nep-tra New Economics Papers
on Transition Economics
Issue of 2012‒05‒22
seventeen papers chosen by
J. David Brown
Heriot-Watt University

  1. Depositor vigilance in the immediate aftermath of Russia's 1998 crisis: education, media freedom and Sberbank as a repository of trust By W. PYLE; K. SCHOORS; M. SEMENOVA; K. YUDAEVA
  2. Human Capital, Economic Growth, and Inequality in China By Heckman, James J.; Yi, Junjian
  3. Comparative Advantage and the Welfare Impact of European Integration By Andrei A. Levchenko; Jing Zhang
  4. Mapping Modes of Rural Labour Migration in China By Sylvie Démurger
  5. Credit Support for Export: Econometric Evidence from the Czech Republic By Karel Janda; Eva Michalíková; Jiøí Skuhrovec
  6. Modelling FDI based on a spatially augmented gravity model: Evidence for Central and Eastern European Countries By Markus Leibrecht; Aleksandra Riedl
  7. Urban-Rural Disparities of Child Health and Nutritional Status in China from 1989 to 2006 By Liu, Hong; Fang, Hai; Zhao, Zhong
  8. Is There a Pollution Haven Effect? Evidence from a Natural Experiment in China By Lu, Yi; Wu, Mingqin; Yu, Linhui
  9. Selection and institutional shareholder activism in Chinese acquisitions By Peng, Fei; Kang , Lili; Jiang, Jun
  10. The impact of changes in second pension pillars on public finances in Central and Eastern Europe By Balázs Égert
  11. 中国对外出口的区域劳动力市场效应 By Zhang, Chuanchuan
  12. Dynamics of Educational Differences in Emigration from Estonia to the Old EU Member States By Kristi Anniste; Tiit Tammaru; Enel Pungas; Tiiu Paas
  13. Financial Integration in Emerging Europe: an Enviable Development Opportunity with Tail Risks. By Aleksandra Iwulska; Naotaka Sugawara; Juan Zalduendo
  14. Skewness in stock returns: evidence from the Bucharest stock exchange during 2000 – 2011 By Panait, Iulian; Slavescu, Ecaterina Oana
  15. Improving the Health-Care System in Poland By Hervé Boulhol; Agnieszka Sowa; Stanislawa Golinowska; Patrizio Sicari
  16. Climate Change Policies in Poland: Minimising Abatement Costs By Balázs Égert
  17. Hemlock for policy response: Monetary policy, exchange rates and labour unions in SEE and CIS during the crisis By Branimir Jovanovic; Marjan Petreski

    Abstract: In the immediate aftermath of Russia’s 1998 crisis household depositors withdrew money from the insolvent and state-owned Sberbank, despite its unique protection by two explicit government guarantees and its reputation of a repository of trust. This was less the case in well-educated, older, more conservative and remote regions and more so in wealthy, entrepreneurial and central regions, enjoying more media freedom. Survey data confirm that access to free media like NTV turns depositors more vigilant about their banks. Well educated people’s better understanding turns them less likely to run on Sberbank but more likely to run on other banks.
    Date: 2012–03
  2. By: Heckman, James J. (University of Chicago); Yi, Junjian (University of Chicago)
    Abstract: China's rapid growth was fueled by substantial physical capital investments applied to a large stock of medium skilled labor acquired before economic reforms began. As development proceeded, the demand for high skilled labor has grown, and, in the past decade, China has made substantial investments in producing it. The egalitarian access to medium skilled education characteristic of the pre-reform era has given rise to substantial inequality in access to higher levels of education. China's growth will be fostered by expanding access to all levels of education, reducing impediments to labor mobility, and expanding the private sector.
