nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒04‒11
nineteen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Banking in transition countries By Bonin, John; Hasan, Iftekhar; Wachtel , Paul
  2. Informal Employment in Russia: Definitions, Incidence, Determinants and Labor Market Segmentation By Hartmut Lehmann; Anzelika Zaiceva
  3. Maternal employment and childhood obesity in China: Evidence from the China Health and Nutrition Survey By Nie, Peng; Sousa-Poza, Alfonso
  4. Review of Rice Policies in China, Thailand and Vietnam By Sina Xie; Orachos Napasintuwong
  5. The Role of Offshore Financial Centers in the Process of Renminbi Internationalization By Cheung, Yin-Wong
  6. The Role of Coresidency with Adult Children in the Labor Force Participation Decisions of Older Men and Women in China By Connelly, Rachel; Maurer-Fazio, Margaret; Zhang, Dandan
  7. Efficient Scale of Local Government in China: Quantile Regression Approach to County-Level Data By Mototsugu Fukushige; Yingxin Shi
  8. Conceptual Framework of the active ageing policies in employment in Czech Republic By Lucie Vidoviæová
  9. Global Implications of the Renminbi’s Ascendance By Prasad, Eswar
  10. Will a Driving Restriction Policy Reduce Car Trips? A Case Study of Beijing, China By Wang, Lanlan; Xu, Jintao; Zheng, Xinye; Qin, Ping
  11. Regional Differences in Perceived Corruption among Ukrainian Firms By Denisova-Schmidt, Elena; Huber, Martin
  12. Food Losses and Food Waste in China: A First Estimate By Gang Liu
  13. Switching cost and deposit demand in China By Ho, Chun-Yu
  14. Accounting for Skill Premium Patterns during the EU Accession: Productivity or Trade? By Sang-Wook (Stanley) Cho; Juliàn P. Dìaz
  15. A liberal developmental state in Georgia? State dominance and Washington Consensus in the post-communist region By Timm, Christian
  16. A Multilevel Investigation of Individual and Contextual Effects on Employee Job Crafting By Jie Li; Tomoki Sekiguchi; Jipeng Qi
  17. Macroeconomic and fiscal challenges faced by the Southern and Eastern Mediterranean region By Marek Dabrowski
  18. Friendship And Study Assistance Ties Of University Students By Oleg Poldin; Diliara Valeeva; Maria Yudkevich
  19. Impact of product-related environmental regulations in Asia : descriptive statistics from a survey of firms in Vietnam By Michida, Etsuyo; Nabeshima, Kaoru; Ueki, Yasushi

  1. By: Bonin, John (BOFIT); Hasan, Iftekhar (BOFIT); Wachtel , Paul (BOFIT)
    Abstract: Modern banking institutions were virtually non-existent in the planned economies of central Europe and the former Soviet Union. In the early transition period, banking sectors began to develop during several years of macroeconomic decline and turbulence accompanied by repeated bank crises. However, governments in many transition countries learned from these tumultuous experiences and eventually dealt successfully with the accumulated bad loans and lack of strong bank regulation. In addition, rapid progress in bank privatization and consolidation took place in the late 1990s and early 2000s, usually with the participation of foreign banks. By the mid 2000s the banking sectors in many transition countries were dominated by foreign owners and were able to provide a wide range of services. Credit growth resumed, sometimes too rapidly, particularly in the form of lending to households. The global financial crisis put transition banking to test. Countries that had expanded credit rapidly were vulnerable to the macroeconomic shock and there was considerable concern that foreign owners would reduce their funding to transition country subsidiaries. However, the banking sectors turned out to be resilient, a strong indication of the rapid progress in institutional development and regulatory capabilities in the transition countries.
