nep-tra New Economics Papers
on Transition Economics
Issue of 2015‒07‒11
twenty-one papers chosen by
J. David Brown
United States Census Bureau

  1. Remittances and Relative Concerns in Rural China By Akay, Alpaslan; Bargain, Olivier; Giulietti, Corrado; Robalino, Juan David; Zimmermann, Klaus F.
  2. Trends and cycles in China's macroeconomy By Chang, Chun; Chen, kaiji; Waggoner, Daniel F.; Zha, Tao
  3. The Limits of Career Concerns in Federalism: Evidence from China By Persson, Petra; Zhuravskaya, Ekaterina
  4. Low-Skilled Jobs and Student Jobs: Employers' Preferences in Slovakia and the Czech Republic By Kureková, Lucia Mýtna; Žilinčíková, Zuzana
  5. Minimum wage and youth unemployment in local labor markets in Poland By Paulina Broniatowska; Aleksandra Majchrowska; Zbigniew Zolkiewski
  6. Relaxing Migration Constraints for Rural Households By Cynthia Kinnan; Shing-Yi Wang; Yongxiang Wang
  7. Location choice of German multinationals in the Czech Republic : the importance of agglomeration economies By Hecht, Veronika
  8. The Situation in the Public Sector and Privatization in Russia in 2014 By Alexander Radygin; Georgy Malginov
  9. The Market of Land Plots in Russia in 2014 By Georgy Zadonsky
  10. Small-scale nowcasting models of GDP for selected CESEE countries By Martin Feldkircher; Florian Huber; Josef Schreiner; Julia Woerz; Marcel Tirpak; Peter Toth
  11. Beyond the CEE 'black box': crisis and industrial relations in the new EU member states By Magdalena Bernaciak
  12. Financial Markets: Government Regulation vs Self-regulation in Russia in 2014 By Natalia Polezhaeva
  13. Mixed Economy of Welfare Emerging in Poland: Outplacement and Non-Governmental Employment Agencies Examples By Klimczuk, Andrzej
  14. Issues of RF State Treasury Property Management in Russia in 2014 By Alexander Radygin; Georgy Malginov
  15. Public Policy for Stimulating Scientific and Industrial Cooperation By Yuri Sinachev; Mikhail Kuzyk
  16. Related variety in Chinese cities: local and Foreign Direct Investment related variety and impacts on urban growth By Junsong Wang; Martha Prevezer
  17. Innovations of corporate legislation and regulation: changes in the Civil Code and the new Code of Corporate Governance in Russia in 2014 By Elena Apevalova; Natalia Polezhaeva
  18. Economic transition and speculative urbanisation in China: gentrification versus dispossession By Hyun Bang Shin
  19. From One to Many Central Plans: Drug Advertising Inspections and Intra-National Protectionism in China By Markus Eberhardt; Zheng Wang; Zhihong Yu
  20. Construction, Commissioning and Supply of New Housing in Russia in 2014 By Georgy Malginov; G. Sternik
  21. Children of Migrants: The Impact of Parental Migration on Their Children's Education and Health Outcomes By Meng, Xin; Yamauchi, Chikako

  1. By: Akay, Alpaslan (University of Gothenburg); Bargain, Olivier (University of Aix-Marseille II); Giulietti, Corrado (IZA); Robalino, Juan David (Cornell University); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of well-being functions to simultaneously explore the relative concerns with respect to income and remittances. Our results show that although rural households experience substantial utility loss due to income comparisons, they gain utility by comparing their remittances with those received by their reference group. In other words, we find evidence of a "status-effect" with respect to income and of a "signal-effect" with respect to remittances. The magnitudes of these two opposite effects are very similar, implying that the utility reduction due to relative income is compensated by the utility gain due to relative remittances. This finding is robust to various specifications, controlling for the endogeneity of remittances and selective migration, as well as a measure of current migrants' net remittances calculated using counterfactual income and expenditures.
