nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒02‒03
eighteen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. FDI and Wages: Evidence from Firm-Level and Linked Employer-Employee Data in Hungary, 1986-2008 By Earle, John S.; Telegdy, Álmos; Antal, Gábor
  2. The Ukrainian Longitudinal Monitoring Survey: Towards a Better Understanding of Labor Markets in Transition By Lehmann, Hartmut; Muravyev, Alexander; Zimmermann, Klaus F.
  3. Returning Home at Times of Trouble? Return Migration of EU Enlargement Migrants during the Crisis By Zaiceva, Anzelika; Zimmermann, Klaus F.
  4. The Effects of the State Sector on Wage Inequality in Urban China: 1988–2007 By Xia, Qingjie; Song, Lina; Li, Shi; Appleton, Simon
  5. Wage Growth through Job Hopping in China By Ariga, Kenn; Ohtake, Fumio; Sasaki, Masaru; Wu, Zheren
  6. Understanding Urban Wage Inequality in China 1988-2008: Evidence from Quantile Analysis By Appleton, Simon; Song, Lina; Xia, Qingjie
  7. The Development of Long-Term Care in Post-Socialist Member States of the EU By Stanislawa Golinowska; Agnieszka Sowa
  8. Gaming in Air Pollution Data? Lessons from China By Yuyu Chen; Ginger Zhe Jin; Naresh Kumar; Guang Shi
  9. Decomposing the labor market earnings inequality: the public and private sectors in Vietnam, 1993-2006 By Imbert, Clement
  10. Estimating Returns to Education when the IV Sample is Selective By Wang, Le
  11. The Chinese contract market By Aurelio Volpe; Mauro Spinelli
  12. The Theory of Interhybridity: Socio-political Dimensions and Migration Experiences of Post-communist Western Balkan States By Aliu, Armando
  13. The internalization of SMEs operating in the engineering industry By Procházková, Lenka; Kubíčková, Lea
  14. Identifying corruption through latent class models: evidence from transition economies By Pieroni, Luca; d'Agostino, Giorgio; Bartolucci, Francesco
  15. Efficiency analysis of commercial grape-producing family farms in the Republic of Macedonia By Manevska-Tasevska, Gordana
  16. Dynamic structural and topological phase transitions on the Warsaw Stock Exchange: A phenomenological approach By A. Sienkiewicz; T. Gubiec; R. Kutner; Z. R. Struzik
  17. Is a gender gap in net school enrollment a reflection of the gender wage gap in the labor market? Evidence using household data from Vietnam By Tien Manh Vu
  18. Who Suffers the Penalty? A Panel Data Analysis of Earnings Gaps in Vietnam By Nguyen, Huu Chi; Nordman, Christophe Jalil; Roubaud, François

  1. By: Earle, John S. (George Mason University); Telegdy, Álmos (Institute of Economics, Budapest); Antal, Gábor (Central European University)
    Abstract: We estimate the wage effects of foreign direct investment (FDI) with universal firm-level and linked employer-employee panel data containing 4,926 foreign acquisitions in Hungary. Matching on pre-acquisition data and controlling for fixed effects for firms and detailed worker groups, we find 12-28 percent effects on average wages. The wage effect mostly reverses for 983 foreign acquisitions later divested to domestic owners. We find positive effects for all worker types, occupations, and wage quantiles. The evidence implies little role for either measurement problems or residual selection, but suggests a strong cross-firm association of FDI wage premia with similar differentials in productivity.
    Keywords: foreign acquisitions, FDI, earnings, wage differentials, productivity, difference-in-differences matching, employer effects, Hungary
    JEL: F23 J31
    Date: 2012–12
  2. By: Lehmann, Hartmut (University of Bologna); Muravyev, Alexander (St. Petersburg University GSOM and IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: The paper presents the Ukrainian Longitudinal Monitoring Survey (ULMS), which is one of the most widely used household and labor force surveys in Eastern Europe. It is based on a statistically representative sample of the Ukrainian population aged between 15 and 72 years, comprising about 4,000 households and 8,500 individuals. The paper introduces the essential aspects of the ULMS, including sampling, survey instruments and content as well as discusses the current available data. Key details of the forthcoming 2012 wave of the survey are outlined. The article also provides an overview of major studies accomplished with the help of the ULMS data. The review suggests the usefulness and high potential of the survey in tackling important questions in labor economics and related fields.