    Keywords: education, human capital, economic growth, inequality
    JEL: I25 J24 O15
    Date: 2012–05
  3. By: Andrei A. Levchenko; Jing Zhang
    Abstract: This paper investigates the welfare gains from European trade integration, and the role of comparative advantage in determining the magnitude of those gains. We use a multisector Ricardian model implemented on 79 countries, and compare welfare in the 2000s to a counterfactual scenario in which East European countries are closed to trade. For West European countries, the mean welfare gain from trade integration with Eastern Europe is 0.16%, rang- ing from zero for Portugal to 0.4% for Austria. For East European countries, gains from trade are 9.23% at the mean, ranging from 2.85% for Russia to 20% for Estonia. For Eastern Europe, comparative advantage is a key determinant of the variation in the welfare gains: countries whose comparative advantage is most similar to Western Europe tend to gain less, while countries with technology most different from Western Europe gain the most.
    JEL: F11 F14 F15
    Date: 2012–05
  4. By: Sylvie Démurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: Internal labour migration has become an important part of the process of China's industrialization and urbanisation in the 2000s. Using micro data for the year 2007, this chapter attempts to contribute to a better understanding of the motives of and the constraints to labour mobility in China. Drawing on various empirical investigations at the household level, it examines both the decision and the level of migration and provides a mapping of the main factors driving different types of labour mobility across space (by destination) and time (by duration).
    Keywords: rural-urban migration; destination; duration; migration networks; China
    Date: 2012–05–09
  5. By: Karel Janda (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Eva Michalíková (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Jiøí Skuhrovec (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The topic of this paper is quite a novel one - it is one of few empirical academic papers dealing with export credit. Moreover, it is the first analysis of this kind which focuses on transition economies. The paper deals with export credit promotion in the Czech Republic. The development and structure of Czech trade and export support is presented first, followed by an econometric analysis of the gravity model of Czech trade. A panel of 160 countries in 1996-2008 is analyzed and two gravity models of exports for the Czech Republic are estimated, the static model by fixed effects (LSDV estimator) and the dynamic model by System GMM. Due to ambiguous conclusions we assume that the behavior of our explanatory variables is not uniform and our data set behaves as a mixture of countries with heterogeneous behavior. This means that traditional techniques of estimation which include all observations into one model do not give significant results. Thus, we use robust techniques of estimation that solve the problem of heterogeneous patterns in data sets. Out of several possibilities we use the Least Trimmed Squares estimator (LTS) with a leverage point. We show that guarantees are a significant factor that influences positively the volume of exports in the Czech Republic. Moreover, there exist more variables that a effect the size of exports in the Czech Republic. Market forces described by GDP, distance, political risk or gross fix capital formation are significant in our econometric model. We find that higher GDP, shorter distance or lower political risk have a positive impact on Czech exports.
    Keywords: export, government promotion, gravity model, panel data
    JEL: F14 G28 C23
    Date: 2012–05
  6. By: Markus Leibrecht (Department for Economics, Leuphana University Lueneburg, Germany); Aleksandra Riedl (Austrian National Bank)
    Abstract: Based on a spatially augmented gravity model the current paper isolates spatial interrelationships in Foreign Direct Investment (FDI) to Central and Eastern European Countries (CEECs) not only across the destination but also across the origin country dimension of FDI. Results show that: (i) spatial interrelationships across destination countries are present and are consistent with the predom- inance of vertical-complex FDI in total FDI; (ii) spatial correlation across origin countries is given in earlier years of transition, while demonstration and competition effects cancel over the whole sample period; and (iii) agglomeration forces gain in importance for FDI to CEECs.
    Keywords: Foreign Direct Investment, Spatial Econometrics, Central and Eastern Europe, Third country effects
    JEL: C33 F21
    Date: 2012–04
  7. By: Liu, Hong (Central University of Finance and Economics); Fang, Hai (University of Colorado Denver); Zhao, Zhong (Renmin University of China)
    Abstract: This paper analyzes urban–rural disparities of China's child health and nutritional status using the China Health and Nutrition Survey data from 1989 to 2006. We investigate degrees of health and nutritional disparities between urban and rural children in China as well as how such disparities have changed during the period 1989–2006. The results show that on average urban children have 0.29 higher height-for-age z-scores and 0.19 greater weight-for-age z-scores than rural children. Urban children are approximately 40% less likely to be stunted (OR = 0.62; P < 0.01) or underweight (OR = 0.62; P < 0.05) during the period 1989-2006. We also find that the urban–rural health and nutritional disparities have been declining significantly from 1989 to 2006. Both urban and rural children have increased consumption of high protein and fat foods from 1989 to 2006, but the urban-rural difference decreased over time. Moreover, the urban-rural gap in child preventive health care access was also reduced during this period.
