nep-tra New Economics Papers
on Transition Economics
Issue of 2017‒05‒07
thirteen papers chosen by
J. David Brown
United States Census Bureau

  1. Moving On Up for High School Graduates in Russia: The Consequences of the Unified State Exam Reform By Slonimczyk, Fabian; Francesconi, Marco; Yurko, Anna
  2. The Shadow Price of CO2 Emissions in China's Iron and Steel Industry By Ke Wang; Linan Che; Chunbo Ma; Yi-Ming Wei
  3. Socioeconomic impact assessment of China's CO2 emissions peak prior to 2030 By Zhi-Fu Mi; Yi-Ming Wei; Bing Wang; Jing Meng; Zhu Liu; Yuli Shan; Jingru Liu; Dabo Guan
  4. The Impact of Parental Health on Children's Schooling and Labour Force Participation: Evidence from Vietnam By Mendolia, Silvia; Nguyen, Thi; Yerokhin, Oleg
  5. Urbanizing with Equity Consideration By Wan, Guanghua; Luo, Zhi; Zhang, Xun
  6. Economic Forecasting Based on the Relationship between GDP and Real Money Supply By BLINOV, Sergey
  7. Where Is the Consumer Center of St. Petersburg? By Konstantin A. Kholodilin; Irina Krylova; Darya Kryutchenko
  8. Спектральная оценка компоненты бизнес цикла ВВП России с учетом высокой зависимости от условий торговли By Polbin, Andrey; Skrobotov, Anton
  9. How Do Unemployed Workers Behave Prior to Retirement? A Multi-State Multiple-Spell Approach By Gałecka-Burdziak, Ewa; Góra, Marek
  10. China's socioeconomic risk from extreme events in a changing climate: a hierarchical Bayesian model By Xiao-Chen Yuan; Xun Sun; Upmanu Lall; Zhi-Fu Mi; Jun He; Yi-Ming Wei
  11. Costly Posturing: Ceremonies and Early Child Development in China By Chen, Xi; Zhang, Xiaobo
  12. Rise of ‘Red Zaibatsu’ in China: entrenchment and expansion of large state-owned enterprises, 1990-2016 By Huangnan Shen; Lei Fang; Kent Deng
  13. Labor markets and informality: the case of Central Asia By Mirkasimov, Bakhrom; Ahunov, Muzaffar

  1. By: Slonimczyk, Fabian (Higher School of Economics, Moscow); Francesconi, Marco (University of Essex); Yurko, Anna (Higher School of Economics, Moscow)
    Abstract: In 2009, Russia introduced a reform that changed the admissions process in all universities. Before 2009, admission decisions were based on institution-specific entry exams; the reform required universities to determine their decisions on the results of a national high-school test known as Unified State Exam (USE). One of the main goals of the reform was to make education in top colleges accessible to students from peripheral areas who typically did not enroll in university programs. Using panel data from 1994 to 2014, we evaluate the effect of the USE reform on student mobility. We find the reform led to a substantial increase in mobility rates among high school graduates from peripheral areas to start college by about 12 percentage points, a three-fold increase with respect to the pre-reform mobility rate. This was accompanied by a 40–50% increase in the likelihood of financial transfers from parents to children around the time of the move and a 70% increase in the share of educational expenditures in the last year of the child's high school. We find no effect on parental labor supply and divorce.