    Keywords: positional concerns, remittances, subjective well-being
    JEL: C90 D63
    Date: 2015–06
  2. By: Chang, Chun (Shanghai Jiaotong University); Chen, kaiji (Emory University); Waggoner, Daniel F. (Federal Reserve Bank of Atlanta); Zha, Tao (Federal Reserve Bank of Atlanta)
    Abstract: We make four contributions in this paper. First, we provide a core of macroeconomic time series usable for systematic research on China. Second, we document, through various empirical methods, the robust findings about striking patterns of trend and cycle. Third, we build a theoretical model that accounts for these facts. Fourth, the model's mechanism and assumptions are corroborated by institutional details, disaggregated data, and banking time series, all of which are distinctive Chinese characteristics. We argue that preferential credit policy for promoting heavy industries accounts for the unusual cyclical patterns as well as the post-1990s economic transition featured by the persistently rising investment rate, the declining labor income share, and a growing foreign surplus. The departure of our theoretical model from standard ones offers a constructive framework for studying China's modern macroeconomy.
    Keywords: reallocation; between-sector effect; total factor productivity growth; heavy versus light sectors; long-term versus short-term loans; labor share; lending frictions; incentive compatibility
    JEL: E2 E3 E5 F4 G1
    Date: 2015–06–01
  3. By: Persson, Petra; Zhuravskaya, Ekaterina
    Abstract: Performance-based promotion schemes in administrative hierarchies have limitations. Chinese provincial leaders, despite facing strong career concerns, make different policy decisions depending on their career backgrounds. Provincial party secretaries who rose from low to high positions within the province they govern ("locals") spend a higher share of budgetary resources on education and health care and invest less in construction infrastructure than party secretaries who made their most significant career advancements in other provinces ("outsiders"). Identification comes from variation in central leadership and term limits. As the promotion mechanism rewards infrastructure investments, locals are less likely to be promoted at the end of the term. We explore various mechanisms and provide evidence that the difference between locals and outsiders is not driven by knowledge or experience. Several pieces of evidence suggest that locals cater to low-level provincial elites, who helped them rise to power. Thus, local career trajectories limit the power of career concerns by fostering competing allegiances.
    Keywords: autocracy; career concerns; China; federalism; hierarchies; public goods
    Date: 2015–02
  4. By: Kureková, Lucia Mýtna (Slovak Governance Institute); Žilinčíková, Zuzana (Masaryk University)
    Abstract: Massification of tertiary education, growing share of student workers on labour market and consequently increased competition for low-skilled jobs gave rise to the theory of crowding out of the less educated workers. This paper contributes to better understanding of temporary skills-qualifications mismatch typical for student workers by analysing the preferences of employers in low-skilled jobs and student jobs. We take labour market demand perspective and carry out exploratory analysis of job offers posted online in Slovakia and the Czech Republic. The results show that the student labour market is quite diverse as student job offers can be found in low-skilled, but also medium-skilled positions. We also find that although student vacancies require, on average, fewer skills than non-student positions, there is strong correlation between formal sophistication of a job vacancy and the required minimum educational level, as well as required skills for both student and non-student positions. It appears that low-educated workers and student workers do not compete for the limited number of positions, but rather fill employers' demands for different types of hard (e.g. language skills) and soft (e.g. flexibility, adaptability) skills. These results support the complementarity view of the coexistence of student employment and low-skilled employment rather than the crowding out theory.
    Keywords: youth, students, employment, skills, vacancy, online, labor demand, Czech Republic, Slovakia
    JEL: J23 J21 J24 J63
    Date: 2015–06
  5. By: Paulina Broniatowska (Warsaw School of Economics, National Bank of Poland); Aleksandra Majchrowska (Faculty of Economics and Sociology, University of Lodz, National Bank of Poland); Zbigniew Zolkiewski (National Bank of Poland)
    Abstract: The aim of the paper is to analyze the impact of minimum wage on youth unemployment (less than 25 years old) in local (NUTS4) labor markets in Poland. The results show that minimum wage in Poland significantly affects youth unemployment in local labor markets in Poland. The higher is the minimum to average wage ratio on local labor market, the higher is the share of youth unemployed in total unemployment. The fact that youths are the group which is disproportionally affected by minimum wage increases is confirmed by low and/or insignificant value of the parameter by minimum to average wage ratio for other, older groups of workers
    Keywords: minimum wage, youth unemployment, local labor markets in Poland.
