nep-tra New Economics Papers
on Transition Economics
Issue of 2012‒12‒22
twelve papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Labor Market Institutions and Informality in Transition and Latin American Countries By Lehmann, Hartmut; Muravyev, Alexander
  2. Are Skills a Constraint on Firms? New Evidence from Russia By Commander, Simon; Denisova, Irina
  3. Matching Skills and Jobs in Estonia By Lilas Demmou
  4. Population Policies, Demographic Structural Changes, and the Chinese Household Saving Puzzle By Ge, Suqin; Yang, Dennis Tao; Zhang, Junsen
  5. Rethinking the form and function of cities in post-Soviet countries By Coulibaly, Souleymane
  6. Productivity As If Space Mattered: An Application to Factor Markets Across China By Wenya Cheng; John Morrow; Kitjawat Tacharoen
  7. Trade liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters By Khandelwal, Amit; Schott, Peter K.; Wei, Shang-Jin
  8. Household Survey Data for Research on Well-Being and Behavior in Central Asia By Brück, Tilman; Esenaliev, Damir; Kroeger, Antje; Kudebayeva, Alma; Mirkasimov, Bakhrom; Steiner, Susan
  9. Public Policy and Individual Labor Market Discrimination: An Artefactual Field Experiment in China By Uwe Dulleck; Jonas Fooken; Yumei He
  10. Essays on pensions, health expectancy and credit insurance. By Zheng, J.
  11. Urban Economic Growth in Europe Between 2001 and 2008 – Gravitation or Dispersion? By Uwe Neumann; Rüdiger Budde; Christoph Ehlert
  12. Multifractal Detrended Fluctuation Analysis of the Chinese Stock Index Futures Market By Xinsheng Lu; Jie Tian; Ying Zhou; Zhihui Li

  1. By: Lehmann, Hartmut (University of Bologna); Muravyev, Alexander (St. Petersburg University GSOM and IZA)
    Abstract: This paper analyzes, using country-level panel data from transition economies and Latin America, the impact of labor market institutions on informal economic activity. The measure of informal economic activity is taken from Schneider et al. (2010), the most comprehensive study to date. The data on institutions, which cover employment protection legislation (EPL), the tax wedge, the unemployment benefit level, unemployment benefit duration and union density, are assembled at the IZA (transition countries) and the World Bank (LAC countries). We find that a more regulated labor market (higher EPL) increases the size of the informal economy. There is also evidence that a larger tax wedge increases informality. The tax wedge elasticity of informal economy, when evaluated at the sample mean, is rather modest, around 0.1%. Our results are broadly in line with the literature, which identifies labor market regulation and the tax wedge as important drivers of informality.
    Keywords: labor market institutions, informality, macroeconometric regressions, transition countries, Latin America
    JEL: E24 J21 J42 O17 P20
    Date: 2012–11
  2. By: Commander, Simon (EBRD, London); Denisova, Irina (CEFIR, New Economic School, Moscow)
    Abstract: The paper uses a unique survey of recruitment firms to look at how Russian firms perceive the supply of skills in the labour market and how well those skills match to their demand for labour. Firms invest significant amounts of time in search to fill vacancies and search time is unambiguously increasing in skills. These skill gaps are associated with significant wage premia and are perceived to have negative consequences for the output mix and productivity. A small job postings experiment also finds that search time increased yet further for activities considered relatively innovative. Further, using Russian Ministry of Labour data for all legal migrant applications in 2010 and matching the migrant to the sponsoring firm, we find that there is some – albeit limited - evidence of firms using migrants to address high skill shortages. However, the overwhelming majority of migrants are skilled or unskilled workers; a reflection of the low underlying rates of innovation and associated demand for high skill jobs.
    Keywords: job search, vacancies, skills
    JEL: J31 J61
    Date: 2012–11
  3. By: Lilas Demmou
    Abstract: The labour market in Estonia is volatile, increasing the risk that groups with some obstacles to enter the labour market (youth, non-Estonian speakers and workers with no upper secondary graduation certificate) may become long-term unemployed, due to the aggravating skills mismatch in the wake of structural change. Avoiding a permanent exit from the labour force makes a multi-pronged strategy necessary, including strengthening activation policies, a better school-to-job transition, improving the cooperation with employers to improve vocational training programmes, stepping up targeting life-long learning support, and improving the access of tertiary studies for students from weak social backgrounds.<P>Faire coïncider compétences et emplois en Estonie<BR>Le marché du travail en Estonie est volatile ce qui, en raison d’une aggravation des problèmes d’inadéquation des compétences, augmente le risque de chômage de long terme pour certains groupes subissant davantage de barrières à l’entrée sur le marché du travail (les jeunes, la population ne parlant pas estonien et les travailleurs sans diplômes du secondaire). Afin de réduire le risque de sortie définitive du marché du travail une stratégie sur plusieurs fronts est nécessaire, incluant le renforcement des politiques actives du marché du travail, l’amélioration de la transition entre l’école et le marché du travail, l’amélioration des programmes d’enseignement professionnel par le biais d’un renforcement de la coopération avec les employeurs, un meilleur ciblage des aides destinées à l’apprentissage tout au long de la vie, et l’amélioration d’un accès aux études supérieures pour les étudiants socialement défavorisés.