    Keywords: transition banking; bank privatization; foreign banks; bank regulation; credit growth
    JEL: G21 O57 P27
    Date: 2014–03–18
  2. By: Hartmut Lehmann; Anzelika Zaiceva
    Abstract: This paper takes stock of informal employment in Russia analyzing its incidence and determinants, developing several measures of informal employment and demonstrating that the incidence varies widely across the different definitions. We, however, show that the determinants of informal employment are roughly stable across the different measures. We also estimate an informal-formal wage gap at the means and across the entire wage distributions. We find only weak evidence for labor market segmentation in Russia for salaried workers but establish a segmented informal sector with a lower free entry tier and an upper rationed tier when including the self-employed and entrepreneurs Classification-JEL: J31, J40, P23
    Keywords: Informal employment, transition economies, labor market segmentation, Russia Length: pages 39
    Date: 2014–03
  3. By: Nie, Peng; Sousa-Poza, Alfonso
    Abstract: Using five waves from the China Health and Nutrition Survey (CHNS), we investigate the association between maternal employment and obesity in children aged 3 - 17 in both rural and urban China. Using BMI and waist circumference as measures for pediatric adiposity, we provide scant evidence for its relation to maternal employment. We also find no strong association between maternal employment and our measures for children's diet and physical activity. Our study also suggests that grandparenting could have beneficial effects on childhood obesity. --
    Keywords: Maternal employment,Childhood obesity,China
    JEL: I12 J13 J22
    Date: 2014
  4. By: Sina Xie; Orachos Napasintuwong (Department of Agricultural and Resource Economics,Faculty of Economics,Kasetsart University,Thailand)
    Abstract: China, Thailand, and Vietnam are key players in world rice market in terms of production and trade. In the past few decades, rice policies in these three countries have changed significantly resulted in changes in production, exports and influences in the world market. This paper reviews major rice policy reforms in China, Thailand and Vietnam during past five decades. It is observed that although each country has practiced different policies at different periods, with the economic development, individuals and market forces have played more important roles in domestic market while government interventions still exist and it is important for the government to invest in rice breeding technology and infrastructure construction. It was found that China and Vietnam have benefited from farm system reforms, the adoption of hybrid rice and the investment in irrigation while liberalization of rice export premium and provision of credits in 1980s have helped Thailand to become the largest rice exporter.
    Keywords: rice, policy, China, Thailand, Vietnam
    JEL: Q17 Q18
    Date: 2014–03
  5. By: Cheung, Yin-Wong (Asian Development Bank Institute)
    Abstract: The People’s Republic of China (PRC) has been quite aggressive recently in promoting the international use of its currency, the renminbi. Historical experience suggests that an active offshore market is essential for a global currency. Indeed, anecdotal evidence affirms the role of offshore markets in pushing the renminbi currency to the world. One should not, however, overplay the contribution of offshore markets. While offshore markets offer the opportunities to experiment with the global use of the currency, the overseas acceptance of the renminbi is ultimately determined by both internal and external economic forces, and geopolitical factors. With its relatively small size, the offshore renminbi is not likely to pressure the PRC and alter its financial liberalization policy. A well-organized offshore renminbi market will complement the PRC’s renminbi internationalization policy, but it is not possible to raise the currency’s global status beyond the level justified by its economic and political attributes.
    Keywords: renminbi; yuan; international monetary policy; currency internationalization; offshore currency market; onshore currency market; foreign exchange; financial centers
    JEL: F33
    Date: 2014–04–06
  6. By: Connelly, Rachel (Bowdoin College); Maurer-Fazio, Margaret (Bates College); Zhang, Dandan (Peking University)
    Abstract: Over the course of China's economic reforms, a pronounced divergence in the labor force participation patterns of rural and urban elders emerged – rural elders increased their rates of participation while urban elders reduced theirs. In this project, based on the data of the Chinese population censuses of 1982 and 2000, we employ a two-stage procedure to take into account the endogeneity of the residency and labor force participation decisions of older persons. We find that the effect of coresidency with adult children on the labor force participation of older adult differs by urban vs. rural residence. In 1982, the LFPR of urban elders who coresided with their adult children were significantly higher than those who did not coreside. By 2000, this effect completely disappeared. In contrast, in rural areas, coresidency with adult children had a large and significant negative effect on the labor force participation of both male and female elders. This effect diminished only slightly over the reform period. Finally, we decompose the changes over time in elders' labor force participation decisions and find that the response effect for all groups (male and female, urban and rural) is positive, such that, holding the levels of demographic and economic variables constant, each group of elders would have had higher rates of participation in 2000 than in 1982. The remarkable divergence in urban and rural elders' labor force participation trends are due to differences in the relative sizes of their attribute and response effects.
    Keywords: labor force participation, elders, China, retirement, coresidency, rural and urban, living arrangements
    JEL: J14 J26 J11 J12 J13 J16 J22 O15 O53 P23 R23
    Date: 2014–03
  7. By: Mototsugu Fukushige (Graduate School of Economics, Osaka University); Yingxin Shi (Department of Economics & Management, Dalian Nationalities University)
    Abstract: We investigate the effects of urban and rural populations and area sizes on the expenditures of the prefecture-level local government. We found the following three results. The first relates to the expenditure for urban populations. At around 220,000 people, per capita local government expenditure is minimized in our simulation. The second is that the expenditure for rural populations is proportional to the population size. The third finding is that the expenditure in accordance with the areas is also proportional to the area size. This cost structure is the reason why Chinafs recent rapid urbanization increases prefectural governmentfs fiscal distress.
