nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒05‒11
seventeen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Earnings Differentials and Returns to Education in China, 1995-2008 By Cui, Yuling; Nahm, Daehoon; Tani, Massimiliano
  2. Offshore jurisdictions (including Cyprus), corruption money laundering and Russian round-trip investment By Svetlana Ledyaeva; Päivi Karhunen; John Whalley
  3. Poverty Dynamics of Households in Rural China By Katsushi S. Imai; Jing You
  4. The political economy of food pricing policy in China By Huang, Jikun; Yang, Jun; Rozelle, Scott
  5. China and India: Reforms and the Response: How Differently have the Economies Behaved By Manmohan Agarwal; John Whalley
  6. România în perioada post-criză: investiţiile străine directe şi efecte asupra echilibrului financiar extern By Georgescu, George
  8. Lessons Learned from Tax versus Expenditure Based Fiscal Consolidation in the European Transition Economies By Mirdala, Rajmund
  9. Reforms for a Cleaner, Healthier Environment in China By Sam Hill
  10. Lin, B., Jiang, Z, 2012. Designation and influence of household increasing block electricity tariffs in China. Energy Policy 42, pp. 164–173: How biased is the measurement of household’s loss? By Salies, Evens
  11. Migration from Ukraine: Brawn or Brain? New Survey Evidence By Commander, Simon; Nikolaychuk, Olexandr; Vikhrov, Dmytro
  12. Technical efficiency in small-scale irrigation cooperative and its determinants from the perspective of social capital heterogeneity–the case of northwestern China By Wang, Xin; McIntosh, Christopher S.; Watson, Philip; Zhang, Hua; Lu, Qian
  13. Intellectual Property Rights Protection, Complexity and Multinational Firms By Yang, Zhenzeng
  14. The Great Recession and the Public-Private Wage Gap: Distributional Decomposition Evidence from Croatia 2008-2011 By Rubil, Ivica
  15. ERAWATCH country reports 2011: Czech Republic By Lenka Hebáková; Jan Vanžura; Miroslav Kostic; Mariana Chioncel
  16. Gender and other determinants of trust and reciprocity in an experimental labour market amongst Chinese students By Uwe Dulleck; Jonas Fooken; Yumei He
  17. ERAWATCH COUNTRY REPORTS 2011: Poland By Jacek Walendowski; Mariana Chioncel

  1. By: Cui, Yuling (Macquarie University, Sydney); Nahm, Daehoon (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney)
    Abstract: This paper estimates the returns to education of rural-urban migrants during the period of transition of China's economy between 1995 and 2008. Using data from CHIP and RUMiC, we find that rural migrants' earning differentials with urban residents are substantial and mainly depend on the type of occupation, industry, and employers' ownership, rather than the level of education completed. Returns to formal schooling for migrants remained stable at approximately 3% and 5% throughout the period, and differences across quantiles are generally statistically insignificant. Increasing gaps in the return to schooling by gender have instead emerged. These results raise questions about the incentives to invest in human capital for rural migrants and for the governments funding education in emigration regions.
    Keywords: returns to education, rural migrants, quantile regression, ownership enterprises, China, returns to schooling
    JEL: C31 J24 J61 O15
    Date: 2013–04
  2. By: Svetlana Ledyaeva; Päivi Karhunen; John Whalley
    Abstract: In this paper we analyze the link between corruption money laundering and round-trip investment via offshore jurisdictions utilizing Russian firm-level data. In particular we empirically explore location strategies of round-trip investors (namely, from Cyprus and British Virgin Islands) across Russia and compare them with the benchmark group of genuine foreign investors in Russia. We further study the determinants of the fraction of round-trip investment in total foreign investment in Russian regions. We find that round-trip investors tend to locate in more corrupt Russian regions than their genuine foreign counterparts and the fraction of round-trip investment is also significantly higher in corrupt regions. Taking into account that a large fraction of round-trip investment in Russia is concentrated in real estate and financial sectors, our results point to the conclusion that there is a strong link between round-trip investment and corruption money laundering.
