nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒10‒05
fourteen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Structural Reforms and Growth in Transition: A Meta-Analysis By Jan Babecky; Tomas Havranek
  2. The Impact of Local Governance Institutions on Foreign Market Listings: The Case of Chinese Firms By Abigail S. Hornstein
  3. China's energy statistics in a global context: A methodology to develop regional energy balances for East, Central and West China By Mischke, Peggy
  4. Heritage from Czar: The Russian Dual System of Schooling and Signaling By ZHANGALIYEVA, Aigerim; NAKABAYASHI, Masaki
  5. Costs and Benefits of Labour Mobility between the EU and the Eastern Partnership Countries Country Study: Italy By Marchetti, Sabrina; Piazzalunga, Daniela; Venturini, Alessandra
  6. Mobility in an Enlarging European Union: Projections of Potential Flows from EU's Eastern Neighbors and Croatia By Fertig, Michael; Kahanec, Martin
  7. Regional integration of stock markets in Southeast Europe By Khaled Guesmi; Duc Khuong Nguyen
  8. В поисках синергетического эффекта: российский рынок слияний и поглощений в 2005-2012 гг. By Ivanov, Alexey
  9. Privatization in China: Technology and Gender in the Manufacturing Sector By Dammert, Ana C.; Ural Marchand, Beyza
  10. Illustrated implications of the Terrifying New Math of Meinshausen and McKibben By Colin Hunt
  11. Corruption, Networking and Foreign Ownership: Recent Evidence from CEE Countries By Pal, Sarmistha
  12. A radical change in traffic law: effects on fatalities in the Czech Republic By Josef Montag
  13. Dinamica echilibrului extern al României si al tarilor CEE, în perioada recesionista By Olteanu, Dan Constantin
  14. Unprivatizing the Pension System: The Case of Poland By Jan Hagemejer; Krzysztof Makarski; Joanna Tyrowicz

  1. By: Jan Babecky; Tomas Havranek
    Abstract: The present fiscal difficulties of many countries amplify the call for structural reforms. To provide stylized facts on how reforms worked in the past, we quantitatively review 60 studies estimating the relation between reforms and growth. These studies examine structural reforms carried out in 26 transition countries around the world. Our results show that an average reform caused substantial costs in the short run, but had strong positive effects on long-run growth. Reforms focused on external liberalization proved to be more beneficial than others in both the short and long run. The findings hold even after correction for publication bias and misspecifications present in some primary studies.
    Keywords: Structural reforms, growth, transition economies, meta-analysis, Bayesian model averaging
    JEL: C83 O11 P21
    Date: 2013–08–15
  2. By: Abigail S. Hornstein (Department of Economics, Wesleyan University)
    Abstract: This paper exploits the substantial variation in market institutions across provinces in China to examine the impact of institutional quality on foreign listing. Firms that list on the U.S. and U.K. exchanges are more likely to come from better regulated provinces and tend to be at the top of a corporate pyramid. However, though the impact on firm performance of market institutions and pyramidal affiliations persists briefly post-listing with firms recording lower EPS and higher raw returns in the first year, it does not help predict whether firms remain listed abroad in 2012. Thus, we conclude that headquarters’ market institutions shape a firm through time of listing and have diminished influence over time.
    Keywords: China, IPO, foreign listing, institutions, pyramid
    JEL: G32 G15
    Date: 2013–09
  3. By: Mischke, Peggy
    Abstract: Reliable, timely and accurate economic and energy data are critical to carry out analysis of energy system changes. An energy balance, characterizing fuels/commodities used in energy supply, transformation and sectoral end uses is an essential tool to calibrate energy system models used for research and policy analysis. An improved understanding of the quality and reliability of Chinese economic and energy data is becoming more important to to understanding global energy markets and future greenhouse gas emissions. China's national statistical system to track such changes is however still developing and, in some instances, energy data remain unavailable in the public domain. This working paper discusses China's energy and economic statistics in view of identifying suitable indicators to develop a simplified regional energy systems for China from a variety of publicly available data. As China's national statistical system continuous to be debated and criticised in terms of data quality, comparability and reliability, an overview of the milestones, status and main issues of China's energy statistics is given. In a next step, the energy balance format of the International Energy Agency is used as an international benchmark to analyze China's national energy statistics in detail and identify indicators to establish regional energy balances inside China. Although this methodology includes a range of data uncertainties, it is intended to stimulate the discussion about current and future regional energy system developments in China in a broader global context. More international comparable and transparent research is needed to better understand and assess China’s progress toward meeting energy supply security targets and emission reduction goals, both at a regional, national and global level.
    Keywords: China Statistics; China Energy Economy; China Regional Energy Balance; IEA; UN ISIC
    JEL: Q41 R1
    Date: 2013–09–30
  4. By: ZHANGALIYEVA, Aigerim; NAKABAYASHI, Masaki (Institute of Social Science, The University of Tokyo)
    Abstract: Employers use educational background as a signal of a workerfs latent ability. This signaling effect decreases as employers learn about the workerfs ability with his/her work experience, which results in negative coefficient of interaction term between schooling and experience in wage equation. Meanwhile, if schooling and experience are complements, it works to make the coefficient positive. We show the latter complementarity effect dominates for vocational school graduates school in Russia. Given that European vocational school systems were introduced from the Russian Empire, our results at least partly explain why employer learning is only weakly observed in Europe.
