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on Transition Economics |
| By: | Tyrowicz, Joanna (University of Warsaw); Van der Velde, Lucas (Warsaw University) |
| Abstract: | We explore data from all transition economies over nearly two decades, providing insights on the mechanisms behind labor force reallocation. We show that worker flows between jobs in different industries are rare relative to the demographic flows of youth entry and elderly exit. The same applies to the flows between state-owned enterprises and private firms. In fact, evidence suggest that changes in the demand for labor were accommodated mostly through demographic flows, with a smaller role left for job transitions. We also show that the speed of changing the ownership structure in the economy has driven exits to retirement, in particular the early exits. |
| Keywords: | hirings, separations, transition, worker flows, unemployment, retirement |
| JEL: | P2 P5 D2 J6 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11249&r=tra |
| By: | Tho Pham (School of Management, Swansea University); Oleksandr Talavera (School of Management, Swansea University); Andriy Tsapin |
| Abstract: | In this paper, we employ the 2014 geopolitical conflict in Eastern Ukraine as a negative shock to banks' assets and examine its impacts on banking sector. We find that banks are hit by the conflict more severely if they granted more loans in the conflict areas as of 2014 Q1. Consequently, in the onset of the unrest, more exposed banks experience a sharper increase in troubled assets and a deeper reduction in credit supply compared to less affected counterparts. Additionally, the shock in the East can be transmitted to other markets through the interconnectedness among banks and branches but the spillover is mitigated by the market - conflict distance. Further analysis provides evidence for the "flight to headquarters" effect in credit allocation whereby more affected banks tend to cut lending more in the markets which are farther away from the headquarters. |
| Keywords: | Geopolitical shock, credit allocation, asset quality, flight to headquarters, difference-in-differences. |
| JEL: | G01 G21 |
| Date: | 2018–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:swn:wpaper:2018-04&r=tra |
| By: | Marek Dabrowski; Yana Myachenkova |
| Abstract: | In the 1990s, the Western Balkan region suffered from severe conflicts, which ended after intervention by United Nations and NATO forces and with the promise of accession to the European Union. In the early and mid-2000s, the prospect of EU accession and the global boom facilitated rapid economic recovery in the Western Balkans and boosted economic and institutional reforms. However, the global financial crisis of 2007-09 and the European crisis of 2010-13 slowed the pace of economic growth and amplified high unemployment. In addition, various unresolved legacies from past conflicts slowed the pace of reform and progress towards EU accession. The European Commission in February 2018 set an indicative deadline (2025) for admission to the EU of the two most advanced candidates – Serbia and Montenegro. This could incentivise all Western Balkan countries, including those candidates that have not yet started membership negotiations (Macedonia and Albania) and those waiting for candidate status (Bosnia and Herzegovina and Kosovo), to remove domestic political obstacles to EU accession, solve conflicts with neighbours, speed up reforms and accelerate economic growth. The European Union and its member states must not overlook the strategic importance of the Western Balkan region. Geographically, Western Balkan countries form a land bridge and the shortest transit route between the south-east flank of the EU and its central European core. The importance of this transit route was demonstrated during the 2015-16 refugee crisis. Furthermore, Western Balkan economies are already closely integrated with the EU. The EU is their largest trade partner, largest source of incoming foreign investment and other financial flows, and the main destination for outward migration. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:24313&r=tra |
| By: | Davidescu, Adriana Anamaria (Bucharest University of Economic Studies); Schneider, Friedrich (University of Linz) |
| Abstract: | The recent increase in the minimum wage in Romania in early May 2016 represented a popular topic at the national level, which indicated that aggressive increases in the minimum wage could create a competitiveness problem in the context of a relatively high level of informal economic activities. The objective of this paper is to analyse the nature of the relationship between the minimum wage and the size of the Romanian shadow economy using quarterly data for the period 2000-2015. The MIMIC model has been used to estimate the dimension of the shadow economy, and the empirical results revealed that unemployment, self-employment, indirect taxation and a lack of trust in the government are considered the main causes of Romanian informality. The results also indicated that the Romanian shadow economy decreased until 2008 to a value of approximately 27.8% of the official GDP. During the economic crisis, a slow increase in the shadow economy occurred, whereas in recent quarters, a slow decrease was observed. The potential effect of an increase in the minimum wage on the size of the shadow economy has been analysed using the Granger causality approach with vector error correction models. The empirical results indicated that an increase in the minimum wage can be considered a long-term supporting factor for the shadow economy because it increases informal economic activities, as firms will seek alternative methods of circumventing authorities. However, the empirical results do not support any effects of an increase in the minimum wage in the short run. |
| Keywords: | minimum wage, shadow economy, MIMIC model, Granger causality, Romania |