    Keywords: human capital, student migration, Russia, university admission
    JEL: J61 O15
    Date: 2017–03
  2. By: Ke Wang; Linan Che; Chunbo Ma; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: As China becomes the world¡¯s largest energy consumer and CO2 emitter, there has been a rapidly emerging literature on estimating China's abatement cost for CO2 using a distance function approach. However, the existing studies have mostly focused on the cost estimates at macro levels (provinces or industries) with few examining firm-level abatement costs. No work has attempted to estimate the abatement cost of CO2 emissions in the iron and steel industry. Although some have argued that the directional distance function (DDF) is more appropriate in the presence of bad output under regulation, the choice of directions is largely arbitrary. This study provides the most up-to-date estimate of the shadow price of CO2 using a unique dataset of China's major iron and steel enterprises in 2014. The paper uses output quadratic DDF and investigates the impact of using different directional vectors representing different carbon mitigation strategies. The results show that the mean CO2 shadow price of China's iron and steel enterprises is very sensitive to the choice of direction vectors. The average shadow prices of CO2 are 407, 1226 and 6058 Yuan/tonne respectively for the three different direction vectors. We also find substantial heterogeneity in the shadow prices of CO2 emissions among China's major iron and steel enterprises. Larger, listed enterprises are found to be associated lower CO2 shadow prices than smaller, unlisted enterprises.
    Keywords: Directional distance function; Marginal abatement cost; Shadow price; Iron and steel; CO2 emissions; Heterogeneity
    JEL: Q54 Q40
    Date: 2017–04–05
  3. By: Zhi-Fu Mi; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Bing Wang; Jing Meng; Zhu Liu; Yuli Shan; Jingru Liu; Dabo Guan
    Abstract: China is the largest emitter of carbon emissions in the world. In this paper, we present an Integrated Model of Economy and Climate (IMEC), an optimization model based on the input-output model. The model is designed to assess the tradeoff between emission deceleration and economic growth. Given that China's projected average growth rate will exceed 5% over the next two decades, we find that China may reach its peak CO2 emissions levels by 2026. According to this scenario, China's carbon emissions will peak at 11.20 Gt in 2026 and will then decline to 10.84 Gt in 2030. Accordingly, approximately 22 Gt of CO2 will be removed from 2015 to 2035 relative to the scenario wherein China¡¯s CO2 emissions peak in 2030. While this earlier peaking of carbon emissions will result in a decline in China's GDP, several sectors, such as Machinery and Education, will benefit. In order to reach peak CO2 emissions by 2026, China needs to reduce its annual GDP growth rate to less than 4.5% by 2030 and decrease energy and carbon intensity levels by 43% and 45%, respectively, from 2015 to 2030.
    Keywords: carbon emissions; peak; input-output; optimization model; integrated assessment model; China
    JEL: Q54 Q40
    Date: 2017–04–02
  4. By: Mendolia, Silvia (University of Wollongong); Nguyen, Thi (University of Wollongong); Yerokhin, Oleg (University of Wollongong)
    Abstract: This paper investigates the relationship between parental health shocks and children's engagement in education and labour market, using a panel data survey of Vietnamese families, interviewed between 2004 and 2008. While there is substantial evidence showing the intergenerational transmission of health, the literature investigating the impact of parental health on children's educational and labour market outcomes is limited, especially in developing countries. We use child fixed effects and control for a detailed set of household and local area characteristics. Our main findings show that maternal illness substantially decreases chances of being enrolled in school for children between 10 and 23 years old and, at the same time, increases the children's likelihood of entering the labour market and working more hours for children aged 10-15 years old. The effect is particularly pronounced for girls, who seem to experience worst adverse consequences in terms of education and labour market engagement.
    Keywords: children's education, child labour, parental illness
    JEL: I10 I14 I24
    Date: 2017–03
  5. By: Wan, Guanghua (Asian Development Bank Institute); Luo, Zhi (Asian Development Bank Institute); Zhang, Xun (Asian Development Bank Institute)
    Abstract: Research has not yet been undertaken on the optimal level of urbanization, notwithstanding the pioneering work of Au and Henderson (2006) on optimal urban concentration. We develop two-sector general equilibrium models of urbanization, with and without equity consideration, respectively. It is shown that considering equity will result in a higher level of urbanization than otherwise, when urban inequality is sufficiently small or migration costs are sufficiently large. Such a theoretical prediction is confirmed by empirical modeling results using panel data from People’s Republic of China (PRC). Provincial governments that paid attention to the inequality issue are found to have higher urbanization levels than those that did not. Finally, we explore possible equity consideration-to-urbanization transmission channels, and empirically establish that equity consideration in PRC (e.g., government initiatives towards combating rural poverty or the urban-rural gap) is positively correlated with road density, which helps reduce migration costs, and with bank lending to the manufacturing sector, which helps enhance the pulling force of migration. Thus, policy makers in the developing world should reverse their prevailing anti-urbanization attitudes and practices that tend to slow down urbanization or restrict rural-to-urban migration.
