nep-tra New Economics Papers
on Transition Economics
Issue of 2012‒12‒15
twelve papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. China's Economic Growth, Structural Change and the Lewisian Turning Point By Fukao, Kyoji; Yuan, Tang jun
  2. Payments for Ecological Restoration and Internal Migration in China : The Sloping Land Conversion Program in Ningxia By Sylvie Démurger; Haiyuan Wan
  3. Development of the Banking Sector in Russia in 2011 By Mikhail Khromov; Alexey Vedev
  4. The Gorbachev Anti-Alcohol Campaign and Russia's Mortality Crisis By Jay Bhattacharya; Christina Gathmann; Grant Miller
  5. Wage growth through job hopping in China By Kenn Ariga; Fumio Ohtake; Masaru Sasaki; Zheren Wu
  6. The road to specialization in agricultural production:: Evidence from rural China By Qin, Yu; Zhang, Xiaobo
  7. Gender Inequality and the Sex Ratio in Three Emerging Economies By Prabir C. Bhattacharya
  8. Exchange Rate Volatility, Financial Constraints and Trade: Empirical Evidence from Chinese Firms By Jérôme Héricourt; Sandra Poncet
  9. Beggar-thy-Neighbor Effects of Currency Undervaluation: Is China the Tip of the Iceberg? By Samba Mbaye
  10. Ex post Investigation of Employment Drops: Case of Slovak and Czech Republic By Daniel Dujava
  11. Costly posturing: relative status, ceremonies and early child development in China: By Chen, Xi; Zhang, Xiaobo
  12. The environmental efficiency of organic farming in developing countries: a case study from China By Sébastien MARCHAND; Huanxiu GUO

  1. By: Fukao, Kyoji; Yuan, Tang jun
    Abstract: In a country such as China, which maintains strict controls on foreign exchange and frequently intervenes in the currency market, it is not surprising that the local currency is persistently undervalued in nominal terms. Normally, one would expect such a policy of deliberate currency undervaluation to result in a sharp rise in domestic prices, with abnormally low prices reversed not through an appreciation of the nominal exchange rate but through a rise in domestic prices. Why is this not occurring in China? A possible explanation is that, due to certain structural reasons, the equilibrium real exchange rate for China is considerably lower than that of other developing countries. Taking this hypothesis as our point of departure, we examine how undervalued the Chinese yuan is in terms of purchasing power parity by comparing China’s experience with other developing countries and the development process of developed countries in the past. In addition, we construct an open economy growth model with three sectors, where - similar to the Lewis growth model - there is surplus labor in the primary sector. Using this model, we analyze the relationship between the economic growth process and the level of absolute prices (real exchange rate). We show that the absolute price level will not increase until the economy reaches the Lewisian turning point. In addition, we show that in an economy like China, where there are strong barriers to the migration of labor to the manufacturing sector and where the ratio of net exports of goods and services to GDP is high, the economy will not reach the turning point until GDP per worker reaches a certain level.
    Keywords: China, Lewisian turning point, Labor market, Purchasing power parity, Equilibrium exchange rate
    JEL: O11 O14 O41 O53 J20 J30 J43 J61 F31 F41 F42 F43
    Date: 2012–11
  2. By: Sylvie Démurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Haiyuan Wan (Department of Social Development, National Development and Reform Commission - National development and reform commission)
    Abstract: This paper analyses the impact of the Sloping Land Conversion Program (SLCP) on rural labor migration in China. We use recent survey data from Ningxia Hui Autonomous Region and a difference-in-difference approach to assess the impact of the policy on labor migration decision. We find a significant effect of the policy : the migration probability increase due to the SLCP policy amounts to 17.5 percentage points in 2008. Furthermore, we highlight the role of policy duration in strengthening the impact of the program on migration. We also find that young, male and Hui nationality individuals are more likely to be impacted by the policy.
