nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒12‒15
25 papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Spillover versus Ownership: A Meta-Analysis of Transition Literature By Iwasaki, Ichiro; Tokunaga, Masahiro
  2. Economic Transition and Private-Sector Labor Demand: Evidence from Urban China By Lakshmi Iyer; Xin Meng; Nancy Qian; Xiaoxue Zhao
  3. Remittances and Well-Being among Rural-to-Urban Migrants in China By Alpaslan Akay; Corrado Giulietti; Juan D. Robalino; Klaus F. Zimmermann
  4. Intangible Knowledge Capital and Innovation in China By Fleisher, Belton M.; McGuire, William H.; Smith, Adam Nicholas; Zhou, Mi
  5. Internationalization of a Chinese "born glocal" brand: the case of Goodbaby By Francesca Checchinato; Lala Hu; Alessandra Perri; Tiziano Vescovi
  6. China – Electronic Payment Services: Discrimination, Economic Development and the GATS By Bernard M. Hoekman; Niall Meagher
  7. Estimating the Marginal Abatement Costs of Carbon Dioxide Emissions in China: A Parametric Analysis By Limin DU; Aoife Hanley; Chu WEI
  8. Cost and Benefits of Labour Mobility between the EU and the Eastern Partnership Partner Countries By Luca Barbone; Matthias Luecke
  9. The Gas Target Model for the Vysehrad 4 Region. Conceptual Analysis By Sergio Ascari
  10. Eligibility thresholds for minimum living guarantee programs : international practices and implications for China By Umapathi, Nithin; Wang, Dewen; O'Keefe, Philip
  11. Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm By Bogaard, Hein; Svejnar, Jan
  12. Long term evolution of the bilateral Trade between China and Spain, 1988-2011 By Carrera Troyano, Miguel; De Diego Álvarez, Dorotea
  13. Understanding Chinese Consumption: The Impact of Hukou By Christian Dreger; Tongsan Wang; Yanqun Zhang
  14. Family Taxation and the Female Labor Supply: Evidence from the Czech Republic By Klara Kaliskova
  16. Czech Giving in the Times of Economic Crisis By Miroslav Pospíšil
  17. Internal Geography, International Trade, and Regional Specialization By A. Kerem Coşar; Pablo D. Fajgelbaum
  18. Combining Monetary and Fiscal Policy in an SVAR for a Small Open Economy By Alfred A. Haug; Tomasz Jedrzejowicz; Anna Sznajderska
  19. The Regional Development Policy of Romania in the Post-Accession Period By Antonescu, Daniela
  20. Expanding Beyond Borders: The Yen and the Yuan By Subacchi, Paola
  21. The Design and Implementation of Ethics-Related Administrative Law in Eastern Europe By Michael, Bryane; Bowser, Donald
  22. The Importance of Azerbaijan's Energy Revenues in its Exports Volume and the Effects on the National Economy By Suleymanov, Elchin; Nuri Aras, Osman; Huseynov, Ruslan
  23. The Steadiness of Migration Plans and Expected Length of Stay – Based on a Recent Survey of Romanian Migrants in Italy By Michael Landesmann; Isilda Mara
  24. Measuring the Shadow Economy: Endogenous Switching Regression with Unobserved Separation By Tomas Lichard; Jan Hanousek; Randall K. Filer
  25. Lobbying, Corruption, and Regulatory Constraints: An Analysis of Eastern European Business Associations By Kiselev, Eugene

  1. By: Iwasaki, Ichiro; Tokunaga, Masahiro
    Abstract: In this paper, we conduct a meta-analysis of the literature that empirically examines the microeconomic impacts of foreign direct investment (FDI) in Central and Eastern Europe and the former Soviet Union. The meta-synthesis of estimates collected from relevant studies shows that both the effect size and the statistical significance of the indirect effect of FDI, namely the productivity spillover effect, are obviously lower than those of the direct effect caused by foreign participation in company management through ownership. Moreover, the meta-regression analysis reveals that, probably due to the presence of publication selection bias, previous studies have not yet provided empirical evidence of a non-zero productivity spillover effect in the region. Further research efforts are required to capture the true effect.