    Keywords: urbanization; income inequality; Social welfare function; Optimization
    JEL: D63 E61 O18
    Date: 2017–01–20
  6. By: BLINOV, Sergey
    Abstract: Forecasts showing how the economy will be developing are very important both for the government and for all the economic agents, including citizens. In Russia, the common practice is to forecast based on price assumptions for hydrocarbons, primarily oil. Such an approach causes serious errors. This paper proposes a different approach driven by the close linkage between the GDP and the real money supply. By way of an example, forecast scenarios for Russia’s GDP in 2017 are adduced. Options for using the proposed methodology in economic policy (including anti-crisis policy) are suggested
    Keywords: Monetary Policy; Business Cycles; Forecasting and Prediction Methods; Energy and the Macroeconomy
    JEL: C53 C54 E37 E52 Q43
    Date: 2017–04–22
  7. By: Konstantin A. Kholodilin; Irina Krylova; Darya Kryutchenko
    Abstract: In an urban economy, the distribution of people and real estate prices depends on the location of the central business district of a city. As distance from the city center increases, both prices and population density diminish, for travel costs increase in terms of time and money. As manufacturing gradually leaves the cities, the importance of consumer amenities as attractors of population to the urban areas increases. The role of a business center is being replaced by the consumer center. In this paper, we identify the location of the consumer center of St. Petersburg - the second largest city in Russia and its former capital. For this purpose using the data from open sources in the Internet regarding the location of many different types of urban amenities, the indices of their spatial density are computed. Using the weights based on coefficients of spatial variation and survey-based weights, the individual indices are aggregated to two general centrality indices. Their unique maxima correspond to the city center of St. Petersburg, which is located on Nevsky prospekt, between Fontanka river and Liteinyi prospekt.
    Keywords: St. Petersburg, urban amenities, consumer city center, kernel density estimation
    JEL: R14 R15 C43
    Date: 2017
  8. By: Polbin, Andrey; Skrobotov, Anton
    Abstract: The article proposes a new approach for estimation of the business cycle component of the Russian GDP. At the first step, the non-stationary component consisting of a deterministic trend with structural breaks, and components characterizing the long-run impact of oil prices on the Russian economy are eliminated from the series of GDP (in logs). At the second step, the component of the business cycle with a periodicity of fluctuations from 6 to 32 quarters is extracted from the stationary residuals using spectral analysis methods. We find that the business cycle component for the period from 2014 to 2016 was zero while other methods give negative estimates. Besides, the magnitude of cyclical fluctuations has decreased.
    Keywords: business cycle; output gap; Russian economy; GDP; oil prices; cointegrating regression; structural breaks; spectral analysis; band pass filter
    JEL: C18 C22 C51 E32 F41
    Date: 2017–04–20
  9. By: Gałecka-Burdziak, Ewa (Warsaw School of Economics); Góra, Marek (Warsaw School of Economics)
    Abstract: We examine the behaviour of unemployed older workers up to five years prior to the point at which they can transition out of unemployment because they become eligible to receive pension benefits. We use a unique dataset covering the unemployment histories (longitudinal data) of individuals born between 1940 and 1965 who were registered with any of the public employment offices in Poland. Thus, we study a whole population of individuals who experienced this type of transition over the time period 1996-2015. We examine the transition from unemployment to retirement as a multi-year process. We analyse multiple unemployment spells, identify transition pathways, and look for patterns in these transitions. Moreover, we estimate a conditional risk set model (a stratified Cox model). Our research proves that being close to the point at which they are eligible to receive pension benefits leads individuals 'wait' to fulfil these eligibility criteria.