    Keywords: transition, public use data, survey panel data, Ukraine
    JEL: C83 J00 P20
    Date: 2012–12
  3. By: Zaiceva, Anzelika (University of Modena and Reggio Emilia); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: The eastern enlargements of the EU in 2004 and 2007 have stimulated the mobility of workers from the new EU8 and EU2 countries. A significant proportion of these migrants stayed abroad only temporarily, and the Great recession may have triggered return intentions. However, a return may be postponed if the economic situation in a sending region is persistently worse. This paper documents emerging evidence on return migration in post-enlargement Europe combining several data sources to describe the characteristics and selection of the returnees, as well as the determinants of return migration and potential re-migration decisions. The findings suggest that brain circulation rather than brain drain is relevant for several new member states and that returnees are most likely to migrate again. Moreover, the proportion of potential movers is larger in countries most affected by the crisis. Repeat and circular migration is expected to alleviate the potential negative impacts of the crisis, leading to a more efficient allocation of resources within the enlarged EU.
    Keywords: return migration, EU Eastern enlargement, economic crisis
    JEL: F22 J61
    Date: 2012–12
  4. By: Xia, Qingjie (Peking University); Song, Lina (University of Nottingham); Li, Shi (Beijing Normal University); Appleton, Simon (University of Nottingham)
    Abstract: This paper examines the effects of state sector domination on wage inequality in urban China. Using Chinese Household Income Project surveys, we conduct two exercises: with quantile regression analysis, we identify wage gaps across the distribution and over time; and we employ the Machado and Mata (2005) decomposition to investigate how urban wage inequality was affected by the changes in wage structure and employment share of the state sector. We find that since the radical state sector reforms designed to reduce over-staffing and improve efficiency since the late 1990s, urban wage gaps were narrowed due to the reduction of employment share in the state sector; the wage premium of the state sector in comparison with the non-state sector increased significantly; and changes in the wage structure of the labour market caused the rise in urban wage inequality.
    Keywords: China, state sector, wage inequality, quantile regression, counterfactual analysis
    JEL: J31 J42 O15 P23
    Date: 2013–01
  5. By: Ariga, Kenn (Kyoto University); Ohtake, Fumio (Osaka University); Sasaki, Masaru (Osaka University); Wu, Zheren (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 relocations are frequent and they are closely correlated. We find that 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 differentials 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 unobservable characteristics associated with risk taking, active and optimistic personality, as well as the implied economic incentives to migrate and keep searching for better jobs.
    Keywords: wage growth, migration, school to work transition
    JEL: J31 J61 J62
    Date: 2012–12
  6. By: Appleton, Simon (University of Nottingham); Song, Lina (University of Nottingham); Xia, Qingjie (Peking University)
    Abstract: This paper examines change in wage gaps in urban China by estimating quantile regressions on CHIPS data. It applies the Machado and Mata (2005) decomposition, finding sharp increases in inequality from 1988 to 1995 and from 2002 to 2008 largely due to changes in the wage structure. The analysis reports how the returns to education and experience vary across wage quantiles, along with wage differentials by sex and party membership. The role of industrial structure, ownership reform and occupational change are also estimated. In the recent period, 2002 to 2008, falls in the returns to education and experience have been equalising. However, changes in every other category of observed wage differential – by sex, occupation, ownership, industrial sector and province – have served to widened inequality. The gender gap continued to rise, as did the gap between white collar and blue collar workers, and between manufacturing and most other industrial sectors.
    Keywords: China, labour, wages, quantile regression, inequality
    JEL: J31 J42 O15 P23
    Date: 2012–12
  7. By: Stanislawa Golinowska; Agnieszka Sowa
    Abstract: Long-term care (LTC) in the new EU member states, which used to belong to the former socialist countries, is not yet a legally separated sector of social security. However, the ageing dynamics are more intensive in these states than in the old EU member states. This paper analyses the process of creating an LTC sector in the context of institutional reforms of social protection systems during the transition period. The authors explain LTC’s position straddling the health and social sectors, the underdevelopment of formal LTC, and the current policies regarding the risk of LTC dependency. The paper is based mainly on the analysis of information provided by country experts in the ANCIEN project.