    Keywords: foreign direct investment (FDI), technology spillover, foreign ownership, meta-analysis, publication selection bias, Central and Eastern Europe, former Soviet Union
    JEL: D22 F21 F23 P33
    Date: 2013–11
  2. By: Lakshmi Iyer; Xin Meng; Nancy Qian; Xiaoxue Zhao
    Abstract: This paper studies the policy determinants of economic transition and estimates the demand for labor in the infant private sector in urban China. We show that a reform that untied access to housing in urban areas from working for the state sector accounts for more than a quarter of the overall increase in labor supply to the private sector during 1986-2005. Using the reform to instrument for private-sector labor supply, we find that private-sector labor demand is very elastic. We provide suggestive evidence that the reform equalized wages across sectors and reduced private-sector rents.
    JEL: J2 O18 P2 P3
    Date: 2013–12
  3. By: Alpaslan Akay (Institute for the Study of Labor); Corrado Giulietti (Institute for the Study of Labor); Juan D. Robalino (Cornell University); Klaus F. Zimmermann (Institute for the Study of Labor)
    Abstract: The main objective of this paper is to propose a systematic approach to empirically analyse the relationship between sending remittances and the utility of migrants, as proxied by their subjective well-being (SWB). Using data from a new survey on China, we estimate models in which a SWB measure is regressed on the level of remittances, finding a sizeable positive correlation. The estimates vary with the socio-economic characteristics of migrants, migration experience and the diversity of family arrangements. As a complementary objective, we use SWB measures to elicit the motivations behind remittances, finding evidence that both altruistic and contractual motivations are at work among rural-to-urban migrants in China.
    Keywords: Migrants, subjective well-being, remittances
    JEL: J61 D64 I3
    Date: 2013–02
  4. By: Fleisher, Belton M. (Ohio State University); McGuire, William H. (University of Washington Tacoma); Smith, Adam Nicholas (Ohio State University); Zhou, Mi (Agricultural Bank of China)
    Abstract: Intangible knowledge capital (IKC) – technology produced by workers but not embodied in them – can offset the "middle income trap" as China exhausts the benefits of international technology transfer. IKC is productivity-enhancing among Chinese enterprises – more so in domestically owned than in foreign invested enterprises. Consistent with other research, we find that China's IKC generates patents in China, but fewer than in major industrialized economies. Among domestically owned enterprises, IKC growth has flowed more toward higher-tech, export-oriented industries, while among foreign invested enterprises, it has been oriented more toward domestic sales.
    Keywords: intellectual capital, technology, economic growth, intellectual property, Asia, China
    JEL: O31 O33 O34 O43 P33
    Date: 2013–12
  5. By: Francesca Checchinato (Dept. of Management, Università Ca' Foscari Venice); Lala Hu (Dept. of Management, Università Ca' Foscari Venice); Alessandra Perri (Dept. of Management, Università Ca' Foscari Venice); Tiziano Vescovi (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: Chinese latecomer firms adopt internationalization strategies in order to gain the necessary resources and competences to compete in the local and global markets. In this process, different sectors are involved: not only in the electronic one (e.g. Haier and Huawei represent two successful cases), but also in other industries Chinese firms have achieved high competitiveness in the global scenario. In this paper, we analyze the case of Goodbaby, a Chinese baby strollersÕ manufacturer. This company has implemented its internationalization activities since the early 1990s, and it is now one of the main stroller manufacturers in the world and the leading brand in China. In order to analyze the brand awareness and purchase behavior in the local market, the empirical design used in this study encompasses the combination of the competitive analysis of strollersÕ brands in the Chinese market and a questionnaire to Chinese consumers. Our research shows that GoodbabyÕs history reflects the internationalization process of multinationals from emerging markets (EM-MNEs), while confirming GoodbabyÕs high competitiveness in a sector that was traditionally dominated by foreign brands. Some managerial implications will be discussed.
    Keywords: China, global, glocal, internationalization, Goodbaby
    JEL: M16 M30
    Date: 2013–11
  6. By: Bernard M. Hoekman; Niall Meagher
    Abstract: This paper provides a legal-economic analysis of the unappealed WTO Panel Report in China – Certain Measures Affecting Electronic Payment Services (WT/DS413/R). The core Number was whether China’s measures that resulted in there being only one dominant supplier of electronic payment services (EPS) in China violated the specific commitments made by China under the GATS. The panel ruled that the measures did not violate China’s market access commitments because there were no explicit limitations on the entry of foreign suppliers, but that the measures were inconsistent with China’s national treatment commitments in that they modified the conditions of competition in favour of domestic suppliers. This case illustrates the complexity in interpreting WTO Members' commitments under the GATS.