    Date: 2015–06
  6. By: Cynthia Kinnan; Shing-Yi Wang; Yongxiang Wang
    Abstract: There are an estimated 750 million internal migrants in the world, yet the effects of access to internal migration for rural households are not well understood. Internal migrants may provide wealth transfers, insurance or credit to households remaining in rural areas. This paper exploits two unique features of China's history to study the impact of relaxing migration constraints on the outcomes and choices of agricultural households: reforms to the household registration (hukou) system that relaxed restrictions on migration, and historical, centrally-planned migration flows. We show that historical flows of temporary migration due to a government policy called the "sent-down youth" (SDY) program created lasting inter-province links, so that decades later, reforms to the hukou system in cities which sent SDY increased migration in provinces where those SDY were sent. Using this variation, we find that improved access to migration leads to higher levels of consumption and lower consumption volatility for rural households. Furthermore, household production decisions change, with a shift into high-risk, high-return activities including animal husbandry and fruit farming.
    JEL: O15
    Date: 2015–07
  7. By: Hecht, Veronika (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper analyses the location choice of German investors in the Czech Republic based on a unique dataset covering all Czech companies with a German equity holder in 2010. The identification of the regional determinants of foreign direct investment (FDI) location is an important regional policy issue as FDI is supposed to improve the labour market conditions of the host region. Using a nested logit approach the impact of agglomeration economies, labour market conditions and distance on the location choice decision is investigated. The main result of the paper is that apart from a low distance to the location of the parent company the attractiveness of a Czech district for German investors is mainly driven by agglomeration economies. Besides localisation economies the agglomeration of German companies in a region plays a decisive role. The importance of labour market characteristics differs between investment sectors, sizes and periods." (Author's abstract, IAB-Doku) ((en))
    Keywords: Standortfaktoren, Standortwahl - Determinanten, Herkunftsland, Investitionsverhalten, Auslandsinvestitionen, Arbeitsmarkt, Tschechische Republik, Bundesrepublik Deutschland, Bundesrepublik Deutschland
    JEL: F23 R12 R30
    Date: 2015–07–02
  8. By: Alexander Radygin (Gaidar Institute for Economic Policy); Georgy Malginov (Gaidar Institute for Economic Policy)
    Abstract: The main developments over the past year in the sphere under consideration were the launch of the second three-year privatization program for the years 2014–2016; the approval of the new government program Federal Property Management until 2018; the transfer, by a court ruling, of JSC Bashneft back to Russian Federation ownership; the continuation of the active process of creation of integrated structures in the defense industry and related sectors; absence of any significant deals completed on the corporate control market with the participation of state companies; and the expansion, at the level of approved model documents, of the set of available instruments to be applied in the management of entities belonging to the public sector of the national economy.
    Keywords: Russian economy; privatization; public sector; role of state in the economy; structural policy; state property management
    JEL: H82 K11 L32 L33
    Date: 2015
  9. By: Georgy Zadonsky (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with a wide range of issues related to the land market in Russia.
    Keywords: Russian economy, land market, home equity landing
    JEL: G21 K11 L74 L85 R14 R21 R31
    Date: 2015
  10. By: Martin Feldkircher (Oesterreichische Nationalbank); Florian Huber (Oesterreichische Nationalbank); Josef Schreiner (Oesterreichische Nationalbank); Julia Woerz (Oesterreichische Nationalbank); Marcel Tirpak (National Bank of Slovakia, Research Department); Peter Toth (National Bank of Slovakia, Research Department)
    Abstract: In this article, we describe short-term forecasting models of economic activity for seven countries in Central, Eastern and Southeastern Europe (CESEE) and compare their forecasting performance since the outbreak of the Great Recession. To build these models, we use four variants of bridge equations and a dynamic factor model for each country. Given the differences in availability of monthly indicators across countries and the rather short time period over which these indicators are available, we favor smallscale forecasting models. We selected monthly indicators on the basis of expert judgment, correlation analysis and Bayesian model averaging techniques. While our odels generally outperform a purely time-series based forecast for all CESEE countries, there is no single technique that consistently produces the best out-of-sample forecast. To maximize forecasting accuracy, we therefore recommend selecting a country-specific suite of well-performing models for every CESEE economy.
