nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒01‒24
fifteen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Chinese Unions and Enterprises Performance By Fang, Tony; Ge, Ying
  2. Distribution Dynamics of Russian Regional Prices By Konstantin Gluschenko
  3. The Distribution Dynamics of Income in Central and Eastern Europe relative to the EU: A Nonparametric Analysis By Nikolay Nenovsky; Kiril Tochkov
  4. Real Output and Prices Adjustments Under Different Exchange Rate Regimes By Rajmund Mirdala
  5. Minimum Wages, Unemployment and Informality: Evidence from Panel Data on Russian Regions By Muravyev, Alexander; Oshchepkov, Aleksey
  6. The RUMiC Longitudinal Survey: Fostering Research on Labor Markets in China By Akgüc, Mehtap; Giulietti, Corrado; Zimmermann, Klaus F.
  7. Romania, Poland. Two Countries, One Wish: Joining the Eurozone By Soproni, Luminita; Marcut, Mirela
  8. The One-Child Policy and Household Savings in China By Keyu Jin; Nicolas Coeurdacier
  9. Re-defining Informal Employment and Measuring its Determinants: Evidence from Russia By Lehmann, Hartmut; Zaiceva, Anzelika
  10. From corporate market research to bank profit maximization By Albina N. Rasskazova
  11. Lessons Learned from Tax vs. Expenditure Based Fiscal Consolidation in the European Transition Economies By Rajmund Mirdala
  12. The Legal Framework of Vietnam’s Water Sector: Update 2013 By Nguyen, Thi Phuong Loan
  13. A small macro econometric model for Kazakhstan: a retrospective of alternative economic policies undertaken during the transition process By Gilles Dufrénot; Adelya Ospanova; Alain Sand-Zantman
  14. Openness and Isolation: the comparative trade performance of the Former Soviet Central Asian countries. By Arman Mazhikeyev; T.Huw Edwards; Marian Rizov
  15. Structural Change in Europe During the Crisis By Peter Havlik

  1. By: Fang, Tony (Monash University); Ge, Ying (School of International Trade and Economics, Beijing)
    Abstract: This paper uses the national firm level survey data to investigate the effects of Chinese unions on firm performance. We show that Chinese unions have a strong "State-Party voice" face and a "collective voice" face but lack of "monopoly" face. The government influence plays an important role in unionization. The empirical findings on the effectiveness of unions are remarkable: unions in the workplace significantly improve productivity but reduce enterprise profitability. Moreover, the presence of unions in same region and industry generates negative spillovers on enterprise performance.
    Keywords: unions, laws, productivity, profitability, China
    JEL: J51 J52 J53
    Date: 2013–12
  2. By: Konstantin Gluschenko
    Abstract: This paper studies the behavior of the entire distribution of consumer prices across Russian regions over the decade of 2001–2010. The analysis uses non-parametric techniques, exploiting the distribution dynamics approach. The results obtained evidence that regional relative prices in Russia remained fairly stable during 2001-2010. No significant changes are found in price dispersion and cross-region price distribution over this time span. Rank mobility was very low with seasonal surges. The pattern of quantity mobility manifests neither convergence nor divergence of regional prices. However, a long-run price distribution has an unpleasant feature, predicting potential emergence of a price convergence club in the Russian Far East.
    Keywords: price convergence; price dispersion; price mobility; market integration; stochastic kernel
    JEL: P22 R10 R15
    Date: 2013–10–15
  3. By: Nikolay Nenovsky; Kiril Tochkov
    Abstract: After more than two decades of transition and integration, countries in Central and Eastern Europe (CEE) still exhibit income levels that are significantly lower than the European Union (EU) average. This paper examines convergence in per-capita GDP between CEE and the EU over the period 1990-2012 by employing a combination of parametric and nonparametric methods, which provide more detailed insights than previous studies. The results indicate that the first decade of transition has been marked by divergence from the EU benchmark. In contrast, CEE countries experienced strong convergence over the 2000s, even in the face of the global financial crisis. However, the distribution of relative income evolved from a unimodal to a multimodal one, revealing growing disparities within CEE. Human capital accumulation and progress in economic reforms are identified as the key determinants of convergence, while financial deepening and price instability had a negative effect, especially in the past decade.