    Keywords: China, GATS, financial services, payment systems, market access, monopoly
    Date: 2013–09
  7. By: Limin DU; Aoife Hanley; Chu WEI
    Abstract: This paper investigates the technical inefficiency, shadow price and substitution elasticity of CO2 emissions of China based on a provincial panel for 2001-2010. Using linear programming to calculate a quadratic parameterized directional output distance function, we show that China’s technical inefficiency increases over the period implying further scope for CO2 emissions reduction in the medium and longer term at best by 4.5% and 4.9% respectively. Our results (notwithstanding regional differences) highlight increases in the shadow price of CO2 abatement (1000 Yuan/ton in 2001 to 2100 Yuan/ton in 2010). Additionally, increasingly steep substitution elasticity highlights the difficult reality of reducing China’s CO2 emissions
    Keywords: CO2 emissions; Shadow Price; Parametric Estimation; China
    JEL: Q52 Q54 Q58
    Date: 2013–11
  8. By: Luca Barbone; Matthias Luecke
    Abstract: Migration from Eastern Partnership (EaP) countries has only become a large and important phenomenon over the last twenty years At its heart, labour migration reflects entrepreneurial decisions by individuals and families looking to improve their lives while facing complex challenges and opportunities. In the past, the language of "migration management" was sometimes used to suggest that migrants and migration needed to be “managed” to achieve government objectives. By contrast, in adopting a migrant-centered perspective, our project aimed to understand, first, EaP migrants’ incentives and the effects of migration on migrants and their families, on non - migrants in the country of origin, and on residents of the destination country. Second, we investigated how labour migration is shaped by and interacts with a wide range of government policies and which policy interventions can enhance the benefits of migration for the affected groups.
    Keywords: Labor market, social policy and social services, Europe, Eastern Europe, Caucasus and Central Asia, labour migration, Eastern Partnership, EU
    Date: 2013–10
  9. By: Sergio Ascari
    Abstract: The Gas Target Model is a challenge, notably for the less than large European markets that are fostered to merge in order to boost liquidity. Th challenge is even tougher for the Vysehrad countries (Czech Republic, Hungary, Poland and Slovakia), which have long been dependent on Russian supplies and are therefore characterised by less open markets than their Western neighbours. This paper analyses the reality of the V4 countries vis -à-vis the European Gas Target Model, starting from their current and expected infrastructural endowment, and suggests ways to develop and implement it in the most efficient way for them and for the EU as a whole.
    Keywords: Gas Target Model, Vysehrad 4, Security of Supply, Gas Hubs
    Date: 2013–10
  10. By: Umapathi, Nithin; Wang, Dewen; O'Keefe, Philip
    Abstract: Using a simple framework, this paper discusses the underlying reason of the variation of threshold level in developed countries, from the least generous 20 percent to around 60 percent of median wage, with an average of 35 percent. The generosity of minimum guarantee social assistance programs is deeply rooted in social values and principles that further underpin the policy objectives. Many Organizations for Economic Cooperation and Development (OECD) countries set their policy targets for minimum living standard programs beyond basic needs and aim to guarantee a minimum socially acceptable level for a decent living. Thresholds are also refined to reflect the differences in family size and demographic structure, difference in regional cost of living and changes in prices and local wages. In some countries the thresholds show some regional variation due to local discretionary powers of sub-national authorities to set the threshold depending on the co-financing mechanisms. These lessons are valuable for China as the Chinese government has made efforts to standardize the implementation and management of its own minimum income guarantee (Di Bao) programs. The policy recommendations for China include accelerating the convergence of localized approaches, raising the administrative level for setting thresholds to higher level, defining the roles of central and local governments in financing and management, and establishing a transparent budgetary management system to transfer and allocate social assistance funds.
    Keywords: Safety Nets and Transfers,Rural Poverty Reduction,Poverty Impact Evaluation,Regional Economic Development,Services&Transfers to Poor
    Date: 2013–11–01
  11. By: Bogaard, Hein (George Washington University); Svejnar, Jan (Columbia University)
    Abstract: We exploit organizational reforms in a foreign-owned bank in Central-East Europe to study the implementation of modern HRM policies in an emerging market context. We have branch-level data and use our knowledge of the process that led to the adoption of the reforms to implement two estimators that address endogeneity bias in a complementary fashion: an IV approach and Generalized Propensity Score estimation. Our results show that some of the reforms had a positive impact on productivity, but they also underscore the risks of quantity-based incentives where quality is important.
