migration, Convergence, Unemployment
    Date: 2012–01–18

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