nep-tra New Economics Papers
on Transition Economics
Issue of 2016‒12‒18
fifteen papers chosen by
J. David Brown
United States Census Bureau

  1. Improving or Disappearing: Firm-Level Adjustments to Minimum Wages in China By Florian Mayneris; Sandra Poncet; Tao Zhang
  2. Are Chinese transport policies effective? A new perspective from direct pollution rebound effect, and empirical evidence from road transport sector By Lu-Yi Qiu; Ling-Yun He
  3. The Health Workforce of the Russian Federation in the Context Of the International Trends By Christopher J. Gerry; Igor Sheiman
  4. The size and effects of emigration and remittances in the Western-Balkans: Forecasting based on a Delphi process By Petreski, Marjan; Petreski, Blagica; Tumanoska, Despina; Narazani, Edlira; Kazazi, Fatush; Ognjanov, Galjina; Jankovic, Irena; Mustafa, Arben; Kochovska, Tereza
  5. Business Cycle Accounting: Bulgaria after the Introduction of the Currency Board Arrangement (1999-2014) By Aleksandar Vasilev
  6. Judging a Book by Its Cover: Analysts and Attention-Driven Price Patterns in China’s IPO Market By Feng, Xunan; Johansson, Anders C.
  7. The distribution dynamics of Carbon Dioxide Emission intensity across Chinese provinces: A weighted Approach By Jian-Xin Wu; Ling-Yun He
  8. Promotion Incentives in the Public Sector: Evidence from Chinese Schools By Karachiwalla, Naureen; Park, Albert
  9. Technology or Upskilling? Trends in the Task Composition of Jobs in Central and Eastern Europe By Wojciech Hardy; Roma Keister; Piotr Lewandowski
  10. How do Chinese cities grow? A distribution dynamics approach By Jian-Xin Wu; Ling-Yun He
  11. Wage Structure and Gender Earnings Differentials in China and India By Dainn Wie; Jong-Wha Lee
  12. Agglomeration and (the Lack of) Competition By Yao Amber Li; Joseph Kaboski; Wyatt Brooks
  13. Vietnamese footwear export:The direction of trade and determinants of firms’ market penetration By Vu, Hanh; Doan, Hung
  14. Antecedents of corporate social responsibility in the banks of Central-Eastern Europe and in the countries of the former Soviet union By Khurshid Djalilov; Jens Hoelscher
  15. The demand for road transport in China: imposing theoretical regularity and flexible functional forms selection By Ling-yun He; Li Liu

  1. By: Florian Mayneris (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE)); Sandra Poncet (Paris School of Economics (University of Paris 1), CEPII and FERDI); Tao Zhang (Shanghai University of International Business and Economics)
    Abstract: We here consider how Chinese firms react to higher minimum wages, exploiting the 2004 minimum-wage Reform in China. After this reform, we find that the wage costs for surviving firms that were more exposed to minimum wage hikes rose, but their employment and profitability were not affected. This came about due to significant productivity gains among surviving exposed firms. Our results are robust to pre-trend analysis and an IV strategy. However, the survival probability of firms most exposed to minimum-wage hikes fell after the Reform. Firm-level productivity gains partly came from better inventory management and greater investment in capital, at the cost of a reduction in firm-level cash flow. We show that competing explanations are unlikely. In particular, there is no evidence of lower fringe benefits compensating for higher wages, the substitution of less-paid/less-protected migrants for incumbent workers, or firm-level adjustment through higher prices instead of higher productivity. This firm-level productivity adjustment to the minimum wage might be particularly relevant for developing countries where inefficiencies are still pervasive.
    Keywords: minimum wages, firm-level performance, productivity, China
    JEL: J38 O12 O14
    Date: 2016–11–30
  2. By: Lu-Yi Qiu; Ling-Yun He
    Abstract: The air pollution has become a serious challenge in China. Emissions from motor vehicles have been found as one main source of air pollution. Although the Chinese government has taken numerous policies to mitigate the harmful emissions from road transport sector, it is still uncertain for both policy makers and researchers to know to what extent the policies are effective in the short and long terms. Inspired by the concept and empirical results from current literature on energy rebound effect (ERE), we first propose a new concept of pollution rebound effect (PRE). Then, we estimate direct air PRE as a measure for the effectiveness of the policies of reducing air pollution from transport sector based on time-series data from the period 1986-2014. We find that the short-term direct air PRE is -1.4105, and the corresponding long-run PRE is -1.246. The negative results indicate that the direct air PRE does not exist in road passenger transport sector in China, either in the short term or in the long term during the period 1986-2014. This implies that the Chinese transport policies are effective in terms of harmful emissions reduction in the transport sector. This research, to the best of our knowledge, is the first attempt to quantify the effectiveness of the transport policies in the transitional China.
