nep-tra New Economics Papers
on Transition Economics
Issue of 2017‒08‒06
fourteen papers chosen by
J. David Brown
United States Census Bureau

  1. Migrants and cities research report on recruitment, employment, and working conditions of domestic workers in China By Minghui, Liu.
  2. Downside Risk in the Chinese Stock Market - Has it Fundamentally Changed? By Ghysels, Eric; Liu, Hanwei
  3. Are some owners better than others in Czech privatized firms? Even meta-analysis can't make us perfectly sure. By Iwasaki, Ichiro; Kočenda, Evžen
  4. The effect of increased general education in vocational schools - Evidence from a Hungarian vocational school reform By Joris Ghysels; Zoltán Hermann; Iryna Rud; Melline Somers
  5. Exchange Rate Induced Export Quality Upgrading: A Firm-Level Perspective By Hu, Cui; Parsley, David; Tan, Yong
  6. Assessing the Fiscal Sustainability of the Czech Republic By Robert Ambrisko; Vilma Dingova; Michal Dvorak; Dana Hajkova; Eva Hromadkova; Kamila Kulhava; Radka Stikova
  7. Non-parametric methods applied in the efficiency analysis of European structural funding in Romania By Roman, Monica; Gotiu (Lucaciu), Liliana
  8. Child Migration and the Health Status of Parents Left Behind By Fengming CHEN
  9. Performance of Hungarian firms: are apprentices an asset or a liability? Evidence from a unique matched employer-employee dataset By Sofie Cabus; Eszter Nagy
  10. Development of and change in the software and IT-enabled services industry in Dalian, China By Yan Zhang
  11. Do friends follow each other? FDI network effects in Central Europe By Gabor Bekes; Marta Bisztray
  12. NEET Policies and Knowledge in Arab & East Central European Economies By Driouchi, Ahmed; Harkat, Tahar
  13. Environmental Governance and Policy in Kazakhstan By Lyazzat Nugumanova; Miriam Frey
  14. Propagation of economic shocks from Russia and Western European countries to CEE-Baltic countries: a comparative analysis By Nazmus Sadat Khan

  1. By: Minghui, Liu.
    Abstract: This study on domestic workers in China was conducted under the EU–China Dialogue on Migration and Mobility Support Project, a collaboration between the International Organization for Migration and the International Labour Organization, funded by the European Union. It examines the current situation of domestic workers in China with a focus on the case study of Beijing, including domestic workers’ recruitment, employment, working conditions, social security, accessibility to legal protection, and complaint mechanisms. The study identifies the gaps in the national policies and practices concerning domestic workers in China in light of international standards and good practices. In addition, the study provides relevant policy recommendations to narrow the gaps with regard to international instruments and to promote the legitimate rights of domestic workers in China. The study is not only an illustration of the socioeconomic impact of migration on development – and urbanization in particular. It is an expression of hope that domestic work may transition from the informal to the formal economy and become a fully-fledged urban labour market in its own right in China’s near future.
    Keywords: descriptor 1, descriptor 2, descriptor 3, descriptor 4
    Date: 2017
  2. By: Ghysels, Eric; Liu, Hanwei
    Abstract: The Chinese economy has gained a more significant role on the world stage. As a consequence, a wide range of investors, both domestic and foreign, have paid more attention to the Chinese stock market. One focal point has been the downside risk, in particular in light of the large price movements and the regulatory changes which took place over time. In this paper we study the pattern of downside risks using the 1\% and 5\% conditional quantiles of the equity index returns. One of our ultimate goals is to provide an objective assessment of the regulatory policy changes and government actions in the Chinese market. We discover several break dates linked to major financial crises and trading reforms put forth by the China Securities Regulatory Commission. Furthermore, our findings indicate that breaks in the B shares and the H shares downside risk tend to appear earlier than those corresponding to the A shares returns. Lastly, the revised Qualified Foreign Institutional Investor (QFII) program in 2006 and government share purchasing actions in 2015 have shown to be effective at alleviating downside risks in the Shanghai A shares.