    Keywords: Nowcasting, bridge equations, dynamic factor models, Bayesian model averaging,Central-, Eastern- and South-Eastern Europe
    JEL: C52 C53 E37
    Date: 2015–06
  11. By: Magdalena Bernaciak
    Abstract: This working paper maps out developments of industrial relations in Central-Eastern Europe (CEE) during the period 2008-2014. It looks at wage trends and public sector austerity measures, collective bargaining practices, social dialogue performance and the incidence of strikes and protests.
    Keywords: EU enlargement, Industrial relations, Trade unions
    Date: 2015–06
  12. By: Natalia Polezhaeva (RANEPA)
    Abstract: This paper deals with the issues of government regulation in financial markets.
    Keywords: Russian economy; financial markets, regulation
    JEL: G18
    Date: 2015
  13. By: Klimczuk, Andrzej
    Abstract: One of the key challenges of social policy in Poland in the early 21st century is to adapt its management to the requirements of a service economy. Essential conditions for the mixed economy of welfare have been already created after adjustments of the subsystems of national social policy during the first years of membership in the European Union since 2004. Labour market policies (LMPs) already include the relationships between providers from the public sector, the commercial sector, and the non-governmental sector. However, the tasks and services of individual entities and institutions still lack coordination and integration. This paper focus on the examples of possibilities for their development by combining the activation (enabling) policy with concepts of the governance and welfare mix. The paper presents the results of the author’s research on the implementation of welfare mix solutions in the field of professional activation of the unemployed people in Poland. Two case studies are included (1) the implementation of outplacement programs that are based on the cooperation between different entities; and (2) the cooperation between the public employment services and non-governmental employment agencies in the activation of people with disabilities in the labour market. Moreover, basic concepts of ongoing reforms of active labour market policies (ALMPs) in Poland were discussed. The summary contains the practical recommendations and possible directions for further research in the field of integration of employment services.
    Keywords: activation policy, cross-sectoral cooperation, disability, employment agencies, labour market policy, local partnerships and pacts, outplacement, unemployment, welfare mix, mixed economy of welfare
    JEL: E24 J14 J24 J28 J64 Z18
    Date: 2015–05
  14. By: Alexander Radygin (Gaidar Institute for Economic Policy); Georgy Malginov (Gaidar Institute for Economic Policy)
    Abstract: Due to the radical character of market transformations that took place in the Russian economy in the 1990s, including reform of the ownership relations oriented to prompt privatization, for a long time there was no interest in the issues of public property management in Russia. Some progress in that sphere occurred after the crisis period of 1997–1998, when a certain shift in the government property policy priorities could be seen. The onset of a new phase in the ownership relations reform in Russia was triggered by the approval, by Decree of the RF Government No 1024 of 9 September 1999, of the Concept of State Property Management and Privatization in the Russian Federation (hereinafter – Concept). It was probably a symbolic event, in that for the first time since 1992 the issues of state property management were given priority over formal alterations to ownership forms.
    Keywords: Russian economy; treasury-owned property, federal property
    JEL: H82 K11 L32 L33
    Date: 2015
  15. By: Yuri Sinachev (Interdepartmental Analytical Center, RANEPA); Mikhail Kuzyk (Interdepartmental Analytical Center, RANEPA)
    Abstract: This paper deals with assessment of the experience in industrial policy implementation in Russia, and a determination of the key lessons including an analysis of two examples of industrial policy – the nano-industry and the automotive industry.