    Keywords: urban-rural disparities, health and nutritional status, child, China
    JEL: I14 I15
    Date: 2012–04
  8. By: Lu, Yi; Wu, Mingqin; Yu, Linhui
    Abstract: In this paper, we investigate whether there is a pollution haven effect, specifically, the effect of environmental regulations on firm location. Our identification uses the Two Control Zones (TCZ) policy implemented by the Chinese government in 1998. The difference-in-differences (DID) estimation shows that cities with tougher environmental regulations attract less foreign direct investment (FDI). Specifically, being listed as a TCZ city causes the amount of FDI to drop by 41%. Our results are robust to various robustness checks on the validity of the DID estimation and other estimation concerns.
    Keywords: Pollution haven effect; Difference-in-differences estimation; Two control zones; Natural experiment
    JEL: D21 L25 R11
    Date: 2012–05
  9. By: Peng, Fei; Kang , Lili; Jiang, Jun
    Abstract: This paper aims to investigate the role that institutional shareholders play in acquisition decision using micro data in the Chinese stock market during 2003-2008. Acquisition decision is the selection and coordination process of shareholders as strategic alliances, which is determined by corporate acquisition ability, composition of institutional shareholders and concentration of tradable share (TS) in China. We use Heckman selection model to surmount the selection biases in acquisition decision. We find that institutional shareholders including qualified foreign institutional investors (QFII), social security funds (SSF), security firms (SF) and security investment funds (SIF), as well as TS concentration affect acquisition probability rather than annual acquisition scale. SSF, SIF and TS concentration can increase acquisition probability while QFII decreases it. Our paper contributes to the published literature in three ways. First, we offer a model to understand the selection and coordination process of acquisition decision. Second, we investigate whether institutional shareholders could effectively monitor annual acquisition scale. Third, we identify Heckman selection problem that institutional shareholders could affect PLCs’ acquisition decision on whether to acquire rather than how much to acquire.
    Keywords: Selection; Institutional Shareholders; Acquisition Decision
    JEL: P41 C52 G34 G32
    Date: 2011–12
  10. By: Balázs Égert
    Abstract: This paper studies the impact of recent changes in second pension pillars of three Central and Eastern European Countries on the deficit and implicit debt of their full pension systems. The paper seeks to answer the following questions: i) what is the impact on the sustainability of Poland’s pension system of the decrease in the pension contribution going to the second pension pillar from 7.3% to 2.3% in 2011; ii) what are the implications of the recent changes on gross replacement rates; iii) does the weakening of the Polish second pension system have a different impact on pension system sustainability than a similar move in a Hungarian-style pension system with a defined-benefit first pillar and iv) how does Estonia’s temporary decrease in pension contributions compensated by temporarily higher future rates affect pension sustainability in that country. The simulation results show that in our baseline scenario the Polish move would permanently lower future pension-system debt, chiefly as a result of a cut in replacement rates. But using a combination of pessimistic assumptions including strong population ageing, low real wage growth and a high indexation of existing pension benefits, coupled with bringing in tax expenditures related to the third voluntary pension pillar and an increase in the share of minimum pensions leads to higher pension system deficits and eventually more public debt at a very long horizon. The simulations also suggest that the Hungarian pension reversal reduces deficit and debt only temporarily, mainly because of Hungary’s costly defined-benefit first pension pillar: the weakening of the second pillar is tantamount to swapping low current replacement rates (in the defined-contribution second pillar) against high future replacement rates in the defined-benefit first pension pillar. Finally, results show that the Estonian move will increase public debt only very moderately in the long run, even though this result is sensitive to the effective interest rate on public debt.