    Keywords: insider econometrics, endogeneity of HRM policies, incentives, foreign ownership, banking, Central and Eastern Europe
    JEL: F23 G21 M52
    Date: 2013–12
  12. By: Carrera Troyano, Miguel; De Diego Álvarez, Dorotea
    Abstract: This paper offers the first results of an ongoing research project on the Intra Industry Trade (IIT) in Spanish trade using microdata from COMEXT database to calculate the levels of IIT in manufactures trade between 1988 and 2011. The analysis offers the figures of the long term evolution of the bilateral trade, the advantages and IIT between China and Spain, and also its distribution between horizontal and vertical IIT. Besides, the paper offers the sectorial levels of IIT.
    Keywords: Intra Industry Trade, China, Spain
    JEL: F14
    Date: 2013
  13. By: Christian Dreger; Tongsan Wang; Yanqun Zhang
    Abstract: The Chinese growth miracle was based on exports and investment in recent years. While strong output growth has been maintained even during the financial crisis, the imbalances within the country increased. To return to a more sustainable path of development, policies are directed to improve the role of private consumption. However, the institutional framework is an impediment to the transformation, as it weakens the incentives of households to consume. Besides a low degree of social security and highly regulated financial markets, we stress the relevance of the hukou system as the main driver for modest consumption, especially in recent years. After controlling for different income levels, the average propensity to consume is significantly lower for migrants, as their access to public services is limited. The downward pressure on consumption will increase in the future. The urbanization strategy of the government will likely raise the number of migrants with limited hukou rights, if it is not accompanied by respective reforms. Therefore, the transformation towards consumption driven growth is endangered without further reforms.
    Keywords: Chinese private consumption, urbanization strategy, hukou system
    JEL: E21 O15 R23
    Date: 2013
  14. By: Klara Kaliskova
    Abstract: Married couples file joint tax returns in many European countries. Nevertheless, research quantifying the effect of joint taxation on the work incentives of secondary earners is scarce thanks to a lack of recent policy changes. This study makes use of the introduction of joint taxation in the Czech Republic in 2005 to estimate its effect on married women's labor supply. Results based on difference-in-differences and on triple differences with several alternative control groups suggest that the introduction of joint taxation lead to a decline of about 3 percentage points in the employment rate of married women with children. Participation declines are twice as large when the tax work disincentives are highest-among women with high-income husbands.
    Keywords: joint taxation; female labor supply; difference-in-differences;
    JEL: J21 H24
    Date: 2013–11
  15. By: Irina Starodubrovskaya (Gaidar Institute for Economic Policy)
    Abstract: Nowadays, the issue of inefficient social expenditures is not just a local item of social policy, rather it comes as far as the macroeconomic level, being considered in discussions about sources of financing of the national long-term development strategy.
    Keywords: Russian economy, regional economy, social expenditure, social polic
    JEL: H5 H7
    Date: 2013
  16. By: Miroslav Pospíšil (Department of Public Economics, Masaryk University)
    Abstract: To analyse the impact of the economic crisis on the Czech nonprofit sector is a complex task, for which there are not sufficient data available to date. In this paper I limit myself to a probe into the level of giving as an important indicator of the support for Czech NPOs. I use several indicators to estimate the impact of the current economic crisis on the funding for NPOs from private donors, ie. individuals and businesses, and for the sake of comparison I also look at the funding from the state. My data indicate that the support from individuals and from businesses has been largely unaffected by the crisis, or has only been affected very briefly, while the funding from the state has decreased, even though not very dramatically. I attribute the sustained level of private individual giving to the prevailing mode of giving by Czech citizens, their disregard for the financial aspects of giving and the continued process of emancipation of civil society and the nonprofit sector from the state since the regime change in 1989. By way of conclusion, I suggest that the crisis can not only be a threat but also an opportunity for Czech NPOs, especially in their efforts to emancipate themselves from too much dependence on the state.
    Keywords: giving, economic crisis, nonprofit sector, Czech Republic
    JEL: D64
    Date: 2013–12
  17. By: A. Kerem Coşar; Pablo D. Fajgelbaum
    Abstract: We introduce an internal geography to the canonical model of international trade driven by comparative advantages to study the regional effects of external economic integration. The model features a dual-economy structure, in which locations near international gates specialize in export-oriented sectors while more distant locations do not trade with the rest of the world. The theory rationalizes patterns of specialization, employment, and relative incomes observed in developing countries that opened up to trade. Our empirical analysis based on industry-level data from Chinese prefectures demonstrates that international trade is an important driver of industry location within China as the theory implies.