    Date: 2016–10
  3. By: Christopher J. Gerry (National Research University Higher School of Economics); Igor Sheiman (National Research University Higher School of Economics)
    Abstract: Having one of the highest physician-population ratios in the world, Russia – paradoxically – also faces shortages of physicians. This paper explores the reasons for this paradox through examining the structural characteristics of the Russian health workforce and its development. In comparing Russia with mainstream European countries and in particular the ‘new” EU countries we argue that the shortage of physicians is determined mostly by the prevailing model of health workforce development with its enduring emphasis on quantitative rather than structural indicators. First, the traditional perception of physicians as inexpensive health resources determines the long-term growth of their jobs – irrespective of the new opportunities for substitution and other structural innovations. Second, there is a persistent distortion in the composition of physician supply, of which the most important is the very low share and narrow remit of primary health care providers in comparison to European standards. Third, the international trends in the division of labor between physicians, medical nurses and allied health personnel are not followed in Russia with the result of an inevitable overburden of physicians, the reproduction of a large supply of physicians, while also the paradoxical shortage. Fourth, the system of professional development of physicians does not match international standards. Although with a substantial delay, Russia has now started transition to a workforce model focused on structural characteristics of human resources and so, in the final part of the paper, these new initiatives of the Government are critically assessed.
    Keywords: physicians, health workforce, health workforce policy, health care systems, primary care, Russia, health reforms
    JEL: Z
    Date: 2016
  4. By: Petreski, Marjan; Petreski, Blagica; Tumanoska, Despina; Narazani, Edlira; Kazazi, Fatush; Ognjanov, Galjina; Jankovic, Irena; Mustafa, Arben; Kochovska, Tereza
    Abstract: The objective of this paper is to forecast the size and effects of remittances and emigration in four Western-Balkan countries: Macedonia, Albania, Serbia and Kosovo, through application of a qualitative forecasting method: a Delphi questionnaire. We solicited consensus building within and between two groups of respondents: 10 experts and 20 receivers were consulted per country in three subsequent rounds - two on the same group, and a third cross-round whereby average answers of receivers were given to experts, and vice versa. Consensual results suggest that remittances in the projected five-year period will increase in Macedonia and Serbia, and will reduce in Albania and Kosovo. With lower consensus, results forecast that emigration will decelerate in Macedonia, Albania and Kosovo, and will accelerate in Serbia by 2021. Emigration effects for the society have been forecasted to be predominantly negative due to skilled labour emigration, while remittances were forecasted to maintain their effect on poverty in Macedonia and Serbia, and weaken it in Albania. In all four countries, expert and receivers were in agreement that remittances will continue to support current consumption only. On the other hand, Macedonians lacked consensus on remittances’ effect on the labour market, whereby experts agreed that remittances will support inactivity, while receivers – employment. On the other hand, there has been a consensus achieved in the other three countries that remittances will support labour-market activity.
    Keywords: remittances; emigration; forecasting; Delphi
    JEL: F22 F24 O15
    Date: 2017
  5. By: Aleksandar Vasilev (Department of Economics, American University in Bulgaria)
    Abstract: This paper focuses on explaining the economic uctuations in Bulgaria after the introduction of the currency board arrangement in 1997, the period of macroeconomic stability that ensued, the EU accession, and the episode of the recent global financial crisis. This paper follows Chari et al. (2002) and performs business cycle accounting (BCA) for Bulgaria during the period 1999-2014. As in Cavalcanti (2007), who studies the Portuguese business cycles, most of the volatility in output per capita in Bulgaria over the period is due to variations in the eciency and labor wedges.
    Keywords: Business Cycle accounting; Bulgarian economy; eciency and labor wedges
    JEL: E32 E37 O47
    Date: 2016–11
  6. By: Feng, Xunan (Southwestern University of Finance and Economics); Johansson, Anders C. (Stockholm China Economic Research Institute)
    Abstract: We hypothesize that investors in China’s market for initial public offerings (IPOs) are influenced by the level of attention given to upcoming offerings. Using a novel data set on analyst coverage, we find that investor attention as proxied by the number of analysts covering a firm drives IPO underpricing. We also show that analyst coverage is positively related with small trading activities during the first trading day. Our results suggest that analysts attract the attention of individual investors, who then drive IPO initial returns and cause related long-term price reversals in the post-IPO market. These findings contradict the argument that a primary role of analysts is to reduce information asymmetry and instead support the attention hypothesis.