    Keywords: Labor market, social policy and social services, Europe, long-term care, social sector reform, social policy
    JEL: I18 I31 J11 J18
    Date: 2013–01
  8. By: Yuyu Chen; Ginger Zhe Jin; Naresh Kumar; Guang Shi
    Abstract: Protecting the environment during economic growth is a challenge facing every country. This paper focuses on two regulatory measures that China has adopted to incentivize air quality improvement: publishing a daily air pollution index (API) for major cities since 2000 and linking the API to performance evaluations of local governments. In particular, China defines a day with an API at or below 100 as a blue sky day. Starting in 2003, a city with at least 80% blue sky days in a calendar year (among other criteria) qualified for the “national environmental protection model city” award. This cutoff was increased to 85% in 2007. Using officially reported API data from 37 large cities during 2000-2009, we find a significant discontinuity at the threshold of 100 and this discontinuity is of a greater magnitude after 2003. Moreover, we find that the model cities were less likely to report API right above 100 when they were close to the targeted blue sky days in the fourth quarter of the year when or before they won the model city award. That being said, we also find significant correlation of API with two alternative measures of air pollution – namely visibility as reported by the China Meteorological Administration (CMA) and Aerosol Optical Depth (AOD), corrected for meteorological conditions, from NASA satellites. The discontinuity around 100 suggests that count of blue sky days could have been subject to data manipulation; nevertheless, API does contain useful information about air pollution.
    JEL: D8 H7 I18 L3 L5
    Date: 2013–01
  9. By: Imbert, Clement
    Abstract: In contrast with the typical transition to a market economy, earnings inequality in Vietnam between 1993 and 2006 appears to have decreased, and the earnings gap in favor of public employees appears to have widened. The paper uses a comparative advantage model to disentangle the effect of sorting workers across sectors from the effect of the differences in returns to workers'skills. The selection of the best workers into the public sector is clearly an important component of the explanation for the public-private sector earnings gap, but the widening of this gap over time is primarily due to changes in the compensation patterns. The paper finds that, in the 1990s, public employees were underpaid compared with their earning potential in the private sector whereas, in the early 2000s, public employees earned similar returns to their comparative advantage in the public and private sectors. The increasing homogeneity in returns to skills in the Vietnamese labor market appears to explain both the increase in the public-private pay gap and the decrease in overall inequality.
    Keywords: Labor Markets,Public Sector Economics,Public Sector Management and Reform,Inequality,Government Procurement
    Date: 2013–01–01
  10. By: Wang, Le (University of New Hampshire)
    Abstract: The literature estimating returns to education has often utilized spousal education and parental education as instrument variables (IV). However, due to usual survey designs, both IVs are available only for the individuals whose spouse or parents are present in the same household. The IV estimates based on these selective sub-samples may be inconsistent, even when the IVs satisfy the standard assumptions. In this paper, we examine the empirical relevance of this issue in the Chinese context. To our surprise, unlike the selection issue in other situations, this kind of selection does not appear particularly worrisome, suggesting that the previous IV results are robust. In particular, using China Household Income Project 1995 and 2002, we find that correcting for this potential issue has only a modest impact on the magnitude of the standard IV estimates using parental education as an IV, but a negligible impact on those using spousal education. Using the specification tests proposed, we find that these impacts are generally not statistically significant. These results are further confirmed by our analysis using U.S. data. We believe that these results are of use to both policymakers and practitioners.
    Keywords: instrument variable estimation, sample selection, returns to education, Chinese labor market
    JEL: J24 I21 C14 C31 P52
    Date: 2012–12
  11. By: Aurelio Volpe (CSIL Centre for Industrial Studies); Mauro Spinelli (CSIL Centre for Industrial Studies)
    Abstract: This Report is the result of 200 interviews with key players (Contract Furniture Manufacturers, Design Studios and Builders, Hotel Chains and other relevant Clients) and two years of CSIL research in China, on contract-related topics. Figures and analysis are described from two different point of views: end user sectors and main products. End user sectors include Hospitality, Restaurant Industry, Mass and Luxury Retail, Real Estate/Luxury Villas, Airports, Schools/Auditoriums, Arts and Museums, Marine. Products considered are: Tables/chairs, Bathrooms, Lighting, Office furniture, Beds, Flooring, Glass, Marble, Textiles. The Report, 80 pages and 20 chapters, is organized in four general sections (Purchasing process, Design studios, Basic data, main Magazines and Fairs), 8 chapters on end user sectors, 8 chapters on main products. Each chapter includes a short description of main players in that field.