    Keywords: Signaling; employer learning; complementarity of schooling and experience; vocational school; Russia.
    JEL: J31 J24
    Date: 2013–09–26
  5. By: Marchetti, Sabrina (European University Institute); Piazzalunga, Daniela (University of Turin); Venturini, Alessandra (University of Turin)
    Abstract: Migrants from the Eastern Partnership Countries: Moldova, Ukraine, Belarus, Georgia, Armenia, Azerbaijan has increased in the last ten years. Two different patterns are detected among the most important groups: Ukrainian and Moldovan. The first is mainly composed by women with a temporary migration plan while the second was initially composed by women but rapidly the family reunification was obtained and the migration plan became more permanent. By using the Italian Labour Force survey we analyse the employment situation, the over education of the migrants and their assimilation.
    Keywords: migration, labour market
    JEL: J15 J26 J61 J62
    Date: 2013–09
  6. By: Fertig, Michael (ISG, Cologne); Kahanec, Martin (Central European University)
    Abstract: This study evaluates potential migration flows to the European Union from its eastern neighbors and Croatia. We perform out-of-sample forecasts using an adaption of the model of Hatton (1995) to time series cross-sectional data about post-enlargement migration flows following the EU's 2004 enlargement. We consider two baseline policy scenarios, with and without accession of sending countries to the EU. Our results show that migration flows are driven by migration costs and economic conditions, but the largest effects accrue to policy variables. In terms of the predicted flows: (i) we can expect modest migration flows in case of no liberalization of labor markets and only moderately increased migration flows under liberalization; (ii) after an initial increase following liberalization, migration flows will subside to long run steady state; (iii) Ukraine will send the most migrants; and (iv) the largest inflows in absolute terms are predicted for Germany, Italy and Austria, whereas Ireland, Denmark, Finland and again Austria are the main receiving countries relative to their population.
    Keywords: migration, free movement of workers, European Union, Eastern Partnership, EU enlargement, migration potential, out-of-sample forecasting
    JEL: F22 C23 C53
    Date: 2013–09
  7. By: Khaled Guesmi; Duc Khuong Nguyen
    Abstract: This article investigates the dynamics of regional financial integration and its determinants in an international setting. We test a conditional version of the international capital asset pricing model (ICAPM) accounting for the deviations from purchasing power parity (PPP) as well as temporal variations in both regional and local sources of risk. Using data from four major countries of the Southeast Europe (Czech Republic, Greece, Poland, and Romania), our results support the validity of ICAPM and indicate that the risk is internationally priced. Further- more, we show that changes in the degree of regional stock market integration are explained principally by trade openness and the level of stock market development whatever the measure of currency risk. Finally, as expected, the degree of stock market integration varies considerably over time and from one market to another. As intense market integration induces both benefits and risks, our findings should have significant implications for eco- nomic policies and market regulations in emerging, frontier-emerging and transition countries, particularly for countries from the same region.
    Keywords: ICAPM, market integration, exchange rate risk
    JEL: G12 F31 C32
    Date: 2013–09–25
  8. By: Ivanov, Alexey
    Abstract: In the article the situation on the Russian market of mergers and acquisitions in 2005-2012 is investigated. Also was produced its comparison with the world market for key indicators. The author based on extensive statistical analysis of the material revealed the specific features and tendencies of development of the domestic market of mergers and acquisitions, and emphasized the role of integrative synergetic effect in the expectations of investors.
    Keywords: слияния и поглощения, интеграция, синергетический эффект, mergers and acquisitions, integration, synergetic effect
    JEL: O30
    Date: 2013–08–23
  9. By: Dammert, Ana C. (Carleton University); Ural Marchand, Beyza (University of Alberta, Department of Economics)
    Abstract: This paper examines the impact of privatization on gender discrimination in China across firms with different technology intensities. Using a comprehensive firm-level survey, the paper identifies gender wage-productivity differentials by directly estimating the relative productivity levels of workers from the production function of firms. The panel structure of the survey is taken advantage of by following firms that were fully state-owned in the initial year, and distinguishing them from firms that were later privatized. The main results show that privatization was associated with an increase in relative productivity of female workers in high technology industries, and a reduction in relative productivity of female workers in low technology industries. Time varying coefficient results suggest that the improvements in gender outcomes in high technology industries may not be maintained in the long run as the relative wage and productivity ratios tend to deteriorate, potentially due to low supply of highly educated female workers. At the same time, outcomes in privatized low technology industries tend to improve over time, lowering the wage and productivity gaps between male and female workers.