    Date: 2017–07
  3. By: Iwasaki, Ichiro; Kočenda, Evžen
    Abstract: We use a total of 1171 estimates extracted from 34 previous studies and perform a meta-analysis to examine the relationship between ownership structures and firm performance in the Czech mass-privatized firms. We find that, in contrast to the remarkable effect of foreign ownership on firm performance and restructuring activities, domestic private entities were incapable of outperforming the state as owners of Czech companies. Our assessment of publication selection bias, however, indicates that the collected estimates do not contain genuine evidence for many types of corporate ownership. Further development and improvement in this study area are necessary to capture the true effect. Finally, we also point at the importance to draw (meta-analysis) inferences based on studies that employ adequate methodology.
    Keywords: voucher privatization, ownership structure, firm performance and restructuring, meta-analysis, publication selection bias, Czech Republic
    JEL: D22 G32 H32 O16 P31
    Date: 2017–06
  4. By: Joris Ghysels (Top Institute for Evidence Based Education Research, TIER-Maastricht University); Zoltán Hermann (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and ELTE University); Iryna Rud (Top Institute for Evidence Based Education Research, TIER-Maastricht University); Melline Somers (Top Institute for Evidence Based Education Research, TIER-Maastricht University)
    Abstract: This paper aims at the evaluation of the reform of vocational education introduced in 1998 in Hungary. The reform extended the duration of education by one year, and increased teaching time spent on non-vocational subjects. The reform affected two of the three tracks in upper-secondary education in Hungary, vocational secondary school and vocational school. We estimate the effect of the reform on educational attainment, employment and wages in a comparative interrupted time series (CITS) framework, using the academic track and secondary school drop-outs as control groups. The results suggest that the reform has had heterogeneous effects. First, we detect no effect for the vocational secondary track, while the reform has improved labour market outcomes of vocational school students. Second, in the vocational school group the reform has increased men’s wages, while not affected their employment. For women we found a positive employment effect, while wages have increased only for the younger cohorts.
    Keywords: vocational education, reform, employment, wages, skills
    JEL: J08 J01 D00
    Date: 2017–06
  5. By: Hu, Cui; Parsley, David; Tan, Yong
    Abstract: This paper explores the impact of exchange rate fluctuations on exported product quality. Existing studies of quality upgrading stress the link between home country depreciation and increased access to export markets. Our focus in this study is on the complimentary effect of an import currency appreciation (i.e., the domestic currency appreciates relative to the sourcing country's currency). Our main finding is that firms upgrade their export quality in response to an import currency appreciation. We first develop a partial equilibrium model to reveal the mechanism: an import currency appreciation that makes imported intermediates cheaper allows firms to switch to higher quality intermediates, which in turn, increase export quality. Using Chinese Customs data during 2000-2006, we find that an import appreciation increases both import, and export quality. Furthermore, export quality increases more for less productive firms, and for firms exporting to developed countries.
    Keywords: Import currency Appreciation, Quality Upgrade, Import Quality, Export Quality
    JEL: F10 F12 F13
    Date: 2017–07–31
  6. By: Robert Ambrisko; Vilma Dingova; Michal Dvorak; Dana Hajkova; Eva Hromadkova; Kamila Kulhava; Radka Stikova
    Abstract: We present a model of public finance for the Czech Republic that addresses the main sources of risks to long-term fiscal sustainability: ageing-related expenditures and revenues, and the corresponding evolution of government debt. The baseline model is based on recent demographic projections issued by the Czech Statistical Office that forecast a shrinking share of the working-age population. Along with regulations and microeconomic incentives embedded in the tax and expenditure systems, demographic developments will affect economic growth and government expenditure and revenues in the long run. Population ageing is found to have a significant impact on future government expenditure via spending on old-age pensions and health care, where the cost profiles are modelled to reflect technological progress in the treatment of ageing-related illnesses. The analysis shows that under the current policy settings, a compound demographic effect will cause the primary government balance to turn negative at the beginning of the 2030s. The growing primary deficits, along with interest payments, which react to debt dynamics, will lead to a rapid escalation of government debt. While the outcome of the model is dependent on the specific settings of macroeconomic trends and policy variables, our wide range of sensitivity analyses show that without a policy response, even the most optimistic population scenario delivers an unsustainable path for public finances.