    JEL: F11 R12
    Date: 2013–12
  18. By: Alfred A. Haug (Department of Economics, University of Otago, New Zealand); Tomasz Jedrzejowicz (National Bank of Poland); Anna Sznajderska (National Bank of Poland)
    Abstract: This paper combines a monetary structural vector-autoregression (SVAR)with a fiscal SVAR for Poland. Fiscal foresight, in the form of implementation lags, is accounted for with respect to both discretionary government spending and tax changes. We demonstrate the importance of combining monetary and fiscal transmission mechanisms. However, ignoring fiscal foresight has no statistically significant effects. We calculate an initial government spending multiplier of 0.14, which later peaks at 0.48. The tax multiplier is close to zero. We also find that monetary policy in Poland transmits mainly through the real sector, that is through real GDP and the real exchange rate.
    Keywords: Structural vector autoregressions, monetary and fiscal policy, fiscal foresight, narrative approach
    JEL: E52 E62 C51
    Date: 2013–10
  19. By: Antonescu, Daniela (Romanian Academy, National Institute of Economic Research)
    Abstract: The general objective of this study is to evaluate regional disparities and the territorial convergence under the impact of the cohesion policy, in the context of the European Union integration. The specific objectives on which the research included in this work focused are the following: specific objectives: (i) analysis and interpretation of main theories of regional science, evolution and influence factors, main representatives; (ii) analysis of regional disparities in Romania in different fields of activity; (iii) analysis of convergence at regional level within the European Union; (iv) assessing the impact of implementing regional policy in Romania; and (v) suggestions regarding a possible model of regional strategy for the future programming period, from the perspective of the Europe 2020 Strategy. The study contains certain quantitative and qualitative estimates on the economic effects generated by Structural Funds at regional level in Romania. The data and information presented in the research paper regarding the gross impact of allocated resources are verified by computing first an average level of obtained effects. By using currently existing qualitative and quantitative data and some analysis techniques of territorial convergence recognised at international level, the study presents the trends at regional and local level in certain fields of activity.
    Keywords: regional convergence, economic and social cohesion, regional programmes and policies, territorial disparities, evaluation
    JEL: R11 R12 F02
    Date: 2013–12
  20. By: Subacchi, Paola (Asian Development Bank Institute)
    Abstract: As all eyes are on the strategy and policy measures of the People’s Republic of China (PRC) to push the international use of the yuan, this paper turns to the internationalization of the Japanese yen and compares it with what the PRC is doing. There are some fundamental differences in the regional context and in the pattern of regional integration, and these distinguish the PRC’s current strategy from the Japanese experience in the 1980s. The yen’s development as an international currency, and the comparison with the PRC’s strategy, highlight the importance of regional integration as a way to overcome network externalities and market inertia. Using an analytical framework that assesses both the range of different roles (the scope) and geographical scale (the domain) of a currency in the global market, the paper suggests that economic fundamentals alone, albeit essential, are not sufficient to warrant a fully fledged scope and global domain of the currency. The paper concludes by suggesting that in the next decade the PRC yuan will become Asia’s leading currency due to the PRC’s deep economic integration in the region, and that the Japanese yen’s function as an international asset and store of value can be further enhanced if Tokyo’s competitiveness as a leading international financial center is improved.
    Keywords: yuan; japanese yen; internationalization; network externalities; regional integration
    JEL: E42 E44 F33
    Date: 2013–12–05
  21. By: Michael, Bryane; Bowser, Donald
    Abstract: How can senior policymakers use data in the design of ethics (anti-corruption) related legislation and regulations? In this paper, we describe how to draft subsidiary legislation (mainly executive agency regulations) based on explicit or implied competencies given by national legislation. We then discuss how to conduct the organisational, legal, economic and audit analysis needed to allocate ethics-related rights and obligations across-government and within the Agency. We illustrate with an example from Romania and use the tools we have presented to make recommendations for Hungary. We describe the roles that the human resource managers and internal auditors play in implementing the provisions of Agency-level ethics-related regulations. We conclude by encouraging policy makers to make greater use of ethics-related regulations.