| JEL: | J31 C32 C52 O17 P48 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11247&r=tra |
| By: | Tran, Hien Thu; Santarelli, Enrico |
| Abstract: | This paper investigates the rationales for the successful economic transition in Vietnam by applying organizational ecology theory. We claim that Vietnam could achieve a smooth transition because the country preserved the strong institutional capacity of the state in parallel with an instant market liberalization approach. Instead of transforming state-owned firms directly into private-owned firms, the economy produced a population of collectively owned and mixed-ownership enterprises that coexisted with state-owned firms to pave the way for the large-scale emergence of privately owned firms afterward. The mechanism underpinning this transition path lies in the evolution and interaction among three organizational forms during the various stages of the transition. Initially, the new private sector emerges and survives because of receiving “legitimacy spillovers” from the well-legitimized collective and mixed sector that shares some “identity overlap”. Overtime, as the private sector accumulates its constitutive legitimacy it competes with and challenges the existence of the old state and collective sector. Finally, the Schumpeterian “creative destruction” process replaces the old sector with the new dominant sector. Empirically, we test this mechanism using the census data of firms operating in Vietnam during 2000-2010, a period following the “doimoi” policy in 1986 that officially recognized private firms in the constitution and included them in the government’s annual statistical coverage. We apply Blundell and Bond’s generalized method of moments (GMM) estimation technique and Cox’s proportional hazard model to study the interaction effects of economic sectors in terms of profitability and survival respectively. |
| Keywords: | ecology theory,ecological process,ownership type,organizational form,economic sector,transition country,Vietnam |
| JEL: | L2 O2 O5 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:181&r=tra |
| By: | Nicole Aregger |
| Abstract: | Motivated by the potential contribution of China's unilateral peg to asset price in flation in the US before the financial crisis of 2007-2009, this paper studies the effect of alternative exchange rate regimes ( flexible versus fixed) on the response of asset prices to economic shocks. I use a two-country general equilibrium model with sticky prices and extend earlier work on this topic by making use of a newer method for analyzing portfolio choice in DSGE models. My findings suggest that asset price responses to shocks differ across regimes. In particular, under a fixed regime, which is operated by the foreign country, responses to shocks in the home country are stronger than under a flexible regime. For home asset prices, however, the amplification of shock responses tends to be small. Applied to the US and China, this implies that, under China's prevailing unilateral peg, the Fed's expansionary monetary policy before the crisis resulted in a slightly but not substantially stronger US asset price infl ation relative to the one that would have been observed under a floating USD/CNY exchange rate. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:szg:worpap:1801&r=tra |
| By: | Danzer, Alexander M. (Catholic University of Eichstätt-Ingolstadt); Dietz, Barbara (Institute for East and Southeast European Studies, Regensburg) |
| Abstract: | This paper investigates the economic and social determinants affecting the well-being of temporary migrants before, during and after the financial crisis. Exploiting unique panel data which cover migration spells from Tajikistan between 2001 and 2011, we find that migrants earn less but stay longer in the destination during the crisis; at the same time, they become more exposed to illegal work relations, harassment and deportation through the Russian authorities. Especially illegal employment has negative second order effects on wages. Despite the similarities in the demographics and jobs of migrant workers, we find substantial heterogeneity in how the financial crisis affects their well-being. Migrants who experience wage losses during the crisis rationally stop migrating. |
| Keywords: | migration, informal employment, deportation, harassment, financial crisis, well-being, Russia |
| JEL: | J15 I31 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11272&r=tra |
| By: | Sophia Chen; Lev Ratnovski; Pi-Han Tsai |
| Abstract: | We jointly estimate credit and fiscal multipliers in China. We use the tenure of the provincial party secretary, interacted with the type of stimulus used in other provinces, to obtain separate instruments for provincial credit and government expenditure. We estimate a fiscal multiplier of 0.8 and a credit multiplier of 0.2 in 2001-2015. The multipliers have changed over time. The fiscal multiplier has increased from 0.75 in 2001-2008 to 1.4 in 2010-2015. The credit multiplier has declined from 0.17 to zero over the same periods. Our results suggest that reducing credit growth in China is unlikely to disrupt output growth, whereas fiscal policy may be effective in supporting macroeconomic adjustment. |
| Keywords: | Asia and Pacific;China;Macroprudential Policy;Fiscal stimulus;Credit Growth, Multipliers, Comparative or Joint Analysis of Fiscal and Monetary or Stabilization Policy, General, Size and Spatial Distributions of Regional Economic Activity |
| Date: | 2017–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/273&r=tra |
| By: | Tho Pham (School of Management, Swansea University); Oleksandr Talavera (School of Management, Swansea University); Mao Zhang |