    Keywords: income convergence; nonparametric methods; European Union; Central and Eastern Europe
    JEL: O47 O57 C14
    Date: 2013–11–15
  4. By: Rajmund Mirdala
    Abstract: Exchange rate regimes evolution in the European transition economies refers to one of the most crucial policy decision in the beginning of the 1990s employed during the initial stages of the transition process. During the period of last two decades we may identify some crucial milestones in the exchange rate regimes evolution in the European transition economies. due to existing diversity in exchange rate arrangements in the European transition economies in the pre-ERM2 period there seems to be two big groups of countries - “peggers” (Bulgaria, Estonia, Latvia, Lithuania) and “floaters” (Czech republic, Hungary, Poland, Romania, Slovak republic, Slovenia). Despite the fact, there seems to be no real prospective alternative to euro adoption for the European transition economies, we emphasize disputable effects of sacrificing monetary sovereignty in the view of positive effects of exchange rate volatility and exchange rate based adjustments in the country experiencing sudden shifts in the business cycle. In the paper we analyze effects of the real exchange rate volatility on real output and inflation in ten European transition economies. From estimated VAR model (recursive Cholesky decomposition is employed to identify structural shocks) we compute impulse-response functions to analyze responses of real output and inflation to negative real exchange rate shocks. Results of estimated model are discussed from a prospective of the fixed versus flexible exchange rate dilemma. To provide more rigorous insight into the problem of the exchange rate regime suitability we estimate the model for each particular country employing data for two subsequent periods 2000-2007 and 2000-2011.
    Keywords: exchange rate volatility, economic growth, economic crisis, vector autoregression, variance decomposition, impulse-response function
    JEL: C32 F32 F41
    Date: 2013–11–15
  5. By: Muravyev, Alexander (St. Petersburg University GSOM and IZA); Oshchepkov, Aleksey (Higher School of Economics, Moscow)
    Abstract: This paper revisits labor market effects of the minimum wage by taking advantage of a unique institutional setting and rich data from Russia that cover 89 regions over 10 years, from 2001 to 2010. Our empirical analysis draws on the methodology introduced by Neumark and Wascher, in which labor market outcomes at the regional level are related to the relative minimum wage (captured by the Kaitz index) in a panel setting. We find that the minimum wage raises unemployment among young workers aged 15 to 24. In contrast, there is no evidence of disemployment effects of the minimum wage for workers aged 25-72, including women. In addition, minimum wage hikes are associated with an increase in informal employment.
    Keywords: minimum wages, unemployment, informal employment, Russia
    JEL: J38 J23
    Date: 2013–12
  6. By: Akgüc, Mehtap (IZA); Giulietti, Corrado (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: This paper describes the Longitudinal Survey on Rural Urban Migration in China (RUMiC), a unique data source in terms of spatial coverage and panel dimension for research on labor markets in China. The survey is a collaboration project between the Australian National University, Beijing Normal University and the Institute for the Study of Labor (IZA), which makes data publicly available to the scientific community by producing Scientific Use Files. The paper illustrates the structure, sampling frame and tracking method of the survey, and provides an overview of the topics covered by the dataset, and a review of the existing studies based on RUMiC data.
    Keywords: household survey, China, migration, labor markets
    JEL: C81 J01 P36 R23
    Date: 2013–12
  7. By: Soproni, Luminita; Marcut, Mirela
    Abstract: The paper aims to present the efforts of the two Member States of the European Union regarding the criteria for accession in the „select club” of the Eurozone, in the current economic environment, which is characterized by uncertainty and profound turbulences. The study has pointed out that, even though the economic policies of the Romanian and Polish governments have generally implied similar measures in order to comply with the convergence criteria, the visions of the two governments are different. In short, Romania’s exaggerated optimism, fuelled by the electoral “needs”, (the only country in a hurry to enter the Eurozone), and not backed by the economic reality, is in a stark contrast with Poland’s reserved attitude (taking into consideration the fact that the Poland has the highest rate of economic growth in Europe), which expresses the wish to join the Eurozone only after the national economy’s problems as well as the Eurozone’s troubles have been resolved.