    JEL: F21 F23
    Date: 2013–05
  3. By: Katsushi S. Imai (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan)); Jing You (School of Agricultural Economics and Rural Development, Renmin University of China, China)
    Abstract: The objective of our study is to identify patterns and causes of households' transitions in and out of poverty using the long household panel data on rural China in the period 1989-2009. We propose a discrete-time multi-spell duration model that not only corrects for correlated unobserved heterogeneity across transitions and various destinations within the transition, but also addresses the endogeneity due to dynamic selection associated with household's livelihood strategies. Duration dependence is generally found to be negative for both poverty exit and entry. The household choosing either farming or out-migration as a main livelihood strategy was more likely to escape from the persistent poverty than those taking local non-agricultural employment. Overall, the present study emphasises the central role of agriculture in helping the chronically poor escape from poverty.
    Keywords: Poverty Transition, Discrete-time duration model, Correlated unobserved heterogeneity, Dynamic selection, Rural China
    JEL: C33 C41 I32 O15
    Date: 2013–04
  4. By: Huang, Jikun; Yang, Jun; Rozelle, Scott
    Abstract: The overall goal of this paper is to analyse the political economy of food price policies in China during the global food crisis. The results show that given China.s unique economic and political context and the nature of its agricultural markets, the gov
    Keywords: food price, agriculture, price shocks, political economy, Mozambique
    Date: 2013
  5. By: Manmohan Agarwal; John Whalley
    Abstract: The relative performance of China and India is compared using two different methods and they provide a very different picture of their relative performance. We compare the average absolute values of indictors for the decade of the 1980s, 1990s and the 2000s. We use indicators such as the current account balance (CAB), exports of goods and services (XGS), foreign direct investment inflow (FDI), gross domestic savings, gross fixed capital formation (GFCF), aid, private capital inflows (PrK) and workers’ remittances, all as a percentage of GDP. We also look at the growth rate of per capita GDP, exports of goods and services and of gross fixed capital formation. Using a two tailed- test we find that China does better than India for most of these indicators. For instance, China has a higher growth rate of per capita income, XGS and GFCF as also a higher share of XGS, GFCF etc in GDP than does India. We also find that China usually has a lower CV, namely a more stable performance. But over the three decades the CV falls in India so it is approaching that in China, namely the two economies are becoming more similar. We also compare the dynamic performance of the two economies since their reforms. We form index numbers for the indicators. So for example, we from an index number for share of exports in GDP with year 1 of reform in China being 100, i.e. the index for the share in 1979 is 100. Year 2 would be the index number for 1980, namely the value of the share in 1980 with the share in 1979 being 100, etc. In the case of India year 1 would be 1992 once the reforms started, year 2 would be 1993 and so on, so the index would have 1992 as the base year. We find that the indices behave very similarly in the two economies for many of the indicators, namely the pattern of change in China after 1979 is the same as in India after 1992.
    JEL: F00 F10 F21
    Date: 2013–05
  6. By: Georgescu, George
    Abstract: Under the circumstances of the global crisis effects on risk appetite of international investors, the net FDI flows in Romania registered a sharp fall in post-crisis period to levels of 1/5 as compared to 2008. Even if the current account deficits of Romania have significantly decreased in the post-crisis years, their coverage by FDI has been reduced below 1/3. The financial performances of foreign companies operating in Romania have worsened, which, besides the erosion of comparative advantages, is increasing the risk of closing businesses and of capital outflows. Taking into account also the major contribution of companies with foreign capital to Romania’s exports (about 70%) the recovery of FDI inflows, helped by adequate measures in order to regain the investor’s confidence and to improve the business environment has become of crucial importance for the perspectives of the country’s external financial stability on medium and long run.
    Keywords: global crisis; foreign direct investments; external financial balance; debt sustainability; foreign trade.
    JEL: E22 F21 G01 G15 O24
    Date: 2013–03–15
  7. By: Covi, Giovanni
    Abstract: The paper aims at investigating the dependency of the Russian economy on natural resources, underlining the causes and the possible consequences of this growth model. The analysis tries to evaluate if the Russian manufacturing has contracted the “Dutch Disease”, that is, if a boom in the oil and gas industry has led to a process of de-industrialization, directly through the resource movement effect and indirectly through the spending effect. In this investigation it will be emphasized the role played by the learning curves as a crucial factor in determining the comparative advantages of a country, and why an excessive reliance on exports of a single product may reduce the welfare of a nation in the long run.