    Keywords: Russian economy, industrial policy
    JEL: L32 L38 L52 L59
    Date: 2015
  16. By: Junsong Wang; Martha Prevezer
    Abstract: The paper measures agglomeration economies through related variety and their impact on growth and employment in Chinese cities, using prefecture level city-industry data from 2003 to 2010.
    Keywords: Related variety; Jacobs externalities; FDI-knowledge spillovers; Urban growth in China
    JEL: O2 R1
    Date: 2015–06
  17. By: Elena Apevalova (RANEPA); Natalia Polezhaeva (RANEPA)
    Abstract: This paper deals with the issues of innovation in corporate legislation. The authors focus on the Civil Code reform and the new Code of Corporate Governance.
    Keywords: Russian economy; civil code, corporate governance legislation
    JEL: K11 K23
    Date: 2015
  18. By: Hyun Bang Shin
    Abstract: Gentrification requires properties to be available for investment through market transactions. In mainland China which has gone through transition from a planned to a market economy, it is necessary to unleash decommodified real estate properties and make them amenable to investment. This entails inhabitants’ dispossession to dissociate them from claiming their rights to the properties and to their neighbourhoods. This paper argues that while China’s urban accumulation may have produced new-build gentrification, redevelopment projects have been targeting dilapidated urban spaces that are yet to be fully converted into commodities. This means that dispossession is a precursor to gentrification. Dispossession occurs through both coercion and co-optation, and reflects the pathdependency of China’s socialist legacy. The findings contribute to the debates on contextualising the workings of gentrification in the global South, and highlight the importance of identifying multiple urban processes at work to produce gentrification and speculative urban accumulation.
    Keywords: Gentrification; dispossession; economic transition; speculative urbanisation; China
    JEL: N0
    Date: 2015
  19. By: Markus Eberhardt; Zheng Wang; Zhihong Yu
    Abstract: This paper provides the first micro-level evidence for the existence and patterns of intra-national protectionism in China. We demonstrate that drug advertising inspections are used by provincial governments to discriminate against firms from outside the province. We further reveal how the degree of discrimination could be mitigated for nonlocal firms under certain circumstances: those from neighbouring areas, those without political ties to rival provincial governments, those from regions with more economic links to the destination province, and those from provinces with stronger presence in the market, are less likely to be targeted. Our findings highlight the unique politico-economic structure in China and confirm that giving local governments strong incentives to compete with each other may exacerbate the market distortions inherent in a partially reformed economy.
    Keywords: Intra-national protectionism; Drug advertising; China JEL Classification: F15, L25, P26
    Date: 2015
  20. By: Georgy Malginov (Gaidar Institute for Economic Policy); G. Sternik (Gaidar Institute for Economic Policy)
    Abstract: The situation in Russia’s residential housing market over the past year was largely determined by the near-stagnation macroeconomic situation and the current phase of market development, which resulted in a multi-vectored movement of prices in the housing markets of different cities, because in most of them the period of post-crisis recovery was already over, while some cities were still struggling with the consequences of the crisis
    Keywords: Russian economy, house construction, house prices, residential property market,
    JEL: R21 R31 R52
    Date: 2015
  21. By: Meng, Xin (Australian National University); Yamauchi, Chikako (National Graduate Institute for Policy Studies Japan)
    Abstract: In the past 15 years around 160 million Chinese rural workers migrated to cities to work. Because of restrictions on migrant access to local health and education system a large cohort of migrant children are left-behind in rural villages and growing up without parental care. This paper examines how parental migration affects children's health and education outcomes. Using the Rural-Urban Migration Survey in China (RUMiC) data we are able to measure the share of children's lifetime during which parents migrated away from home. By instrumenting this measure of parental migration with weather changes in their home village when they were young we find a sizable adverse impact of exposure to parental migration on children's health and education outcomes. We also find that what the literature has always done (using contemporaneous measure for parental migration) is likely to underestimate the effect of exposure to parental migration on children's outcomes.
    Keywords: migration, children, education, health, China
    JEL: J38 I28
    Date: 2015–06

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