    Keywords: pension system; pension reversal; defined benefit; defined contribution; public finances; Central and Eastern Europe
    JEL: H55 J32
    Date: 2012
  11. By: Zhang, Chuanchuan
    Abstract: One striking phenomena of the macro economy in China during the past decade is the rapid exporting growth. Exporting growth provides strong demand for domestic manufacturing production and is one of the most important engines of economic growth. Using population census data and trade data, this paper examines the local labor market effects of exporting in China. Our empirical analysis suggests that exporting growth significantly promoted employment in manufacturing sector and also indirectly promoted employment in service sector. Exploiting our micro-level data, we further estimated the impact of exporting on employment by various groups and found that exporting has a more significant and larger effect on younger, less-educated, rural and women labor force. Moreover, exporting also promoted wage of workers in manufacturing and service sector, besides promoting employment. Finally, exporting lowered local income inequality since labor force in low-income group such as less-educated workers and rural workers are the main beneficiaries of exporting.
    Keywords: Exporting; Local Labor Market; Employment; Wage; Income Inequality
    JEL: F16 J31 J21
    Date: 2012–04–10
  12. By: Kristi Anniste (University of Tartu); Tiit Tammaru (University of Tartu); Enel Pungas (University of Tartu); Tiiu Paas (University of Tartu)
    Abstract: The study analyzes the changes in emigration from Estonia in order to shed more light on East-West migration, contributing to the main debate on “brain drain” by focusing on educational differences in emigration. We use anonymous individual level data for all emigrants from the register-based Estonian Emigration Database compiled by Statistics Estonia for the period 2000–2008. The analysis shows that there has been no significant brain drain from Estonia as the new EU member state during this period. Moreover, we find evidence of a spreading of the emigration norm into a wider range of population groups, including the less educated, since Estonia joined the European Union in 2004.
    Keywords: education; emigration; East-West migration; Estonia
    Date: 2012–05
  13. By: Aleksandra Iwulska; Naotaka Sugawara; Juan Zalduendo
    Abstract: This paper draws on the experience of emerging Europe and argues that foreign capital is an enviable development opportunity with tail risks. Financial integration and foreign savings supported growth in the EU12 and EU candidate countries. We argue that this was possible because of EU membership (actual or potential) and its role as an anchor for expectations. In contrast, the eastern partnership states did not benefit from the foreign savings-growth link. But financial integration also led to a buildup of vulnerabilities and now exposes emerging Europe to prolonged uncertainty and financial deleveraging due to eurozone developments. Nonetheless, we believe that external imbalances should not be eradicated—nor should emerging Europe pursue a policy of self-insurance. Instead, what we refer to as an acyclical fiscal policy stance could serve to counterbalance private sector behavior. Going forward, a more proactive macroprudential policy will also be needed to limit financial system vulnerabilities when external imbalances are large.
    Keywords: Financial integration, Emerging Europe, Capital inflows, Growth, Macroprudential policies
    JEL: E58 F36 F41 G28
    Date: 2012
  14. By: Panait, Iulian; Slavescu, Ecaterina Oana
    Abstract: Our paper investigates the symmetry in stock returns of the 30 most liquid companies traded on Bucharest Stock Exchange during 2000 – 2011 and also the most representative 5 market indices. Our daily data shows that skewness estimates are slightly negative for most indices and individual stocks, but only a few present values significantly different from the characteristics of a normal distribution. We compare our results with skewness estimates for 21 major and emerging stock market indices around the world and find that such results are similar to other low capitalization and trading volume markets. For all the Romanian and international assets studied, the Studentized-Range (St-R) and Jarque-Bera (J-B) tests reject the hypothesis of normal distribution of daily returns.