    Keywords: elder workers unemployment, retirement, transition pathways, multiple unemployment spells, recurrent event data, longitudinal analysis
    JEL: C14 C41 H55 J14 J22 J26 J64
    Date: 2017–03
  10. By: Xiao-Chen Yuan; Xun Sun; Upmanu Lall; Zhi-Fu Mi; Jun He; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: China has a large economic and demographic exposure to extreme events that is increasing rapidly due to its fast development, and climate change may further aggravate the situation. This paper investigates China's socioeconomic risk from extreme events under climate change over the next few decades with a focus on sub-national heterogeneity. The empirical relationships between socioeconomic damages and their determinants are identified using a hierarchical Bayesian approach, and are used to estimate future damages as well as associated uncertainty bounds given specified climate and development scenarios. Considering projected changes in exposure we find that the southwest and central regions and Hainan Island of China are likely to have a larger percentage of population at risk, while most of the southwest and central regions could generally have higher economic losses. Finally, the analysis suggests that increasing income can significantly decrease the number of people affected by extremes.
    Keywords: socioeconomic risk; hierarchical Bayesian; natural disasters; climate change
    JEL: Q54 Q40
    Date: 2017–04–07
  11. By: Chen, Xi (Yale University); Zhang, Xiaobo (Peking University)
    Abstract: Participating in and presenting gifts at funerals, weddings, and other ceremonies held by friends and neighbors have been regarded as social norms in many parts of the world for thousands of years. However, due to the reciprocal nature of gift giving, it is more burdensome for the poor to take part in these social occasions than for the rich. Because the poor often lack the necessary resources, they are forced to cut back on basic consumption, such as food, in order to afford a gift to attend the social festivals. For pregnant women in poor families, such a reduction in nutrition intake as a result of gift-giving can have a lasting detrimental health impact on their children. Using a primary census-type panel household survey in rural China, this paper provides empirical evidence on the squeeze effect of gift giving.
    Keywords: economic status, squeeze effects, food consumption, gift-giving, stunting, malnutrition
    JEL: D13 I14 I32 O15 Z13
    Date: 2017–03
  12. By: Huangnan Shen; Lei Fang; Kent Deng
    Abstract: Ever since Deng Xiaoping’s reforms commencing in the 1980s, how to improve efficiency of state-owned enterprises has been on the government agenda. Progress has been made but more slowly than one expects in the decade. Even worse, against all the odds, China’s large state-owned firms, mega-SOEs, the backbone of Maoist economy previously, have gained exponential growth in the past decade. Reforms of that part of the economy have stalled. Why? To reveal the rationale and mechanisms of the rise of mega-SOEs, this study establishes a two-stage game model for an ‘authoritarian market economy’ (or a ‘market-Leninist economy’) where market monopoly and rent-seeking by state-owned conglomerates is firmly entrenched. Our findings confirm a ‘subgame perfect Nash equilibrium’ in China’s authoritarian market economy that has led the state (the owner or ‘principal’) and the large state-owned firms (the manager or the ‘agent’) to a paradox which prevents continuous reforms towards a Pareto solution for efficiency improvement.
    Keywords: authoritarian market economy; rent-seeking; subgame perfect Nash equilibrium; SOEs; economic reforms; economic efficiency
    JEL: O53 N0
    Date: 2017–03
  13. By: Mirkasimov, Bakhrom; Ahunov, Muzaffar
    Abstract: Central Asian “stans”– Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan – jointly have 31.4 million people in the labor force (See table 1). The largest labor share belongs to Uzbekistan (13.6 million) and the smallest number live in Turkmenistan (2.3 million). Labor force participation rates in these economies, as a legacy of Soviet period, are high and, in Turkmenistan and Uzbekistan, at comparable level with advanced economies like South Korea. In Kazakhstan, Kyrgyzstan and Tajikistan labor force participation rates are even higher than in other economies.
    Keywords: labor markets, informality, Central Asia
    JEL: J46 O53
    Date: 2017

This nep-tra issue is ©2017 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.