| Abstract: | This paper investigates the impact of financial development on entrepreneurs' well-being. Using longitudinal data from China, Russia and Ukraine, we find that Chinese and Russian entrepreneurs experience a higher level of well-being while the Ukrainian self-employed are prone to dissatisfaction. We also observe that the extent to which financial development can improve entrepreneurs' utility differs across countries. First, the development of formal financial sector does not affect Chinese entrepreneurs’ happiness. Second, greater financial development increases life satisfaction of Ukrainian self-employed but decreases Russian entrepreneurs' job satisfaction. The results suggest that financial development could affect well-being through both monetary and nonmonetary channels. |
| Keywords: | Entrepreneurship, self-employment, satisfaction, financial development. |
| JEL: | J24 O16 |
| Date: | 2018–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:swn:wpaper:2018-03&r=tra |
| By: | Braggion, Fabio; Manconi, Alberto; Zhu, Haikun |
| Abstract: | We study whether and to what extent peer-to-peer (P2P) credit helps circumvent loan-to-value (LTV) caps, a key macroprudential tool to contain household leverage. We exploit the tightening of mortgage LTV caps in a number of cities in China in 2013 as our testing ground, in a difference-in-differences setting, and we base our tests on a novel, hand-collected database covering all lending transactions at RenrenDai, a leading Chinese P2P credit platform. P2P loans increase at the cities affected by the LTV cap tightening relative to the control cities, consistent with borrowers tapping P2P credit to circumvent the regulation. The granularity of our data allows us to separate credit demand from credit supply effects, with a fixed effects strategy. Our results also indicate that P2P lenders do not adjust their pricing and screening to the influx of new borrowers after 2013, despite the fact that their loans ex post have higher delinquency and default rates. Symmetric effects are associated with a loosening of mortgage LTV caps in 2015. Our test provides empirical evidence on the capacity of P2P credit to undermine LTV caps. More broadly, our analysis informs the debate on the challenges posed by the interaction between FinTech and credit regulation. |
| Keywords: | peer-to-peer credit; household leverage; macroprudential regulation; loan-to-value caps |
| JEL: | G01 G23 G28 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12668&r=tra |
| By: | Shan Lu; Jichang Zhao; Huiwen Wang |
| Abstract: | The imbalance of buying and selling functions profoundly in the formation of market trends, however, a fine-granularity investigation of the imbalance is still missing. This paper investigates a unique transaction dataset that enables us to inspect the imbalance of buying and selling on the man-times level at high frequency, what we call 'trading polarity', for a large cross-section of stocks from Shenzhen Stock Exchange. The trading polarity measures the market sentiment toward stocks from a view of very essence of trading desire. When using the polarity to examine market crash, we find that trading polarity successfully reflects the changing of market-level behavior in terms of its flipping times, depth, and length. We further investigate the relationship between polarity and return. At market-level, trading polarity is negatively correlated with returns, while at stock-level, this correlation changes according to market conditions, which becomes a good signal of market psychology transition. Also, the significant correlation disclosed by the market polarity and market emotion implies that our presented polarity, which essentially calculated in the context of high-frequency trading data, can real-timely reflect the sentiment of the market. The trading polarity indeed provides a new way to understand and foresee the market behavior. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1802.01143&r=tra |
| By: | Torosyan, Karine (ISET, Tbilisi State University); Pignatti, Norberto (ISET, Tbilisi State University); Obrizan, Maksym (Kyiv School of Economics) |
| Abstract: | Internally displaced people (IDPs) constitute a serious economic, social and cultural problem for many countries, including countries in transition. Despite the importance of the problem, there are only a handful of previous studies investigating the issue of labor market outcomes of IDPs. We aim to fill this gap in the literature using 13 years of Integrated Household Surveys over 2004-2016 from Georgia, which experienced large flows of internal migrants from the early 1990s until now. Our analyses indicate that the labor market outcomes of IDPs are much worse than those of local residents. Specifically, IDPs are 3.9 to 11.2 percentage points less likely to be in the labor force, depending on the period and duration of IDP status. IDPs are also up to 11.6 percentage points more likely to be unemployed, sometimes even after 20 years of forced displacement. Finally, IDPs residing in a locality for more than 5 years receive persistently lower wages than local residents with similar characteristics, with the gap widening over time, reaching some 16 percentage points in the last period under analysis. |
| Keywords: | conflict, internally displaced people, IDPs, labor market outcomes, transition countries |
| JEL: | D74 J21 O15 P23 R23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11301&r=tra |
| By: | Kolpakova S.V (National Research University Higher School of Economics) |
| Abstract: | This paper examines the effects of reforms in Russian mental health care (MHC) delivery since 1991, namely how it has developed; how priorities, targets and means of delivery have changed; which problems were considered the main ones; and how ongoing changes have affected the system of delivery. An analysis of policy documents and of psychiatric journals was used in conducting this research and also in understanding any changes that had occurred. The results indicate that some transformations in MHC organization took place, while others, mainly regarding patient related issues, were still being neglected by policy makers |