    Keywords: Romania, Poland, convergence criteria, Eurozone, Economic and Monetary Union, economic crisis
    JEL: E01 E5 E58 F43 F5
    Date: 2013
  8. By: Keyu Jin (London School of Economics); Nicolas Coeurdacier (SciencesPo Paris)
    Abstract: This paper analyzes the impact of the 'one child policy' in China on its household saving behavior. First, it develops a life-cycle model with endogenous fertility, intergenerational transfers and human capital accumulation. We show a macroeconomic and a microeconomic channel of a fall in fertility on raising aggregate household saving: at the macroeconomic level, the population composition shifts initially towards the middle-aged—the high savers of the economy. At the microeconomic level, (1) expenditures of children fall—despite higher education investment in each child—as quantity substitutes for quality; (2) middle-aged save additionally for retirement in anticipation of reduced transfers from their only child. Second, our quantitative model implies policy-induced changes in aggregate savings and age-saving profiles broadly consistent with estimates from Chinese household-level data. Third, an empirical study using the birth of twins as a source of exogenous increase in fertility is shown to support the micro-economic channels we highlight. Overall, our estimation suggests that the policy is able to account for 30% to 50% of the rise in household savings rate since its implementation in 1980.
    Date: 2013
  9. By: Lehmann, Hartmut (University of Bologna); Zaiceva, Anzelika (University of Modena and Reggio Emilia)
    Abstract: Informal activities impact countries' economic development and overall growth. However, studying informal employment is not easy and it is crucial to provide a valid definition of it. This paper contributes to the recent discussion of the measures of informality by taking advantage of a rich dataset on Russia over the period 2003 - 2011, that is before and after the economic downturn, together with a special supplement on informality that allows to construct different measures of informal employment and to analyze its determinants. We demonstrate that the incidence of informal employment varies across the different definitions. However, the determinants of informal employment are roughly stable across the different measures as long as we exclude firm size as a criterion. We also show that risk-averse individuals, as expected, are less likely to select themselves into informal employment.
    Keywords: informal employment, definitions, incidence, determinants, Russia
    JEL: J31 J40 P23
    Date: 2013–12
  10. By: Albina N. Rasskazova (National Research University Higher School of Economics)
    Abstract: The purpose of this article is to study the target segment of the corporate bank market in order to reveal the demand for financial products and to incorporate this demand into solving the problem of bank profit maximization. Instrumental guidelines for conducting market research that allow to study the aspects of the problem specifically dealing with the efficiency of a bank’s cooperation with corporate customers has been developed as a technique for studying target corporate market customers. A target retail trade market sector and a client base of corporate customers including 430 trade network operators functioning in the northwest region of Russia were chosen as objects of research. The article defines the retail market demand potential for bank products, analyses the prospective viability of providing additional bank products to retail market customers, and identifies the corporate customer’s informational portrait. On the basis of obtained results, the problem of maximizing the bank’s extra profit from serving trade network operators. The research is confined to the client base of one major Russian bank operating in the northwest region of Russia; it will be useful to adapt the material of this article to studying target sectorial markets nationwide. The results of market research were used to assess the economic potential (estimated optimal profit) of the commercial bank’s cooperation with trade network operators. This article constitutes the groundwork for organizing effective bank marketing that guarantees a congruity of the bank’s resources and capabilities with the demands and requirements of the market in which it operates.
    Keywords: customer orientation, effectiveness, financial services, market research, bank marketing, process planning
    JEL: M31
    Date: 2014
  11. By: Rajmund Mirdala
    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: 2013–09–15
  12. By: Nguyen, Thi Phuong Loan
    Abstract: In order to deal with problems related to both water quality and quantity as well as to strengthen the sustainable and integrative management of the nation’s water resources, the Vietnamese Government has adopted a wide spectrum of laws and regulations. In recent years, more than 300 water related regulations on the guidance and implementation of the Law on Water Resources have been issued and often amended to meet the requirements of the country’s development and its increasing international integration. In spite of this, the current legal framework for water resources management in Vietnam remains ineffective and does not correspond with the reality on the ground. Furthermore, law enforcement is deficient and often national regulations are ignored by local authorities, who priorities rapid growth of their communities over sustainability. Under these circumstances, the legal framework cannot properly guide sustainable use of water resources in order to achieve a degree of environmentally sustainable and, in particular, to protect the livelihoods of marginalized groups in society, such as landless fishermen, small-holders or poor people in periurban areas. Despite the gaps in this legal framework, water-related policies and programs in Vietnam consistently refer back to it while, at the same time, policy advisors typically call for reform. Understanding the legal framework is therefore important for both researchers and practitioners. In this view, a previous study was carried out by the author, entitled ‘Legal Framework of the Water Sector in Vietnam’ (Nguyen 2010), which aimed at presenting the key dimensions and the structure of that framework. Both the Vietnamese and the English version of the book were widely disseminated. This update became necessary because the government of Vietnam recently issued a new law on water resources as well as supplementary legislation. So far, no official English version of any of these new documents exists. Therefore, a detailed presentation of the contents of the laws is particularly timely. In addition to presenting the laws, this paper aims at shedding light on some of the critical aspects of the current legislation and illustrates how the law making process proceeded.