    Keywords: unemployment, active labour market policies, higher education, Estonia, skills mismatch, life-long learning, chômage, enseignement supérieur, formation continue, Estonie, enseignement professionnel, inéquation des qualifications
    JEL: I21 I22 I28 J18 J24 J64 J68
    Date: 2012–12–10
  4. By: Ge, Suqin (Virginia Tech); Yang, Dennis Tao (University of Virginia); Zhang, Junsen (Chinese University of Hong Kong)
    Abstract: Using combined data from population censuses and Urban Household Surveys, we study the effects of demographic structural changes on the rise in household saving in China. Variations in fines across provinces on unauthorized births under the one-child policy and in cohort-specific fertility influenced by the implementation of population control policies are exploited to facilitate identification. We find evidence that older households with a reduced number of adult children save more because of old-age security concerns, middle-aged households experience an increase in saving due to the lighter burden of dependent children, and younger households save more because of having fewer siblings to share the responsibility of parental care. These findings lend support to a simple economic model in which the effects of population control policies are investigated in the context of household saving decisions in China.
    Keywords: household saving, one-child policy, demographic structure, cohort analysis, China
    JEL: E21 J11 J13
    Date: 2012–11
  5. By: Coulibaly, Souleymane
    Abstract: Eurasian cities, unique in the global spatial landscape, were part of the world's largest experiment in urban development. The challenges they now face because of their history offer valuable lessons to urban planners and policymakers across the world from places that are still urbanizing to those already urbanized. Today, Eurasian cities must respond to three big changes: the breakup of the Soviet Union, the return of the market as the driving force of society, and the emergence of regional powers such as the European Union, China, and India that are competing with the Russian Federation for markets and influence in its former satellites. Several methods of analysis indicate an imbalance across Eurasia, implying a need to readjust Eurasia's urban structure. National policies in Eurasia are still preoccupied with spatial equity. But the concentration of economic activity in large cities is fundamental to national competitive advantage: they foster innovation through their diversity of industries -- and reduce production costs through their economies of scale. This paper suggests some ideas on how policymakers can harness the economic power of cities to drive national economic development, by focusing on four themes: planning, connecting, greening, and financing cities.
    Keywords: Transport Economics Policy&Planning,Environmental Economics&Policies,City Development Strategies,Banks&Banking Reform,Housing&Human Habitats
    Date: 2012–12–01
  6. By: Wenya Cheng; John Morrow; Kitjawat Tacharoen
    Abstract: Optimal production decisions depend on local market characteristics. This paper develops a model to explain firm labor demand and firm density across regions. Firms vary in their technology to combine imperfectly substitutable worker types, and locate across regions with distinct distributions of workers and wages. Firm technologies which best match regional labor markets explain both productivity differences and firm density. Estimating structural model parameters is simple and relies on a two stage OLS procedure. The first stage estimates local market conditions using firm employment and regional data, while the second incorporates regional costs into production function estimation. The method is applied to Chinese manufacturing, population census and geographic data to estimate local market costs and production technologies. In line with the model, we find that labor markets which provide cost advantages explain substantial differences in firm productivity. Furthermore, regions which have lower optimal hiring costs attract more firms per capita.
    Keywords: Structural estimation, productivity, firm location, China
    JEL: D22 D24 J24 J30 O15 R11
    Date: 2012–12
  7. By: Khandelwal, Amit; Schott, Peter K.; Wei, Shang-Jin
    Abstract: If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the removal of externally imposed quotas. Both the surge in export volumes and the decline in prices after the quota removal are driven by net entry, implying that the pre-liberalization quota allocation is not based on firm productivity. Removing this misallocation accounts for a substantial share of the overall productivity gains associated with the quota removal.