    Keywords: Attention; Investor behavior; Behavioral biases; Analyst coverage; Initial public offerings; China
    JEL: G11 G14 G15 G24
    Date: 2016–12–12
  7. By: Jian-Xin Wu; Ling-Yun He
    Abstract: This paper examines the distribution dynamics of carbon dioxide (CO2) emission intensity across 30 Chinese provinces using a weighted distribution dynamics approach. The results show that CO2 emission intensity tends to diverge during the sample period of 1995-2014. However, convergence clubs are found in the ergodic distributions of the full sample and two sub-sample periods. Divergence, polarization and stratification are the dominant characteristics in the distribution dynamics. Weightings with economic and population sizes have important impacts on current distributions and hence long run steady distributions. Neglecting economic size may under-estimate the deterioration in the long run steady state. The result also shows that conditioning on space and income cannot eliminate the multimodality in the long run distribution. However, capital intensity has important impact on the formation of convergence clubs. Our findings have contributions in the understanding of the spatial dynamic behaviours of CO2 emissions across Chinese provinces, and have important policy implications for CO2 emissions reduction in China.
    Date: 2016–10
  8. By: Karachiwalla, Naureen; Park, Albert
    Abstract: We provide evidence that promotion incentives influence the effort of public employees by studying China's system of promotions for teachers. Predictions from a tournament model of promotion are tested using retrospective panel data on primary and middle school teachers. Consistent with theory, promotions are associated with wage increases, higher wage increases are associated with better performance, and teachers increase effort in years leading up to promotion eligibility but reduce effort if they are repeatedly passed over for promotion. Evaluation scores are positively associated with teacher time use and with student test scores, diminishing concerns that evaluations are manipulated.
    Keywords: China; incentives; promotions; teachers
    JEL: J31 J33 J45 M51
    Date: 2016–12
  9. By: Wojciech Hardy (Institute for Structural Research (IBS); Faculty of Economics, University of Warsaw); Roma Keister (Institute for Structural Research (IBS)); Piotr Lewandowski (Institute for Structural Research (IBS); Institute of Labor Economics (IZA))
    Abstract: In this paper we analyse the changes in the task content of jobs in Central and Eastern European countries between 1998 and 2013. We link the O*NET data on occupational characteristics with EU-LFS, following the approach of Autor, Levy and Murnane (2003), and Acemoglu and Autor (2011). We find that the CEE countries witnessed similar trends of rising intensity of non-routine cognitive tasks, and a decreasing intensity of manual tasks, although they differed with regards to changes in the routine cognitive task content. We assess the relative role played by education and technology in the development of task contents. We also decompose the observed changes into the contributions of sectoral, educational and occupational changes as well as the interaction between them. Our results show that workforce upskilling was the major factor behind the evolution of non-routine cognitive and manual tasks in CEE, whereas structural changes and shifts towards work with lower speed of de-routinisation have shaped routine cognitive tasks.
    Keywords: task content of jobs, routinization, job polarization, Central and Eastern Europe
    Date: 2016–12
  10. By: Jian-Xin Wu; Ling-Yun He
    Abstract: This paper examines the dynamic behavior of city size using a distribution dynamics approach with Chinese city data for the period 1984-2010. Instead of convergence, divergence or paralleled growth, multimodality and persistence are the dominant characteristics in the distribution dynamics of Chinese prefectural cities. Moreover, initial city size matters, initially small and medium-sized cities exhibit strong tendency of convergence, while large cities show significant persistence and multimodality in the sample period. Examination on the regional city groups shows that locational fundamentals have important impact on the distribution dynamics of city size.
    Date: 2016–10
  11. By: Dainn Wie (National Graduate Institute for Policy Studies); Jong-Wha Lee (Korea University)
    Abstract: This study analyzes how changes in overall wage inequality and gender-specific factors affected the gender wage gap in Chinese and Indian urban labor markets in the 1990s and 2000s. Analysis of micro data present that contrasting evolutionary patterns in gender wage gap emerged over the period, showing a widened wage gap in China but a dramatically reduced gap in India. In both countries, female workers f increased skill levels contributed to reducing the gender wage gap. However, increases in observed prices of education and experience worked unfavorably for high-skilled women, counterbalancing their improvement in labor market qualifications. Decomposition analyses show that China fs widened gap was attributable to gender-specific factors such as deteriorated observable and unobservable labor market qualifications and increased discrimination, especially against low- and middle-skilled female workers. For India, gender-specific factors and relatively high wage gains of low- and middle-skilled workers reduced the male-female wage gap.