    Keywords: Ageing, debt, demographics, fiscal sustainability, health care expenditure, old-age pension expenditure
    JEL: B12 B52
    Date: 2017–07
  7. By: Roman, Monica; Gotiu (Lucaciu), Liliana
    Abstract: One of the most widely used methods in assessing the efficiency of public policies and programs for a set of units is Data Envelopment Analysis (DEA). DEA is a non-parametric method which identifies an efficiency frontier on which only the efficient Decision Making Units (DMUs) are placed, by using linear programming techniques. By applying non-parametric techniques of frontier estimation, the efficiency of a DMU can be measured by comparing it with an identified efficiency frontier. In this paper we have used DEA for evaluating the efficiency of the European structural funds allocated to finance the educational infrastructure through the Regional Operational Program 2007-2013, implemented in Romania. The output variables measure the educational performance as well as the school drop-out rate, while the focal input variable is the value of European funds. Romanian counties are considered to be the decision making units (DMUs) and our results confirm the deep disparities existing between Romanian counties concerning the efficient use of European structural funds.
    Keywords: European structural funds, efficiency, Data envelopment analysis, infrastructure, regions
    JEL: C61 H83 R58
    Date: 2017–03–17
  8. By: Fengming CHEN
    Abstract: I investigate the causal effect of child migration the health status their parents left behind. I mainly focus on the respondents who are more than 50 years old and have only two children to simplify the situations of child migration. Using 2010 wave of China Family Panel Studies (CFPS), I employ propensity score matching method to correct the problem of self-selection and evaluate the causal effect of having migrant children on the health status of the elderly left behind. Results show that, in the case of one child migrating for work, child migration has no impact on the health status of their parents. As the substitutive relationship exists among child siblings, the child staying at home would provide more support to their parents and cancel out the impact of child migration. The incentive of free riding for migrant children is very strong, which reduces the benefit of remittances for the elderly.
    Date: 2017–05
  9. By: Sofie Cabus (Maastricht University); Eszter Nagy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and ELTE University)
    Abstract: Hungarian legislation provides firms with financial incentives to train apprentices from vocational training schools. In line with these incentives, it is observed that firms increasingly train apprentices over the period 2003-2011, in particular, in the sectors manufacturing, construction, wholesale and retail and hotels and restaurants. However, at the same time, it is observed that firms decreasingly retain the trained apprentices in these four sectors. This finding leads to the hypothesis that apprentices are not profitable in the long run. The formulated hypothesis is known in the previous literature as the ‘substitution strategy’. This recruiting strategy is particularly observed among firms that replace their low-skilled labour with apprentices in order to reduce the cost of wages. For these firms it is not beneficial to hire an apprentice after accomplishing his training, because then he becomes a low-skilled worker paid at higher wages. This paper investigates the effect of the share of days worked by apprentices on productivity and gross profits of Hungarian firms by using a unique matched employer-employee dataset. Different approaches that allow us to estimate the effect are discussed among which fixed effects first-difference models and system GMM. The results indicate that apprentices decrease productivity and gross profits of Hungarian firms. These negative effects on firm performance were more prominent and robust before (2003-2007) than after the financial crisis (2008-2011).
    Keywords: apprenticeship training, firm performance, panel data
    JEL: I21 J24 L25
    Date: 2017–06
  10. By: Yan Zhang
    Abstract: The software and IT-enabled services (ITES) industry in Dalian, China exhibits certain characteristics given its deep relationship with Japan. However, of late, the proportion of exports to Japan has decreased substantially. Hence, Dalian must progress from being an offshore base for Japan. This study discusses the changes in the domestic and international environments and analyzes their causes to explain the growth in the ITES industry in Dalian. In recent years, software and ITES companies in Dalian have been upgrading offshore services to Japan and expanding their business for the domestic market. Meanwhile, the positive lock-in effect to Japan has effectively advanced to upstream or high value processes in the software industry through long-term business relationships with Japanese partners. Furthermore, China's domestic business is facing a spillover effect from the use of the human resources and technology accumulated through offshore development in Japan. However, there are negative lock-in effects, too. For example, some companies cannot avoid dependence on offshore contractors because their range of business skills and knowledge is limited. Other companies are familiar with operating in the mature Japanese market, making it difficult for them to function efficiently in the highly volatile Chinese market.