    Keywords: Efficient scale, Local government, Quantile regression, China
    JEL: H40 H72 R51
    Date: 2014–04
  8. By: Lucie Vidoviæová
    Abstract: In this paper we present a general assessment of the labour market situation of older workers in the Czech Republic, starting with a more general overview of the demographic situation and emphasizing the generational differences among the young-old and older cohorts, underlying a number of different problems as well as solutions. Further in the paper we address the impact of the recent economic situation on employment levels, showing that the recovery in terms of employment has not yet begun and that the impact on older workers is (at least) two-fold: firstly, for older workers it is very difficult to find a new job once unemployed; secondly, if employed, the pressure on workability and the increasing demands of workplaces may be harder to bear for the older the worker. We describe a National Action Plan Supporting Positive Ageing (2013-2017) and other examples of good and transferable praxes which address some of the active ageing issues in an innovative way. The second part of this report examinethe issues of employability, workability and age-managementas perceived by some of the key actors. We go into greater detail on the topic of paid work after retirement, which is considered an important part of the Czech economy, despite the fact that the employment of sizable groups of older workers after retirement is undeclared. Self-entrepreneurship and independent work in later life are another realm of employment that is increasing in importance in the Czech economy; however, as consulted experts argue, it is not to be taken as an unproblematic solution to late-life careers. In the last chapter we turn our attention to the lifelong learning of older workers and to their up-skilling/retraining. In the concluding remarks, we reemphasize the need to address the heterogeneity of the older workforce, in the sense of age/generational affiliation, health, socio-economic and other characteristics.
    Keywords: Older workers, Labour market, Lifelong learning, Active ageing, Good practice, Czech Republic, Paid work after retirement, Self-entrepreneurship, Trade unions, Focus groups
    JEL: H55 H75 M12 M50
    Date: 2014–03
  9. By: Prasad, Eswar (Asian Development Bank Institute)
    Abstract: This paper evaluates the prospects for the renminbi’s role as an international currency and the implications for global financial markets. Although the People’s Republic of China (PRC) does not have either an open capital account or a flexible exchange rate, the renminbi has attained considerable traction as an international currency on account of the PRC’s rising shares of global trade and gross domestic product. Through bilateral swaps that the People's Bank of China has established with other central banks, the renminbi is also becoming more prominent in international finance. However, the renminbi is unlikely to become a major reserve currency in the absence of capital account convertibility, a flexible exchange rate, and better-developed financial markets. The renminbi’s rising prominence—if it is accompanied by significant economic reforms within the PRC—could add to the stability of Asian and global financial systems.
    Keywords: renminbi internationalization; reserve currency; capital account convertibility; exchange rate flexibility; currency swaps
    JEL: E50 F30 F40
    Date: 2014–03–28
  10. By: Wang, Lanlan; Xu, Jintao; Zheng, Xinye; Qin, Ping
    Abstract: A driving restriction policy, as a control-and-command rationing measure, is a politically acceptable policy tool to address traffic congestion and air pollution in some countries and cities. Beijing was the first city in China to implement this policy. A one-day-a-week driving restriction scheme was expected to take 20 percent of cars off the road every weekday. Using household survey and travel diary data, we analyze the short-term effect of the driving restriction policy on individual mode choice. The data also allow us to identify which demographic groups are more likely to break the rules. The estimates reveal that the restriction policy in Beijing does not have a significant influence on individual driving choices, as compared with its influence on public transit. The rule-breaking behavior is constant and pervasive. We found that 47.8 percent of the regulated car owners didn’t follow the rules and drove “illegally” to their destinations. On average, car owners who traveled during peak hours or for work trips, and those whose destinations were farther away from the city center or subway stations, were more likely to break the rules.
    Keywords: driving restriction policy, Beijing, mode choice, rule breaker Creation-Date: 2013-09-30
    JEL: Q58 R41 D01
  11. By: Denisova-Schmidt, Elena; Huber, Martin
    Abstract: This paper investigates regional differences in the perception of corruption and informal practices among Ukrainian firms. Using two different data sets from Ukraine we show that perceived corruption differs significantly across regions, even when taking into account the size, industry, workforce composition, and other characteristics of the firms based on propensity score matching. In particular, perceived corruption is highest in the eastern areas and lowest in the western region, which points to distinct business practices that may be rooted in the different political, cultural, and historical development of Ukrainian regions.