    Keywords: Skewness; stock returns; asymmetric returns; frontier and emerging markets
    JEL: G14 G12 G15 G01
    Date: 2012–05–11
  15. By: Hervé Boulhol; Agnieszka Sowa; Stanislawa Golinowska; Patrizio Sicari
    Abstract: Since the transformation following the Communist era, Poland has matched improvements in health outcomes of the most developed OECD countries, although without catching up the ground lost during the 1970s and 1980s. The health status of the population remains relatively poor, although after controlling for per capita income health outcomes are only slightly below the OECD average. The Polish health-care system is characterised by low spending, a heavily regulated public system with a stringent budget constraint, restricted sub-national government autonomy and a thin private insurance market. Heavy out-of-pocket payments and long waiting lists generate inequalities in access to care. The most pressing issues to be addressed concern: easing the substantial limitations in access to care; reducing persistent inequalities; carefully designing new private health insurance; better coordinating among major public actors; improving hospital management; strengthening the gate-keeping function played by generalists; and developing a comprehensive long-term-care strategy. This Working Paper relates to the 2012 OECD Economic Review of Poland (<P>Améliorer le système de soins de santé en Pologne<BR>Depuis qu’elle a opéré sa transformation post-communiste, la Pologne a enregistré des progrès comparables à ceux des pays de l’OCDE les plus développés dans le domaine de la santé, sans toutefois parvenir à regagner le terrain perdu au cours des années 70 et 80. L’état de santé de la population reste relativement mauvais même si, après contrôle du revenu par habitant, les indicateurs de santé ne sont que légèrement inférieurs aux moyennes de l’OCDE. Le système de santé de la Pologne se caractérise par de faibles dépenses, un système public fortement réglementé et assujetti à des contraintes budgétaires strictes, une autonomie limitée des autorités infrarégionales et un marché de l’assurance privée peu développé. Les dépenses élevées laissées à la charge des patients et les longues listes d’attente engendrent des inégalités d’accès aux soins. Les priorités les plus pressantes sont les suivantes : alléger les lourdes restrictions d’accès aux soins ; réduire les inégalités persistantes ; mettre en place de nouvelles formules d’assurance-maladie privée soigneusement conçues ; mieux coordonner les principaux acteurs publics ; améliorer la gestion des hôpitaux ; renforcer la fonction de filtrage des médecins généralistes ; et élaborer une stratégie complète en matière de soins de longue durée. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Pologne 2012 (
    Keywords: Poland, pharmaceuticals, health care system, hospitals, physicians, health-care insurance, waiting lists, Pologne, système de santé, médicaments, hôpitaux, assurance médicale, listes d’attente, docteurs
    JEL: I1
    Date: 2012–05–10
  16. By: Balázs Égert
    Abstract: Poland is on track to meet its international greenhouse-gas emissions commitments. However, it will need to cut emissions significantly in the future, if the European Commission’s proposal on the Low Carbon Roadmap is adopted. Policies should ensure that the country’s substantial reduction potential, mainly linked to the energy sector’s high emissions intensity, and implying overall abatement costs above the EU-average, is realised in a least-cost fashion by imposing an economy-wide single carbon price. This stands in contrast with current explicit and implicit carbon prices, which vary widely across different sectors of the economy. Crucial to least-cost abatement is also a high responsiveness to the EU-ETS carbon price signal. While Poland has made good progress in complying with EU regulations related to the energy sector, the large share of public ownership and the lack of effective separation between electricity producers and distributors may blur the price signal for investment decisions in generation capacity. The isolation of the Polish electricity market implies a need for more investment in low-emission technologies in Poland to achieve a given emissions-reduction target, whereas a deeper integration with neighbouring electricity markets would spread the burden more efficiently across countries. The cost-efficiency advantage of uniform support to renewables via green certificates should be retained to minimise abatement costs. Government policies aimed at a higher share of nuclear power and natural gas from shale formations need to take fully into account tail risks and the short- and long-term environmental costs of the use of the former and fully consider environmental risks related to extraction of the latter. Energy efficiency policies can help to address market failure but should not be allowed to distort relative carbon prices. This Working Paper relates to the 2012 OECD Economic Review of Poland (<P>Politiques