    Keywords: Economic development - Dutch disease - Natural Resource Curse – Oil dependence – Industrial policy – Russian economic growth
    JEL: E52 O11 P28 Q32 Q33 Q43 Q48
    Date: 2013–05–02
  8. By: Mirdala, Rajmund
    Abstract: European Union member countries are currently exposed to negative implications of the economic and debt crisis. Questions associated with disputable implications of fiscal incentives seem to be contrary to the crucial need of the effective fiscal consolidation that is necessary to reduce excessive fiscal deficits and high sovereign debts. While challenges addressed to the fiscal policy and its anti-cyclical potential rose steadily but not desperately since the beginning of the economic crisis, the call for fiscal consolidation became urgent almost immediately and this need significantly strengthen after the debt crisis contagion flooded Europe. In the paper we provide an overview of main trends in public budgets and sovereign debts in ten European transition economies during last two decades. We identify episodes of successful and unsuccessful (cold showers versus gradual) fiscal (expenditure versus revenue based) consolidations by analyzing effects of improvements in cyclically adjusted primary balance on the sovereign debt ratio reduction. We also estimate VAR model to analyze effects of fiscal shocks (based on one standard deviation in total expenditure, direct and indirect taxes) to real output. It is expected that responses of real output to different types of (consolidating) fiscal shocks may vary and thus provide more precise ideas about a feasibility (i.e. side effects on the macroeconomic performance) of expenditure versus revenue based fiscal consolidation episodes. Economic effects of fiscal consolidating adjustments are evaluated for two periods (pre-crisis and extended) to reveal crisis effects on fiscal consolidation efforts.
    Keywords: fiscal policy adjustments, fiscal consolidation, cyclically adjusted primary balance, government expenditures, tax revenues, unrestricted VAR, Cholesky decomposition, SVAR, structural shocks, impulse-response function
    JEL: C32 E62 H20 H50 H60
    Date: 2013–02
  9. By: Sam Hill
    Abstract: China’s exceptional economic expansion has led to rising energy demand and pollution as well as other environmental pressures. Strong efforts by the government have moderated emissions of some types of air and water pollution from high levels but others, including greenhouse gas emissions, continue to rise. Poor air and water quality threaten human health, create other costs and reduce well-being. The 12th Five Year Plan aims at further reducing pollution and at other environmental improvements. To achieve these goals in a cost-effective manner wide-ranging reforms are needed. Reliance on command-and-control measures ought to make way gradually for well-implemented market-based approaches. Energy and water pricing need to be reformed to provide stronger incentives for end-users. So does pollution pricing. A carbon tax should be given serious consideration, especially if pilot carbon emissions trading schemes turn out to be difficult to implement. As well, stronger standards are needed, including for motor vehicles and fuels. Efforts to enhance environmental enforcement, particularly at the local level, will also be key to further progress. This Working Paper relates to the 2013 OECD Economic Survey of China (<P>Des réformes pour assainir l'environnement en Chine<BR>L’expansion économique exceptionnelle de la Chine a entraîné une demande croissante d'énergie et une hausse de la pollution ainsi que d'autres pressions environnementales. Les efforts soutenus du gouvernement ont modéré les émissions de certains types de pollution de l’air et de l’eau à des niveaux élevés, mais d'autres, y compris les émissions de gaz à effet de serre continuent d'augmenter. La mauvaise qualité de l'eau et de l’air menace la santé humaine, crée des coûts supplémentaires et réduit le bien-être. Le 12e plan quinquennal vise à réduire la pollution et à améliorer l'environnement. Pour atteindre ces objectifs d'une manière rentable de vastes réformes sont nécessaires. La dépendance à l'égard des mesures de commandement et de contrôle devrait faire place progressivement à une bonne mise en oeuvre des approches fondées sur le marché. Les prix de l'énergie et de l'eau doivent être réformés pour fournir des incitations plus fortes pour les utilisateurs finaux. Il en va de même pour la tarification de la pollution. Une taxe carbone devrait être sérieusement prise en considération, surtout si les régimes pilotes d'échange d'émissions de carbone se révèlent difficiles à mettre en oeuvre. De plus, des normes plus strictes sont nécessaires, notamment pour les véhicules à moteur et les carburants. Les efforts visant à renforcer le respect de l'environnement, en particulier au niveau local, seront également essentiels à de nouveaux progrès. Ce Document de travail se rapporte à l'Étude économique de la Chine de l’OCDE, 2013, (
    Keywords: health, environment, energy, renewable energy, China, air pollution, emissions trading scheme, carbon tax, cities, water pollution, pollution, environmental taxation, santé, environnement, énergie renouvelable, Chine, fiscalité environnementale, pollution de l'eau, pollution, taxe carbone, pollution de l’air, systèmes d'échange d'émissions
    JEL: I18 Q00 Q25 Q28 Q4 Q5 R48
    Date: 2013–04–17
  10. By: Salies, Evens
    Abstract: The three-tier inclining block tariff (‘‘IBT’’) issued by the Chinese government in 2010 is focusing attention of energy economists, among whom Lin and Jiang (2012. Designation and influence of household increasing block electricity tariffs in China. Energy Policy 42, 164–173) who assert that the issued tariff is unsuited to meet the social and environmental objectives it was designed for. These authors offer an alternative four-tiered IBT, the performance of which they show by evaluating its welfare and income distribution effects taking the current uniform tariff as reference. To measure the surplus loss to a representative household in a given block the authors use the trapezoid approach. But, because of the limited data on demand, they calculate the household’s response by using a constant point estimate of the own-price elasticity of electricity demand. In this note I show there is an incompatibility between these two modeling assumptions. Combining them is causing an upward bias in the surplus loss, which is of significance given the large price change associated with the IBT. I then offer a correction to this bias.