    Keywords: Corruption, Informal Practices, Regionalism, Ukraine
    JEL: C21 D73 K42 O17 P2
    Date: 2014–04
  12. By: Gang Liu
    Abstract: Reducing food losses and food waste is attracting growing public attention at the international, regional, and national levels, and is widely acknowledged to contribute to abating interlinked sustainability challenges such as food security, climate change, and water shortage. However, the pattern and scale of food waste throughout the supply chain remains poorly understood for developing countries such as China, despite growing media coverage and public concerns in recent years. The data in the literature are either out of date or fragmented. This report presents estimates of food losses and food waste in China, based on literature data, informed estimates, and other publicly available information.
    Keywords: China, food waste reduction, municipal solid waste, agricultural losses, food loss, food waste, data, policy information, grain storage, food value chain
    JEL: Q18 Q53 Q58
    Date: 2014–04–03
  13. By: Ho, Chun-Yu (BOFIT)
    Abstract: This paper develops and estimates a dynamic model of consumer demand for deposits in which banks provide differentiated products and product characteristics that evolve over time. Existing consumers are forward-looking and incur a fixed cost for switching banks, whereas incoming consumers are forward-looking but do not incur any cost for joining a bank. The main finding is that consumers prefer banks with more employees and branches. The switching cost is approximately 0.8% of the deposit’s value, which leads the static model to bias the demand estimates. The dynamic model shows that the price elasticity over a long time horizon is substantially larger than the same elasticity over a short time horizon. Counterfactual experiments with a dynamic monopoly show that reducing the switching cost has a comparable competitive effect on bank pricing as a result of reducing the dominant position of the monopoly.
    Keywords: banks in China; demand estimation; switching cost
    JEL: G21 L10
    Date: 2014–03–25
  14. By: Sang-Wook (Stanley) Cho (School of Economics, Australian School of Business, the University of New South Wales); Juliàn P. Dìaz (Department of Economics, Quinlan School of Business, Loyola University)
    Abstract: In this article, we disentangle the relationship between the skill premium, trade liberalization and productivity changes in accounting for the skill premium patterns of transition economies that joined the European Union (EU) in 2004. To conduct our analysis, we construct an applied general equilibrium model with skilled and unskilled labor, and combining Social Accounting Matrices, Household Budget Surveys and the EU KLEMS Growth and Productivity Accounts database, we calibrate it to match Hungarian data, a transition economy wherethe skill premium consistently increased between 1995 and 2005. We then assess the role of the multiple factors that affected the patterns of the skill premium: trade liberalization reforms, factor and sector bias of technical change and capital deepening, and find that all the factors can jointly account for approximately 87% of the actual change in skill premium between 1995 and 2005. Individually, capital deepening accounts for the largest share of the rise in the skill premium, whereas trade liberalization accounts for a small portion of that increase. While productivity changes account for only a small fraction of the skill premium increases during 1995 and 2000, they significantly offset the impact of the capital deepening on the skill premium in the period between 2000 and 2005.
    Keywords: Transition Economies, Skill Premium, Trade Liberalization, Skill-biased Technical Change, Capital-skill complementarity
    JEL: D58 F16 O33
    Date: 2014–03
  15. By: Timm, Christian
    Abstract: The article analyzes state dominance in Georgia's economy between 2003 and 2010 from the perspective of the (new) developmental state. The specific interlinkage of economic model, law and administration through which state interventions may generate market-enhancing effects provides the analytical framework for the examination of Georgia's institutional setting. The article argues that Georgia enjoyed favorable exogenous conditions for the emergence of a developmental state and was about to introduce a set of administrative features similar to developmental states. However, two factors significantly shaped state-economy relations different to developmental states. Firstly, Georgia opted for a radical anti-corruption-driven separation of state and economy and pursued, consequently, a strict Washington Consensus economic policy. In doing so, the government simultaneously abandoned effective formal instruments for the politically relevant steering of the distribution of economic advantages. This in turn increased the necessity for informal interventions in economic processes contradicting the chosen economic model. Secondly, the flexibility-approach of the government, which relied rather on capable managers than on structures and procedures, undermined the administrative reforms and prevented the emergence of an 'embedded autonomy' of the public service. The absence of a capable, institutional learning and autonomous administration must be seen as the major obstacle for the elaboration of appropriate strategies after 2008 when the government altered its neo-liberal approach towards state-managed capitalism. Although the government was able to steer private and public investments in the specific sectors by relying on its informal coercive power, the economic success of this economic policy, however, failed to appear. The article argues that the lack of an independent administration and the renunciation of means of formal coordination and of law in general are to be made responsible for this. In doing so, Georgian policy makers also waived the chance to reconcile their agenda of sustainable economic growth with the agenda of political power preservation. The study seeks to contribute to the question of institutional prerequisites for successful state interventions in Low- and Middle-Income Countries and, hence, to the growing literature on Post-Washington Consensus and New Developmentalism. --
    Date: 2014
  16. By: Jie Li (Graduate School of Economics, Osaka University); Tomoki Sekiguchi (Graduate School of Economics, Osaka University); Jipeng Qi (School of Economics and Management, Beijing Jiaotong University)
    Abstract: We extend the theory of job crafting by proposing that job characteristics, individual differences, and group-level contexts interactively promote employee job crafting. Specifically, drawing on the theories of job characteristics, regulatory focus, and social exchange, we develop a multilevel model involving skill variety, an employeefs promotion focus, and procedural justice climate in predicting job crafting. To test our model, we conducted a survey of 265 employees working in 44 work groups at a state-owned enterprise in China. In support of our hypotheses, skill variety has a direct effect on job crafting, which is moderated by promotion focus. Further, our finding on the cross-level three-way interaction suggests that procedural justice climate is an important group-level context that influences employee job crafting. Implications for job crafting theory and future research directions are discussed.