    JEL: L11 L22 L68
    Date: 2013–01
  12. By: Aliu, Armando
    Abstract: The Western Balkans integration within the EU has started a legal process which is the rejection of former communist legal/political approaches and the transformation of former communist institutions. Indeed, the EU agenda has brought vertical/horizontal integration and Europeanization of national institutions (i.e. shifting power to the EU institutions and international authorities). At this point, it is very crucial to emphasize the fact that the Western Balkans as a whole region has currently an image that includes characteristics of both the Soviet socialism and the European democracy. The EU foreign policies and enlargement strategy for Western Balkans have significant effects on four core factors (i.e. Schengen visa regulations, remittances, asylum and migration as an aggregate process). The convergence/divergence of EU member states’ priorities for migration policies regulate and even shape directly the migration dynamics in migrant sender countries. From this standpoint, the research explores how main migration factors are influenced by political and judicial factors such as; rule of law and democracy score, the economic liberation score, political and human rights, civil society score and citizenship rights in Western Balkan countries. The proposal of interhybridity explores how the hybridization of state and non-state actors within home and host countries can solve labor migration-related problems. Indisputably, hybrid model (i.e. collaboration state and non-state actors) has a catalyst role in terms of balancing social problems and civil society needs. Paradigmatically, it is better to perceive the hybrid model as a combination of communicative and strategic action that means the reciprocal recognition within the model is precondition for significant functionality. This will shape social and industrial relations with moral meanings of communication.
    Keywords: Interhybridity; Migration; Politics; Western Balkans
    JEL: F22 A1 C0 B4 P48 C1 F5 P3 J61 C8 J53
    Date: 2013–01–25
  13. By: Procházková, Lenka; Kubíčková, Lea
    Abstract: The importance of small and medium enterprises (SMEs) in the national economies of EU countries has been always growing. For these reasons, the increasing attention is paid to small and mediumsized enterprises also in the Czech economy. The paper is focused on the globalization of small and medium enterprises, in particular, identifying the key success factors of small and medium-sized businesses that operate in the engineering industry. For the purpose of fulfi lling the objective of the article, the level of success of SMEs in foreign markets is established with the aggregate indicator of success. Subsequently the results of the primary research among the Czech engineering companies are presented, based on this research the factors aff ecting the success of these entities of engineering industry in foreign markets are defi ned.
    Keywords: small and medium-sized enterprises; foreign markets; success; key success factors; engineering industry
    JEL: M00
    Date: 2012
  14. By: Pieroni, Luca; d'Agostino, Giorgio; Bartolucci, Francesco
    Abstract: Evaluation of corrupt activities is incrementally based on administration of questionnaires to firms in business, and generally involves a large number of items. Data collected by questionnaires of this type can be analyzed by Latent Class (LC) models in order to classify firms into homogeneous groups according to the perception of corruption. In this paper, we propose a multidimensional framework, based on an LC model, to identify various types of corruption. By using a dataset for transition economies, we identify four classes of corrupt activities, which go beyond the usual classification into administrative and political types of corruption; we then validate our estimates by using a direct administrative corruption index from the same dataset and by comparing, at country level, corruption perception rankings published by Transparency International. The potential of the proposed approach is illustrated through an application to the relationship between firms' competitiveness and the identified latent corruption classes, with evident heterogeneity in the interpretation of results regarding policy implications.