    Date: 2017–03
  11. By: Gabor Bekes (Institute of Economics Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Central European University and CEPR); Marta Bisztray (Institute of Economics Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: A great deal of multinationals receive a bundle of hidden or cash subsidizes upon investing in a foreign country. Policymakers often argue that a subsidy today will help locate friends of the investor later on. Using extensive data on FDI investments, we analyze such patterns. In particular, we investigate if co-location is more frequent among connected firms such as members of business groups as well as firms sharing similar background. Focusing on investments into Central and Eastern European countries we find evidence of co-location pattern of connected firms.
    Keywords: Foreign direct investment, agglomeration, location choice, network effects, business groups
    JEL: F23 R3
    Date: 2017–06
  12. By: Driouchi, Ahmed; Harkat, Tahar
    Abstract: Abstract This research analyzes the policies related to those youth that are not in education, not in employment, and not in training (NEETs) in the Arab and the East Central European (ECE) countries. It attempts assessing the impacts of knowledge on policies related to NEETs. The empirical framework used is based on measures of knowledge such as the number of reports published by the European Training Foundation (ETF) for each country. The number of studies that relate to education, training, and to the labor markets represent the independent variables. Furthermore, this paper assumes that joining the European Union, as it is the case for ECE countries, benefits these economies through the available strategies and policies related to youth, mostly to the NEET category. Findings indicate that the more publications for a specific country, the more the NEETs decrease. Still, among the studied Arab countries, only Algeria and Morocco show this trend. For ECE countries, only Bulgaria and Slovak Republic benefit from joining the European Union (EU) by reducing the category of youth that are NEETs with the remaining countries having no statistically significant effects. These findings require that further knowledge is needed mainly in Arab countries even though Morocco and Algeria appear to behave differently. Such a knowledge is likely to induce more policies targeting the NEETs.
    Keywords: Keywords: NEETs, Arab, ECE Countries, NEETs, Policies.
    JEL: I32 J68
    Date: 2017–07–29
  13. By: Lyazzat Nugumanova (Leibniz Institute for East and Southeast European Studies, Regensburg); Miriam Frey
    Abstract: We provide a comprehensive overview of the current state of environmental governance and policy in Kazakhstan as the country is assumed to have a leading role in Central Asia in terms of green growth and sustainable development. The overview of the environmental and institutional framework in the country reveals that the significant steps towards an improvement of environmental governance have been undertaken.
    Keywords: shadow economy; environmental governance, environmental policy, institutions, Kazakhstan
    JEL: Q50 Q58 Q59
    Date: 2017–05
  14. By: Nazmus Sadat Khan
    Abstract: What is the relative importance of Russia and Western European countries on Central and East European and Baltic (CEE-Baltic) countries? This paper tries to address this geo-politically important question by quantifying and comparing the spillover effects of a growth and trade shocks coming out of Russia and three major Western European countries (i.e. Germany, France and Italy) on ten CEE-Baltic countries. It uses a global vector autoregression (GVAR) model with quarterly data from 2003Q1-2015Q3. In constructing the foreign variables, a time varying trade weight is used instead of a fixed weight in order to take account of the financial crisis of 2007-08 and the recent economic sanctions on Russia. The results show that growth spillover effects are strong in the region. However, shocks to Russia have higher and persistent spillover effects on CEE-Baltic countries compared to shocks to Western European countries. Spillover effects of growth shocks also show that Russia is affected more by Western European countries than the other way round. Trade balance shocks on the other hand do not play an important role in this transmission process.
    Keywords: economic growth, spillover e ects, global vector autoregression, Central and East European countries
    JEL: C32 F43 O47
    Date: 2017–07

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