    Keywords: China; misallocation; Multifibre Agreement; productivity
    JEL: F1 O1
    Date: 2012–12
  8. By: Brück, Tilman (Humboldt University Berlin); Esenaliev, Damir (DIW Berlin); Kroeger, Antje (DIW Berlin); Kudebayeva, Alma (KIMEP); Mirkasimov, Bakhrom (DIW Berlin); Steiner, Susan (DIW Berlin)
    Abstract: This paper summarizes the micro‐level survey evidence from Central Asia generated and analyzed between 1991 and 2012. We provide an exhaustive overview over all accessible individual and household‐level surveys undertaken in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan ‐ and of all English‐language academic papers published using these datasets. We argue that Central Asia is a fascinating region for the study of comparative economics given its dual experience of transition and development. However, the region is also understudied, in part due to lack of data, and especially due to a lack of panel data. We identify knowledge gaps caused from this lack of longitudinal surveys and suggest worthwhile areas for future research. Finally, we also present the new and novel individual‐level panel dataset called "Life in Kyrgyzstan".
    Keywords: survey data, poverty, labor force participation, Central Asia
    JEL: O12 I32 J22
    Date: 2012–11
  9. By: Uwe Dulleck; Jonas Fooken; Yumei He
    Abstract: We study discrimination based on the hukou system, a policy segregating migrants and locals in urban China. We hired household aids as participants in our artefactual field experiment and use a gift exchange game to study labor market discrimination. We find that social discrimination based on hukou status also implies individual level discrimination. To identify whether discrimination is statistical or taste-based we introduce the wage promising game, a gift exchange game with a cheap talk wage promise. We find that discrimination is taste-based: Status is exogenous for our participants, migrants and locals behave similarly and discrimination increases when reasons for statistical discrimination are removed.
    Keywords: labor market discrimination, artefactual field experiment, hukou
    JEL: J7 C93 P36
    Date: 2012–11–28
  10. By: Zheng, J. (Tilburg University)
    Abstract: The choice of payment terms has increasingly become more important in determining the success of exporting transactions. While exporters often use Open Account (OA) terms to secure international contracts and to expand export levels, these terms in turn make them face more non-payment risks. In Export Credit Insurance and Trade Promotion, we present a theoretical model showing the competitiveness of OA terms in international trade, and the risk-reducing as well as export-enhancing role played by export credit insurance programs. Our theoretical analysis shows that, when exporters are risk averse, these programs are always effective without breaking the legal and financial obligations. Using Chinese export and insurance data, both static and dynamic models show a positive and statistically significant export-promoting effect of export credit insurance in China. The insurance effect across income groups also suggests the success of export credit insurance in diversifying export destinations.
    Date: 2012
  11. By: Uwe Neumann; Rüdiger Budde; Christoph Ehlert
    Abstract: This paper examines what regional characteristics drove urban economic growth in Europe during the past decade. Possible impacts on the new member states in Central Europe due to expansion of the European Union are accounted for by comparison between two periods, before and after 2004. With a focus on cities, a more precise view of Europe-wide regional disparities and their development can be provided than by research based on larger territories, which prevails in the empirical literature on regional convergence. After 2004, economic growth accelerated considerably in the least developed peripheral regions and in the wealthier capital cities of Central European countries. In the medium term, however, no equalisation of disparities within Europe can be exptected. The analysis suggests that economic prosperity in Central Europe and in other parts of Europe depends on the performance of urban “growth poles” favouring regional innovation. This implies that it is a task of regional policy to support provision of a high-quality infrastructure for education and innovation in cities and to encourage utilisation of these facilities within wider regions.
    Keywords: Spatial economics; urban economics; EU enlargement
    JEL: R11 R12 C21 C23
    Date: 2012–11
  12. By: Xinsheng Lu (Department of Economics and Finance, Tongji University, China); Jie Tian (Centre for Resource Economics and Management, Northwest A&F University, Yangling, China); Ying Zhou (Department of Economics, Auckland University of Technology); Zhihui Li (Department of Economics, Jinan University, Jinan, China)
    Abstract: Based on the multifractal detrended fluctuation analysis (MF-DFA) and multifractal spectrum analysis, this paper empirically studies the multifractal properties of the Chinese stock index futures market. Using a total of 2,942 ten-minute closing prices, we find that the Chinese stock index futures returns exhibit long-range correlations and multifractality, making the single-scale index insufficient to describe the futures price fluctuations. Further, by comparing the original time series with the transformed time series through shuffling procedure and phase randomization procedure, we show that there exists two different sources of the multifractality for the Chinese stock index futures market. Our results suggest that the multifractality is mainly due to long-range correlations, although the fat-tailed probability distributions also contribute to such multifractal behavior.
    Keywords: Multifractality, Stock index futures, MF-DFA, Generalized Hurst exponent
    Date: 2012–10

This nep-tra issue is ©2012 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.