    Keywords: Increasing block tariffs, Electricity demand, Welfare measurement
    JEL: D11 D63 Q41 Q48
    Date: 2012–09
  11. By: Commander, Simon (EBRD, London); Nikolaychuk, Olexandr (CERGE-EI); Vikhrov, Dmytro (CERGE-EI)
    Abstract: We study selection and labour market outcomes among Ukrainian migrants using unique data from a survey conducted in Ukraine in August – October 2011. We find that migrants are positively selected in terms of age and education. Yet, this is not associated, as might be expected, with their labour market outcomes. Notably, around half of the migrants are employed in occupations for which they are over-qualified. We conjecture that this downshifting in occupation can partly be explained by the absence of the conventional link between education and skills in Ukraine. To circumvent this problem, we compare pre- and post-migration labour market outcomes and find that the probability of downshifting decreases with the duration of stay in a foreign country and knowledge of the local language or English. Significantly, someone who downshifted prior to migration in the home country was more likely to downshift abroad. Further, we find that migrants to the EU are more likely to downshift when compared to other destinations.
    Keywords: migration, selection, occupation downshift, survey data
    JEL: F22 J24
    Date: 2013–04
  12. By: Wang, Xin; McIntosh, Christopher S.; Watson, Philip; Zhang, Hua; Lu, Qian
    Abstract: Increased attention has recently been given to technical efficiency of small-scale irrigation to achieve food security and increase agricultural development. In this paper, the authors classify irrigation supply management methods as cooperative or non-cooperative, introduce social capital by four dimensions (social network, social trust, social reputation, and social participation), and highlight the impacts of both social capital and cooperative agreements on technical efficiency in the context of small-scale irrigation management. Efficiency is assessed using data envelopment analysis (DEA), and the impact of cooperative agreements and social capital on efficiency is estimated using path analysis. The result of DEA indicates that cooperative and social capital can improve technical efficiency of irrigation. Results of path analysis show that the presence of a cooperative has a positive, significant and direct impact on efficiency. Additionally, the effect of social capital on efficiency is estimated to be reinforced via participation in cooperative methods.
    Keywords: Technical efficiency, Cooperative agreement, Social capital, Small-scale irrigation, Consumer/Household Economics, Institutional and Behavioral Economics, Public Economics,
    Date: 2013
  13. By: Yang, Zhenzeng
    Abstract: This paper examines theoretically the impact of host intellectual property rights (IPR) protection and complexity on MNEs' investment decision to the South in order to explain why large amount of foreign direct investment (FDI) flows to low IPR protecting China and other emerging economies. There are two key assumptions, imitation cost are positively related to complexity and imitation cost is higher when imitating a product designed only for foreign market than those for host market. In the model, a strengthening of IPR protection in the South raises an MNE's profit and stimulates inward FDI and licensing simultaneously, and stronger IPR protection will also induce more higher complexity production transfered to the South. Furthermore, as cost-oriented FDI is less sensitive to host IPR protection, developing host countries with low IPR protection can attract relatively more cost-oriented FDI. The model implies that strengthening of IPR protection can help emerging economies attract more complex and market-oriented FDI.