liées au changement climatique en Pologne : minimiser les coûts de réduction des émissions<BR>La Pologne est en voie de tenir ses engagements internationaux en matière d’émissions de gaz à effet de serre. Elle devra toutefois réduire sensiblement ses émissions à l’avenir si la proposition de la Commission européenne concernant la Feuille de route pour une économie sobre en carbone est adoptée. Les politiques mises en oeuvre devraient s’attacher à exploiter au moindre coût l’important potentiel de réduction des émissions du pays, principalement lié à la forte intensité d’émissions du secteur de l’énergie et qui implique des coûts globaux de réduction supérieurs à la moyenne de l’UE, en imposant un prix unique du carbone pour toute l’économie. Cet objectif contraste avec les prix explicites et implicites actuels du carbone, qui sont très variables selon les secteurs. Une forte sensibilité aux signaux de prix du carbone fournis par le SCEQE est également essentielle à la réduction des émissions au moindre coût. En dépit des progrès significatifs accomplis par la Pologne pour se conformer aux réglementations de l’UE dans le secteur énergétique, l’importance de l’actionnariat public et l’absence de séparation effective entre les producteurs et les distributeurs d’électricité peuvent brouiller le signal de prix pour les décisions d’investissement dans les capacités de production. L’isolement du marché polonais de l’électricité implique qu’il faudra procéder à de plus lourds investissements dans les technologies sobres en émissions pour atteindre un objectif donné de réduction des émissions, alors qu’une intégration plus poussée avec les marchés de l’électricité des pays voisins permettrait un partage plus efficient des coûts entre les différents pays. Il faudrait maintenir l’avantage coût-efficacité du système de soutien uniforme aux énergies renouvelables sous forme de certificats verts en vue de minimiser les coûts de réduction des émissions. Les politiques publiques destinées à accroître la part de l’énergie nucléaire et du gaz naturel à partir des gisements de schiste doivent tenir pleinement compte des risques d’événements extrêmes et des coûts environnementaux à court et long termes de l’utilisation du nucléaire, et intégrer pleinement les risques environnementaux potentiels induits par l’extraction des schistes bitumineux. Les politiques axées sur l’efficacité énergétique peuvent contribuer à remédier aux défaillances du marché, mais elles ne devraient pas aller jusqu’à fausser les prix relatifs du carbone. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Pologne 2012 (
    Keywords: global warming, GHG emissions, environmental policies, carbon price, abatement cost, renewables, nuclear power, negative externalities, énergie renouvelable, réchauffement climatique, politiques environnementales, émissions de GES, coût d'abattement, énergies nucléaire, externalités négatives
    JEL: H23 Q41 Q42 Q48 Q52 Q53 Q54 Q58
    Date: 2012–04–24
  17. By: Branimir Jovanovic; Marjan Petreski
    Abstract: The objective of this paper is to assess whether the level of unionization and the rigidity of the exchange rate affected wages and monetary policy in SEE and CIS during the ongoing economic crisis. Towards that end, a New Keynesian model with price and wage rigidities is used. The model is estimated with a panel GMM over the period January 2002 – March 2011 on sample of 19 countries. Several findings emerge. First, the output gap is found not to depend on the real interest rate, in accordance with the underdeveloped financial markets in these economies. Second, inflation is found not to depend on the output gap, but on the wage gap, which stresses the relevance of the labour unions for the inflation dynamics in these countries. Third, the labour wedge that arises from the monopolistic competition in the labour market works mainly through the wage gap, not the output gap, in accordance with the high unemployment in these countries. Fourth, monetary policy responded counter-cyclically during the crisis in countries with weak trade unions, differently from countries with strong unions: in crisis times, weak economy drags wages down in low-unionized countries and monetary policy relaxes in these countries, both due to lower wages and due to the weaker economy; on the other hand, strong unions prevent a weak economy to drag wages down in crisis times and central banks in these countries are found not to react to economic activity, prices or wages. Fifth, the fixed exchange rate is found to restrain monetary policy in times of crisis, too – in countries with flexible exchange rates, monetary policy during the crisis responds to movements in output gap and reserves, in contrast to countries with fixed exchange rate, where monetary policy does not respond to any domestic macroeconomic variable.
    Keywords: monetary policy, fixed exchange rate, wage bargaining, unionization, SEE, CIS
    JEL: E52 F0 F31 J51 P20
    Date: 2012–05

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