    Keywords: anti-corruption, administrative law, codes of conduct
    JEL: M42 O29
    Date: 2013
  22. By: Suleymanov, Elchin; Nuri Aras, Osman; Huseynov, Ruslan
    Abstract: Large energy reserves have been a major contributor to the Azerbaijan economy, and affected the country's exports volume, and have become a main determinant of the country's economic structure. Azerbaijan is a country that has major oil and gas based economy with the completion of the Baku-Tbilisi-Ceyhan Oil Pipeline in 2005 and Baku-Tbilisi-Erzurum Gas Pipeline in 2007. First export oil was pumped into Baku-Tbilisi-Ceyhan in May 2005, and the oil reached Ceyhan in May 2006. On the other hand, first export gas was pumped into Baku-Tbilisi-Erzurum in March 2007. The importance of country energy source revenues on Azerbaijan's export volume and the effects on national economy has increased with the completion of these pipelines year after year. Azeri export’s reliance on energy source revenues keeps dominant position in Azerbaijan’s exports despite efforts to diversify Azerbaijan’s economy away from oil. Finally, crude oil made 86 percent and oil products made 6 percent, so oil and oil products made 92 percent of Azerbaijan’s export in 2011. Non-oil products made up only 8 percent of the country’s export last year. Thus, non-oil sector contribution to Azerbaijani export was lower than Georgian export in 2011. This means that increasing of total export volume of Azerbaijan is not sustainable.
    Keywords: Energy Resources, Oil, Export, Azerbaijan Economy, National Budget, Inflation.
    JEL: D1 D10 D2 O5
    Date: 2013–06–19
  23. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract The study analyses migration intentions and expected length of stay in the host country, taking account of the propensity to change (or retain) migration plans during the course of the migration experience in the host country. We analyse the particular case of Romanian migrants in Italy, using a survey conducted in 2011 in the context of the TEMPO/NORFACE project. We used different specifications to analyse the exogeneity vs endogeneity of steady/changing migration plans regarding expected length of stay and migration intentions. The survey and the analysis showed that Romanian migrants, both men and women, who arrived in Italy after May 2004 have modified their migration plans, the main determinants being employment and family reasons. Migrants who have maintained similar migration plans to the ones upon arrival are mostly those with a preference for long-term and permanent migration. Gender differences in analysing migration plans matter as diverse patterns emerge for men compared to women. Differently from women, men plan their length of stay based on the employment context, especially on whether the job is adequate to the level of qualification and whether earnings match expectations. For women, on the other hand, family context variables play a significant role. The paper concludes that migration intentions could be a good predictor of migration behaviour if we account for the endogeneity of steadiness/switching of such plans.
    Keywords: migration, temporary/permanent, Romanian migrants, applied econometrics, bivariate ordered probit, migrants in Italy
    JEL: J61 D84
    Date: 2013–09
  24. By: Tomas Lichard; Jan Hanousek; Randall K. Filer
    Abstract: We develop a novel estimator of unreported income, perhaps due to tax evasion, that does not depend on as strict identifying assumptions as previous estimators based on microeconomic data. The standard identifying assumption that the self- employed underreport income whereas wage and salary workers do not is likely to fail in countries where employees are often paid under the table or have a secondary source of self-employed income. Assuming that evading individuals have a higher consumption-income gap than non-evading ones due underreporting both to tax authorities and in surveys, an endogenous switching model with unknown sample separation enables the estimation of consumption-income gaps for both underre- porting and truthful households. This avoids the need to identify non-evading and evading groups ex ante. This methodology is applied to data from Czech and Slovak household budget surveys and shows that estimated evasion is substantially higher than found using previous methodologies.
    Keywords: endogenous switching regression; shadow economy; tax evasion; undereporting;
    JEL: C34 H26
    Date: 2013–10
  25. By: Kiselev, Eugene
    Abstract: This paper examines lobbying and corruption as alternative ways of dealing with regulatory obstacles. I propose a model where firms facing a costly regulation can bribe a rule-enforcing bureaucrat to get around it, lobby the government to reduce its impact, or do both. I then use a firm-level dataset of Eastern European enterprises to examine whether firms use membership in a lobby group as a substitute for the bribe payments they make to rule-enforcing bureaucrats. The results indicate that firms who join lobby groups do not stop paying bribes to bureaucrats, and firms more impacted by corruption are no more likely to join a lobby group than their counterparts. On the other hand joining a lobby group increases the likelihood of a firm bribing legislators and other rule makers, suggesting that lobbying introduces the possibility of state capture by allowing firms access to policy makers that they wouldn't otherwise have.
    Keywords: Lobbying, Corruption, Regulations
    JEL: D72 D73 L51
    Date: 2013–07

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