    Keywords: Sloping Land Conversion Program; Labor migration; Policy evaluation, China
    Date: 2012–12–05
  3. By: Mikhail Khromov (Gaidar Institute for Economic Policy); Alexey Vedev (Gaidar Institute for Economic Policy)
    Abstract: The financial sphere of Russia was the first sector of the national economy which was affected by the global economic crisis of 2008. Financial markets were hit first and then the banking sector experienced the liquidity problem to be followed by a full-scale economic crisis in Russia. Early in 2011, all the factors pointed to the fact that the banking sector overcame the crisis, and it seemed the upward development began. The banking sector had at its disposal huge available resources for expansion of lending to the non-financial sector.
    Keywords: Banking sector, Russian economy
    JEL: E43 E44 E51 E58 G15 G21 G24
    Date: 2012
  4. By: Jay Bhattacharya; Christina Gathmann; Grant Miller
    Abstract: Political and economic transition is often blamed for Russia’s 40% surge in deaths between 1990 and 1994. Highlighting that increases in mortality occurred primarily among alcohol-related causes and among working-age men (the heaviest drinkers), this paper investigates an alternative explanation: the demise of the 1985-1988 Gorbachev Anti-Alcohol Campaign. Using archival sources to build a new oblast-year data set spanning 1978-2000, we find a variety of evidence suggesting that the campaign’s end explains a large share of the mortality crisis – implying that Russia’s transition to capitalism and democracy was not as lethal as commonly suggested.
    JEL: I12 I18 N34
    Date: 2012–12
  5. By: Kenn Ariga (Institute of Economic Research,Kyoto University); Fumio Ohtake (The Institute of Social and Economic Research of Osaka University); Masaru Sasaki (The Graduate School of Economics at Osaka University); Zheren Wu (Faculty of Economics,Kinki University)
    Abstract: This paper uses a unique survey of the Chinese youth to construct a panel data in which we keep track of geographical and job mobilities. Our estimation results deliver the following major findings. (1) The sample individuals are highly mobile. Job quits and relo- cations are frequent and they are closely correlated. We find the job hopping to be highly productive as our estimates indicate each job quit generates more than .2 log increase in monthly wage. .(2) The migrant disadvantage in urban labor market is compensated by their higher job mobility. After four jobs, the expected earnings di¤erentials essentially disappear. We also find that migration and job mobility are highly selective processes. Our evidence indicates that the migrants are positively selected. (3) Job and location mobilities are highly dependent upon family back ground and personal traits which we interpret as representing un- observable characteristics associated with risk taking, active and opti- mistic personality, as well as the implied economic incentives to migrate and keep searching for better jobs.
    JEL: J31 J61 J62
    Date: 2012–11
  6. By: Qin, Yu; Zhang, Xiaobo
    Abstract: Because many rural poor live in areas far away from markets, we investigate whether better road access could help improve their livelihood and reduce rural poverty. We use three waves of a primary panel survey at the household level conducted in 18 remote natural villages in China to study how road access shapes farmers’ agricultural production patterns and input uses and affects rural poverty. Our results show that access to roads is strongly associated with specialization in agricultural production. In natural villages with better road access, farmers plant fewer numbers of crops, purchase more fertilizer, and invest more money in labor. In combination with such factors, road connections improve household agricultural income—in particular, cash income—and contribute to poverty reduction in the surveyed villages. However, better access to rural roads does not appear to bring about significant changes in nonagricultural income.
    Keywords: roads, Agricultural specialization, Input use, rural areas, Rural poor, Household income, Household surveys, Poverty reduction,
    Date: 2012
  7. By: Prabir C. Bhattacharya
    Abstract: The aim of this paper is to study inequality and deprivations as reflected in the human sex ratio (commonly defined as the number of males per 100 females). The particular focus is on three emerging economies, viz., Russia, India and China. The paper compares and contrasts the experiences of these countries and discusses policy issues. It is noted that while the feminist perspective on the issues surrounding the sex ratio is important, it would be wrong to view these issues always or exclusively through the prism of that perspective . It is also suggested that India and China probably have better prospects of sustained economic growth in the foreseeable future than does Russia.
    Date: 2012
  8. By: Jérôme Héricourt; Sandra Poncet
    Abstract: This paper studies how firm-level export performance is affected by RER volatility and investigates whether this effect depends on existing financial constraints. Our empirical analysis relies on export data for more than 100,000 Chinese exporters over the period 2000-2006. We confirm a trade-deterring effect of RER volatility. We find that firms tend to export less and fewer products to destinations with higher exchange rate volatility and that this effect is magnified for financially vulnerable firms. As expected, financial development does seem to dampen this negative impact, especially on the intensive margin of export.