    Keywords: Latent class models; multidimensional item response theory; corruption; transition economies
    JEL: D73 C52 D22
    Date: 2013–01–13
  15. By: Manevska-Tasevska, Gordana
    Abstract: An empirical analysis was conducted on the efficiency of commercial grape-producing family farms in the Republic of Macedonia in order to examine how farm performance is influenced by selected aspects of the current Rural Development Programme (RDP) (2007-2013). The emphasis was on Macedonian grape production on family farms and on instruments for more efficient use of resources, production modernisation, vine revitalisation, and the knowledge and managerial capacity of Macedonian grape growers. A two-stage analysis was carried out on farm-level data for the period 2006-2008. The estimated efficiency scores indicated that substantial efficiency improvements are possible on Macedonian grape-producing farms, with potential for a cost decrease of 29% (20% and 36% with parametric and bootstrapping applied) if farmers manage inputs more efficiently. Farm revenue can be improved by 47% (61% when bootstrapping applied) if farmers manage to increase the value of outputs. More efficient farms used a smaller area, irrigated a smaller proportion of total area, used less hired labour, used and paid less for inputs, but produced a larger quantity, with higher value per hectare. The technically more efficient farmers were: younger farmers, farmers with profit maximisation objectives; farmers with lower expectations of a better future for farming; farmers making choices with other family members; farmers monitoring production on the farm and maintaining bookkeeping records; those attending seminars, and those interested in competence-based knowledge such as plant protection, credit/investments. Interventions in production assortment and quality have potential to influence farm performance. Rural development policies can help improve farm efficiency. RDP measures targeted at achieving stable yield, yield improvement and modernisation of equipment, improving farmers' managerial performance and strengthening the capacity of sources providing non-formal education should be a high priority.
    Date: 2011–12
  16. By: A. Sienkiewicz; T. Gubiec; R. Kutner; Z. R. Struzik
    Abstract: We study the crash dynamics of the Warsaw Stock Exchange (WSE) by using the Minimal Spanning Tree (MST) networks. We find the transition of the complex network during its evolution from a (hierarchical) power law MST network, representing the stable state of WSE before the recent worldwide financial crash, to a superstar-like (or superhub) MST network of the market decorated by a hierarchy of trees (being, perhaps, an unstable, intermediate market state). Subsequently, we observed a transition from this complex tree to the topology of the (hierarchical) power law MST network decorated by several star-like trees or hubs. This structure and topology represent, perhaps, the WSE after the worldwide financial crash, and could be considered to be an aftershock. Our results can serve as an empirical foundation for a future theory of dynamic structural and topological phase transitions on financial markets.
    Date: 2013–01
  17. By: Tien Manh Vu (Ph.D Candidate, Osaka School of International Public Policy, Osaka University)
    Abstract: The paper estimates both the gender gap in wage and net schooling enrollment from Vietnam household data. The results imply a reflection of gender wage gap in the labor market in hazard of school withdrawals. Generally, males have higher incentive to terminate their schooling to join the labor force. Males would have 43.8 percent higher in participating the labor market and gain 18.4 percent of wage per hour higher than females. Also, we observe 16?44.4 percent lower in probability for males to enroll in school, especially, the school withdrawal rate accelerates at higher speed after the age of primary school. Meanwhile, females would have an incentive to complete junior, senior high school and 3?year college thanks to higher speed gain in wage. Besides, family having a combination of a household head working for a state?owned firm and his spouse working as self?employed would best facilitate their co?residing children and grandchildren for more years of schooling. Finally, the current education subsidy and tuition fee reduction policy do minimal to reduce the hazard of school dropouts among beneficiaries.
    Keywords: School dropouts, Returns to schooling, Wage, Gender gap, Vietnam
    JEL: I24 I25 J31
    Date: 2013–01
  18. By: Nguyen, Huu Chi (IRD, DIAL, Paris); Nordman, Christophe Jalil (IRD, DIAL, Paris); Roubaud, François (IRD, DIAL, Paris)
    Abstract: In spite of its predominant economic weight in developing countries, little is known about the informal sector earnings structure compared to that of the formal sector. Taking advantage of the VHLSS dataset in Vietnam, in particular its three wave panel data (2002, 2004, 2006), we assess the magnitude of various formal-informal earnings gaps while addressing heterogeneity at three different levels: the worker, the job (wage employment vs. self-employment) and the earnings distribution. We estimate fixed effects and quantile regressions to control for unobserved individual characteristics. Our results suggest that the informal sector earnings gap highly depends on the workers' job status and on their relative position in the earnings distribution. Penalties may in some cases turn into premiums. By comparing our results with studies in other developing countries, we draw conclusions highlighting the Vietnam's labour market specificity.
    Keywords: informal employment, earnings gap, transition matrix, panel data, Vietnam
    JEL: J21 J23 J24 J31 O17
    Date: 2013–01

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