    Keywords: Intellectual Property Rights, Licensing, Imitation, Multinational Enterprise, Foreign Direct Investment
    JEL: F21 F23 O33 O34
    Date: 2013–05–07
  14. By: Rubil, Ivica
    Abstract: We study the pay gap between the public and the private sectors in Croatia just before and in the wake of the recent Great Recession. Using the Labor Force Survey data, we decompose the real hourly wage gap of full-time workers in 2008 and 2011 into the contributions of differences in workers’ characteristics and differences in marginal returns to these characteristics. Besides decomposing the gaps in the two years, we analyze the main drivers of changes in the 2008-2011 period. The decompositions are performed at the mean, as well as at a number of quantiles along the distribution. In addition to quantifying the aggregate effects of characteristics and their marginal returns, we further decompose each of the two effects into the contributions of specific characteristics or groups of them. For the decomposition of the mean gap, the standard Oaxaca-Blinder framework is used, while in the case of quantile decompositions, this framework is combined with the recently developed unconditional quantile regressions. The results show that in both 2008 and 2011 there was a notable wage premium in favor of the public sector workers along the entire distribution, with both the differences in characteristics and marginal returns playing a role. The premium in favor of the public sector increased in the period considered, driven almost exclusively by changes in marginal returns.
    Keywords: wage gap, decomposition, Oaxaca-Blinder, recentered influence function, unconditional quantile regression, public, private, Great Recession, Croatia
    JEL: J31 J45
    Date: 2013–05–01
  15. By: Lenka Hebáková (ASCR); Jan Vanžura (ASCR); Miroslav Kostic (ASCR); Mariana Chioncel (JRC-IPTS)
    Abstract: The main objective of the ERAWATCH Annual Country Reports is to characterise and assess the performance of national research systems and related policies in a structured manner that is comparable across countries. EW Country Reports 2011 identify the structural challenges faced by national innovation systems. They further analyse and assess the ability of the policy mix in place to consistently and efficiently tackle these challenges. The annex of the reports gives an overview of the latest national policy efforts towards the enhancement of European Research Area and further assess their efficiency to achieve the targets. These reports were originally produced in November - December 2011, focusing on policy developments over the previous twelve months. The reports were produced by the ERAWATCH Network under contract to JRC-IPTS. The analytical framework and the structure of the reports have been developed by the Institute for Prospective Technological Studies of the Joint Research Centre (JRC-IPTS) and Directorate General for Research and Innovation with contributions from ERAWATCH Network Asbl
    Keywords: European research and innovation policy, ERAWATCH, European Research Area, Policy Mixes, Transnational and International Cooperation; NETWATCH; ERA Nets; Foresight; Joint programming of research; Researchers, Universities; European Foresight Platform (EFP); modelling, linking Qualitative and Quantitative methods.
    Date: 2012–12
  16. By: Uwe Dulleck; Jonas Fooken; Yumei He
    Abstract: Due to economic and demographic changes highly educated women play an important role on the Chinese labour market. Gender has been shown to be an important characteristic that influences behaviour in economic experiments, as have, to a lesser degree, academic major, age and income. We provide a study looking at trust and reciprocity and their determinants in a labour market laboratory experiment. Our experimental data is based on two games, the Gift Exchange Game (GEG) and a variant of this game (the Wage Promising Game, WPG) where the employer's wage offer is non-binding and the employer can choose the wage freely after observing the workers effort. We find that women are less trusting and reciprocal than men in the GEG while this cannot be found in the WPG. Letting participants play the GEG and the WPG, allows us to disentangle reciprocal and risk attitudes. While in the employer role, it seems to be that risk attitude is the main factor, this is not confirmed analysing decisions in the worker role.
    Date: 2013–05–01
  17. By: Jacek Walendowski (Technopolis Group, Belgium); Mariana Chioncel (JRC-IPTS)
    Abstract: The main objective of the ERAWATCH Annual Country Reports is to characterise and assess the performance of national research systems and related policies in a structured manner that is comparable across countries. The 2011 country reports assess the evolution on the national R&D investments targets, the efficiency and effectiveness of national policies and investments into R&D, the articulation between education, research and innovation, with an increased focus on the last two in terms of their wider governance and policy mix. The reports for EU MS and AS integrates in the assessment the evolution of the national policy mixes in the perspective of the Europe 2020 Strategy goals and on the realisation and better governance of ERA.
    Keywords: European research and innovation policy, ERAWATCH, European Research Area, Policy Mixes, Transnational and International Cooperation; NETWATCH; ERA Nets; Foresight; Joint programming of research; Researchers, Universities; European Foresight Platform (EFP); modelling, linking Qualitative and Quantitative methods.
    Date: 2012–12

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