    Keywords: Environmental impact assessment (EIA), regulatory impact assessment (RIA), integrated water resource management(IWRM), law on water resources, law making process, Mekong Delta,Vietnam, water quality management, water resources management
    JEL: K23 K4 L5 L52 Q53 Q54 Q56 Q58
    Date: 2013–08
  13. By: Gilles Dufrénot (DEFI - Centre de recherche en développement économique et finance internationale - Faculté des Sciences Economiques - Université de la Méditerranée - Aix-Marseille II, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, Centre de recherche de la Banque de France - Banque de France); Adelya Ospanova (Aix-Marseille Université - Aix-Marseille Université); Alain Sand-Zantman (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon)
    Abstract: This paper presents a quarterly macro econometric model of the Kazakhstan. The main goal is to provide a stylized representation of the Kazakh economy in order to simulate the consequences of several economic policies viewed by the authorities as essential during the period of transition to a market economy. The policy simulation potential of the model is illustrated by five types of simulations : interest rate shocks, foreign direct investment shocks, world oil price shocks, foreign demand shocks and nominal wages shocks. These sets of simulations show the importance of foreign direct investments in terms of theirs global positive effect, as well as the demand effect of an increase in the wages. We also find that effect of the tight monetary policy in not ambiguous ; we argue that in some cases it is not the most efficient policy instrument to sustain the economy.
    Keywords: Transition economies; Kazakhstan; Macroeconomic stabilization; Central Asian CIS countries
    Date: 2014–01–09
  14. By: Arman Mazhikeyev (Loughborough University); T.Huw Edwards (Loughborough University); Marian Rizov (Middlesex University)
    Abstract: Previous studies characterize some of the Former Soviet Central Asian countries (CACs) as “more open” (Kazakhstan, Kyrgyzstan) and others as “more isolated” (Tajikistan, Turkmenistan and Uzbekistan) depending on their trade-over-GDP level. Being an open or isolationist economy has resulted respectively in more or less suitable environment for business and investment. We investigate this by measuring contributions of country-specific properties and networking factors in 185 bilateral CACs trade flows over the period 1995-2011. We find that, even though all CACs’ trade has increased greatly since 1995, for the more open economies (Kazakhstan and Kyrgyzstan) trade changes are mainly explained by networking (bilateral) factors while for isolationist economies (Turkmenistan, Uzbekistan and Tajikistan) changes in trade are mostly explained by country-specific properties.
    Keywords: Trade performance, gravity models, transition, Central Asia, FSU
    JEL: F14 F15
    Date: 2014–02
  15. By: Peter Havlik
    Abstract: This note examines the extent and patterns of structural changes that have occurred in European economies during the recent crisis using some stylised facts on changing output and employment struc-tures at detailed sectoral level. Focusing mainly on the new EU member states, we compare the perform-ance of various European countries by looking at the differentiated impact of the recent crisis on struc-tural shifts in their economy. We start with stylised facts related to output and employment structures at broader sectoral (NACE-2) level and attempt to find out whether there has been a structural convergence (or divergence) of the New EU Member States (NMS) compared to the more advanced ‘old’ EU countries (OMS) during the crisis. Finally, we provide also some policy conclusions related to the future role of the NMS in the economy of an integrated Europe, especially in view of post-crisis growth challenges. The fi-nancial crisis 2008-2011 adversely affected manufacturing industry more than services – particularly in terms of employment – and accelerated structural change in favour of the services sector. The latter ten-dency was more pronounced in the NMS though even here country specific differences were remarkable. The importance of industry in this group of countries remains strong. There has been no EU-wide uniform pattern of structural change; the formulation of industrial policy at EU level – even reaching the 20% target of industry’s share in GDP – is challenging and hardly attainable.
    Keywords: Industry, structural change, European economy, growth, crisis
    JEL: L13 L52 J3
    Date: 2014–01

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