    Keywords: Exchange rate volatility;financial development;exports
    JEL: F10 R12 L25
    Date: 2012–12
  9. By: Samba Mbaye (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper examines empirically one of the most popular views in international economics, yet barely tested: undervaluation of the currency is a "beggar-thy-neighbor" policy. It assesses simultaneously the two closely related implications of the beggar-thy-neighbor view: (i) undervaluation of the domestic currency improves the domestic trade balance; and most importantly, (ii) undervaluation of the domestic currency negatively impacts the other countries' trade balances. Starting from the traditional imperfect substitutes model, we propose an empirical framework allowing the estimation of both the internal and external impacts of currency undervaluation. This framework is then applied to a panel of 62 advanced and emerging markets over the period 1990-2007. The results give strong support to the beggar-thy-neighbor hypothesis. We find that currency undervaluation is robustly and significantly associated with an improvement of the domestic trade balance. We also find that countries that keep their currencies undervalued tend to negatively impact the other countries' trade balances. Finally, our estimates suggest that the external effect of China's renminbi, which has been the focus of the profession thus far, might be "the tip of the iceberg": the latter two results carry over when China's trade data are excluded from the analysis.
    Keywords: exchange rate misalignment;Trade;Undervaluation;beggar-thy-neighbor;China
    Date: 2012–12–05
  10. By: Daniel Dujava (Department of Economic Theory, University of Economics in Bratislava)
    Abstract: In the study we propose an index of unemployment caused by structural changes. In the case of employment drop, the index enables to quantify what fraction of jobs has been lost because of ongoing structural changes. The index is based on distinction between temporary and permanent changes in employment in different industries. We consider fluctuations outside the corridor defined by initial and final level of employment to be temporary. It is possible to calculate the index only after employment reaches its former level which is its major drawback. We apply this methodology on Slovakia and Czech Republic during the period 1996 - 2007. We find out that in Slovakia, 62 % of jobs have been lost due to structural reasons. In Czech Republic, corresponding number is 55 %.
    Keywords: Cyclical employment, Economic cycles, Employment, Structural changes, Structural unemployment
    JEL: J69 L16
    Date: 2012–12–03
  11. By: Chen, Xi; Zhang, Xiaobo
    Abstract: Participating in and presenting gifts at funerals, weddings, and other ceremonies held by fellow villagers have been regarded as social norms in Chinese villages for thousands of years. However, it is more burdensome for the poor to take part in these social occasions than for the rich. Because the poor often lack the necessary resources, they are forced to cut back on basic consumption, such as food, in order to afford a gift to attend the social festivals. For pregnant women in poor families, such a reduction in nutrition intake as a result of gift-giving can have a lasting detrimental health impact on their children.
    Keywords: Social norms, Social relations, food consumption, Stunting, malnutrition, Women,
    Date: 2012
  12. By: Sébastien MARCHAND (Centre d'Etudes et de Recherches sur le Développement International); Huanxiu GUO
    Abstract: In this case study, we attempt to re-evaluate the performance of organic farming in developing countries using the indicator of Environmental Efficiency (EE) within the framework of Stochastic Frontier Analysis (SFA). A set of plot-season level panel data was collected from an NGO-led organic paddy rice project in southern China. This original dataset is used to calculate EE scores across both the organic and conventional plots. Our two-stage analysis reveals two essential points. First, in poor rural areas, organic farming doesn't systematically reduce the pure nitrogen input for paddy rice production. In order to maintain the yield, organic farmers may apply the same, or an even greater quantity of pure nitrogen than conventional farmers. Second, organic farming loses its environmental efficiency in the scaling up period due to the excessive pure nitrogen input. Therefore, we argue that beyond the simple substitution of chemical fertilizer by organic fertilizer, more sustainable organic farming necessitates additional e fforts on the control of nutrient input.
    Keywords: Organic farming, Environmental efficiency, Stochastic frontier analysis, China
    JEL: D71 O53 R15 Q57 Q12
    Date: 2012

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