    Keywords: Discrimination; Gender; Privatization; Technology
    JEL: J16 J31 P20
    Date: 2013–09–01
  10. By: Colin Hunt (School of Economics, The University of Queensland)
    Abstract: There is a limit to the quantity of greenhouse gases that may be emitted to the atmosphere if catastrophic climate change is to be avoided. There is a global carbon budget that should not be exceeded by 2050. The practical implication is that most of the world’s fossil fuel inventory must be left in the ground and not burned. The article analyses the implications of adhering to the carbon budget by modelling the implied rate of reduction in emission intensity of the world economy. A delay in concerted international action increases sharply the rate required. The four major emitting countries are examined for their energy and emission policies and the trajectories of their required emission intensities derived. If the budget is adhered to, the intensities of China and Russia will need to be reduced sharply after 2020 when their present policies expire. Barriers are likely to remain to concerted international action in 2020, however. This will leave countries such as China and Russia free to pursue policies for the maintenance of economic growth as a priority, rather than the adoption of strict and economically stultifying targets for emissions or emission intensity.
    Date: 2013–09–30
  11. By: Pal, Sarmistha (University of Surrey)
    Abstract: The present paper argues that the effect of corruption on foreign ownership is not necessarily linear and depends on the level of host corruption. So long as the expected returns from foreign investments exceed its expected costs, higher host corruption will be associated with higher foreign ownership. However, costs may exceed or exactly compensate the returns to foreign investment at very high level of corruption, giving rise to negative or even an insignificant relationship when positive and negative effects outweigh each other. Further, we argue that this non-linear corruption effects may arise from multinational firms' attempts to investing in countries with similar environment and/or ensuring some formal networking with host countries in a bid to limit the damages caused by high level of host corruption. Panel fixed effects estimates (after correcting for foreign entry selection) using a recent large home-host matched panel data from central and eastern European host countries provide some support to these hypotheses: (i) higher corruption is associated with significantly higher foreign ownership unless corruption is at its fourth quartile value. (ii) There is also some confirmation that this non-linear corruption effects is linked to parent firms' attempts to ensure institutional similarity while investing in corrupt host countries: in particular, foreign multinationals from EU/OECD home countries tend to hold higher ownership in EU/OECD host countries and also when the home-host relative corruption distance is small.
    Keywords: corruption, relative corruption, EU/OECD home-host link, foreign ownership, joint venture vs sole subsidiaries, Central and Eastern Europe
    JEL: F23 G32 L24 O17 P33
    Date: 2013–09
  12. By: Josef Montag (Faculty of Business and Economics, Mendel University in Brno)
    Abstract: This study examines short- and long-run effects of a new—stricter—road traffic law on traf- fic accident-related fatalities in the Czech Republic. The law introduced tougher punishments through the introduction of a demerit point system and a manifold increase in fines, together with augmented authority of traffic police. Identification is based on difference-in-differences methodology, with neighbouring countries serving as a control group. I find a sharp, 33.3%, decrease in accident-related fatalities during the first three post-reform months. This trans- lates into 127 saved lives (95% confidence interval: 51, 204). The decline was, however, temporary; the estimates of the effects going beyond the first year are around zero. Unique data on traffic police activity reveal that police resources devoted to traffic law enforcement gradually declined. Tougher penalties have significant, but often short-lived effects. Weaker enforcement in the aftermath of such reforms may explain the absence of long-run effects.
    Keywords: traffic law, traffic accidents, demerit point system, law enforcement
    JEL: J28 I12 I18
    Date: 2013–09
  13. By: Olteanu, Dan Constantin (Institutul National de Cercetari Economice al Academiei Române)
    Abstract: This study aims to reveal structural changes in the balance of payments for Romania and five other CEE countries, along with macroeconomic effects of these adjustments during the period 2008-2011. First, we studied the dynamics of foreign capital inflow components - foreign direct investment, portfolio investment and other investment - and its impact on domestic demand, foreign reserves and exchange rate, in order to assess the destabilizing effect hypothesis of an extensive change in external financing. Second, we followed the dynamics of trade balance - the evolution of export, import and export/import ratio - structured by product groups, trading partners and product technological levels, and we analysed the extent to which the domestic absorption shock was transmitted to the national product demand and import demand.
    Keywords: foreign capital flows, capital account adjustment, current account adjustment
    JEL: F41 F21 F32 F14
    Date: 2013–09
  14. By: Jan Hagemejer (National Bank of Poland; Faculty of Economic Sciences, University of Warsaw); Krzysztof Makarski (National Bank of Poland; Warsaw School of Economics); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)
    Abstract: In many countries the fiscal tension associated with the global financial crisis brings about the discussion about unprivatizing the social security system. This paper employs an OLG model to assess ex ante the effects of such changes to the pension reform in Poland from 1999 as implemented in 2011 and proposed in 2013. We simulate the behavior of the economy without the implemented/proposed changes and compare it to a status quo defined by the reform from 1999. We find that the changes implemented in 2011 and all of the proposed reform scenarios from 2013 are detrimental to welfare. The effects on capital and output are small and depend on the selected fiscal closure. Implied effective replacement rates are lower. These findings are robust to time inconsistency. The shortsightedness of the governments imposes welfare costs.
    Keywords: OLG, PAYG, pension system reform, time inconsistency
    JEL: C68 E17 E25 J11 J24 H55 D72
    Date: 2013

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