    Keywords: job crafting, skill variety, promotion focus, procedural justice climate
    JEL: M10 M12 M54
    Date: 2014–04
  17. By: Marek Dabrowski
    Abstract: The current fiscal imbalances and fragilities in the Southern and Eastern Mediterranean countries (SEMC) are the result of decades of instability, but have become more visible since 2008, when a combination of adverse economic and political shocks (the global and European financial crises, Arab Spring) hit the region. In an environment of slower growth and higher public expenditure pressures, fiscal deficits and public debts have increased rapidly. This has led to the deterioration of current accounts, a depletion of official reserves, the depreciation of some currencies and higher inflationary pressure. To avoid the danger of public debt and a balance-of-payment crisis, comprehensive economic reforms, including fiscal adjustment, are urgently needed. These reforms should involve eliminating energy and food subsidies and replacing them with targeted social assistance, reducing the oversized public administration and privatizing public sector enterprises, improving the business climate, increasing trade and investment openness, and sector diversification. The SEMC may also benefit from a peace dividend if the numerous internal and regional conflicts are resolved. However, the success of economic reforms will depend on the results of the political transition, i.e., the ability to build stable democratic regimes which can resist populist temptations and rally political support for more rational economic policies.
    Keywords: Southern and Eastern Mediterranean, fiscal policy, macroeconomic policy, energy and food subsidies, Arab Spring, Arab transition
    JEL: E62 E63 H24 H56 H62 H63
    Date: 2014–04
  18. By: Oleg Poldin (National Research University Higher School of Economics); Diliara Valeeva (National Research University Higher School of Economics); Maria Yudkevich (National Research University Higher School of Economics)
    Abstract: We analyze the characteristics of the social networks of students studying in the economics department in one Russian university. We focus on student friendship and study assistance ties and demonstrate how these networks are connected with the individual characteristics of students and their peers. We find that the probability of a tie existing is explained by the gender homophily, and initial student assignment to the same exogenously defined study group. Students ask for help and form friendships with students who have similar academic achievements. Academically successful students are more popular in study assistance networks while there is no gender difference in student popularity in both networks. Our findings enhance the understanding of the role of friendship and study assistance ties in the formation of peer group effects
    Keywords: student achievement, social networks, peer group effects, higher education
    JEL: D85 I21 I23
    Date: 2014
  19. By: Michida, Etsuyo; Nabeshima, Kaoru; Ueki, Yasushi
    Abstract: This paper summarizes the main results of a unique firm survey conducted in Vietnam in 2011 on product-related environmental regulations (PRERs). The results of this survey are compared with the results of a corresponding survey of firms in Penang, Malaysia (Michida, et al. 2014b). The major findings are as follows. First, adaptation to PRERs involves changes in input procurement and results in market diversification, which potentially alters the structure of supply chains. This finding is consistent with the Malaysian survey result. Second, connections to global supply chains are key to compliance, but this requires firms to meet more stringent customer requirements. Third, government policy can play an important role in assisting firms to comply with PRERs.
    Keywords: Vietnam, Environmental protection, Industrial standards, Foreign investments, International trade, Statistics, Global supply chain, FDI, PRERs (Product-related environmental regulations), REACH, RoHS
    JEL: F18 O14
    Date: 2014–03

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