    Date: 2016–12
  12. By: Yao Amber Li (Hong Kong University of Science and Tech); Joseph Kaboski (University of Notre Dame); Wyatt Brooks (University of Notre Dame)
    Abstract: Industrial clusters are generally viewed as good for growth and development, but clusters can also enable non-competitive behavior. This paper studies the presence of non-competitive pricing in geographic industrial clusters. We develop, validate, and apply a novel identification strategy for collusive behavior. We derive the test from the solution to a partial cartel of perfectly colluding firms in an industry. Outside of a cartel, markups depend on a firm’s market share but not on the total market share of firms in the agglomeration, but in the cartel, markups are constant across firms and depend only on the overall market share of the agglomeration. Empirically, we validate the test using plants with a common owner, and we then test for collusion using data from Chinese manufacturing firms (1999-2009). We find strong evidence for non-competitive pricing within a subset of industrial clusters, and we find the level of non-competitive pricing is roughly four times higher in China’s “special economic zones†.
    Date: 2016
  13. By: Vu, Hanh; Doan, Hung
    Abstract: We investigate determinants of firms’ direction of trade by using panel data of Vietnam’s footwear firms for the 2006-2010 period. Since no variance was found between firms, a pooled multinomial logit model is consequently preferable. Notably, the economies of scale show positive and significant effects for footwear firms serving the USA and EU markets. Although Vietnamese footwear firms are less likely to export to the ASEAN countries, they tend to focus on the diversification of products in this market. Both private and FDI firms are less likely to export to the EU compared with their counter parts owned by the State (SOEs). However, private firms outperform SOES in the U.S market.
    Keywords: Direction of trade, footwear, export firms, multinomial logit, Vietnam
    JEL: F11 F14
    Date: 2016–12
  14. By: Khurshid Djalilov (Bournemouth University, Executive Business Centre); Jens Hoelscher (Bournemouth University, Executive Business Centre)
    Abstract: This article explores the determinants of corporate social responsibilities (CSR) in the banking sector of the transition countries of Central and Eastern Europe (CEE), as well as those of the former Soviet Union (FSU). Our panel fixed-logit results for 237 banks, covering the period 2000–2012, show that while financial performance is not associated with CSR, larger banks are more likely to engage in CSR. Additionally, a government’s effectiveness and its regulatory quality increase the likelihood that the banks will engage in social activities. A range of possible approaches that governments can take to encourage social activities in the banking sector of transition countries are provided. Overall, our results are consistent with the theory that the necessary conditions must be in place to support CSR, which seem to be absent in the countries under investigation.
    Keywords: Banks; corporate social responsibility; performance; transition economies
    JEL: P20 M14 G21
    Date: 2016–12
  15. By: Ling-yun He; Li Liu
    Abstract: Road transport sector is found to be one of the major emitters, and responsible for serious air pollution and huge pubic health losses. One important parameter for determining the consequences of transport demand shocks for the macroeconomy, air pollution and public health is the elasticity of the demand for transport. Most published studies that use flexible functional forms have ignored the theoretical regularity conditions implied by microeconomic theories. Moreover, even a few studies have checked and/or imposed regularity conditions, most of them equate curvature alone with regularity, thus ignoring or minimizing the importance of other regularities. And then, the results appear biased and may in fact be biased. Therefore, we select three of the most widely used flexible functional forms, the Rotterdam model, the Almost Ideal Demand System (AIDS), and the quadratic AIDS (QUAIDS) to investigate the demand for road transport in China using recent annual expenditure data, over a 13 year period from 2002 to 2014, on three expenditure categories in the transportation sector: private transportation, local transportation and intercity transportation. Estimation shows that the AIDS model is the only model that is able to provide theoretically consistent estimates of the residents demand for road transport in China. Our estimates show that the private transportation is a luxury among the transportation goods, and is elastic in price changes relatively. The empirical results imply that the private and the local transportation, the local and intercity transportation are gross complements. And, the private transportation is a substitute for the inter-city transportation, while the intercity transportation is a complement of the private transportation.
    Date: 2016–10

This nep-tra issue is ©2016 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.