| Keywords: | MHC policy, psychiatric journals, Soviet times, Russia |
| JEL: | I1 I18 I19 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:14/psp/2017&r=tra |
| By: | Vasilev, Aleksandar |
| Abstract: | We introduce a pro-cyclical endogenous utilization rate of physical capital stock into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We investigate the quantitative importance of the endogenous depreciation rate, and the capital utilitization mechanism working through the use of energy for cyclical fluctuations in Bulgaria. In particular, a positive shock to energy prices in the model works like a negative technological shock. Allowing for variations in factor utilization and the presence of energy as a factor of production improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework with constant depreciation and a fixed utilization rate of physical capital, e.g., Vasilev (2009). |
| Keywords: | Business fluctuations,capital utilization rate,endogenous depreciation rate,energy prices,Bulgaria |
| JEL: | E32 E22 E37 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:173966&r=tra |
| By: | Luigi Minale (Universidad Carlos III de Madrid) |
| Abstract: | This paper analyses the way households in rural China use rural-urban migration and off-farm work as a response to negative productivity shocks in agriculture. I employ various waves of a longitudinal survey to construct a panel of individual migration and labour supply histories, and match them to detailed weather information, which I use to instrument agricultural productivity. For identification, I exploit the year-by-county variation in growing season rainfalls to explain within-individual changes in labor allocation. Data on days of work supplied to each sector allow to study the responses to weather shocks along both the participation and the intensive margin. Results suggest that farming activity decreases by 4.5% while migration increases by about 5% in response to a 1-standard deviation negative rainfall shock. Increment in rural-urban migration derives from both longer spells in the city as well as raise in the likelihood to participate in the urban sector. I find interesting heterogeneous responses across generations driven by age-specific migration costs and changes in the relative productivity of sectors. Finally, land tenure insecurity seems to partially prevent households from freely reallocating labor away from farming in bad times. |
| Keywords: | Agricultural productivity, Labor supply, Rural-urban migration, China |
| JEL: | J22 R23 J61 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1804&r=tra |
| By: | Facchini, Giovanni (University of Nottingham); Liu, Maggie Y. (Smith College); Mayda, Anna Maria (Georgetown University); Zhou, Minghai (University of Nottingham) |
| Abstract: | We analyze the effect of China's integration into the world economy on workers in the country and show that one important channel of impact has been internal migration. Specifically, we study the changes in internal migration rates triggered by the reduction in trade policy uncertainty faced by Chinese exporters in the U.S. This reduction is characterized by plausibly exogenous variation across sectors, which we use to construct a local measure of treatment, at the level of a Chinese prefecture, following Bartik (1991). This allows us to estimate a difference-in-difference empirical specification based on variation across Chinese prefectures before and after 2001. We find that prefectures facing the average decline in trade policy uncertainty experience an 18 percent increase in their internal in-migration rate – this result is driven by migrants who are "non-hukou", skilled, and in their prime working age. Finally, in those prefectures, working hours of "native" unskilled workers significantly increase – while the employment rates of neither native workers nor internal migrants change. |
| Keywords: | hukou, immigration, internal migration, trade policy uncertainty |
| JEL: | F22 J61 O15 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11279&r=tra |
| By: | Ke Wang; Zhifu Mi; Yi-Ming Wei |
| Abstract: | Previous studies of the efficiency of Chinese electricity industry have been limited in providing insights regarding policy implications of inherent trade-offs of economic and environmental outcomes. This study proposes a modified data envelopment analysis method combined with materials balance principle to estimate ecological and cost efficiency in the Chinese electricity industry. The economic cost and ecological impact of energy input reallocation strategies for improving efficiency are identified. The possible impacts of pollution taxes upon the levels of sulfur dioxide (SO2) emissions are assessed. Estimation results show that (i) both energy input costs and SO2 could be reduced through increasing technical efficiency. (ii) It is possible to adjust energy input mix to attain ecological efficient, and correspondingly, SO2 would reduce by 15%. (iii) The Chinese electricity industry would reduce its unit cost by 9% if optimal ecological efficiency is attained and reduce its unit pollution by 13% if optimal cost efficiency is attained, implying that there are positive ecological synergy effects associated with energy cost savings and positive economic synergy effects associated with SO2 pollution reductions. (iv) Estimated shadow costs of SO2 reduction are very high, suggesting that, in the short term, the Chinese electricity industry should pursue cost efficient point instead of ecological efficient point, since alternative abatement activities are less costly and some of the abatement cost could be further offset by energy input cost savings. (v) There would be no significant difference between the impacts of pollution discharge fees and pollution taxes on SO2 emissions levels because of the relatively low pollution tax rate. |
| Keywords: | Data envelopment analysis (DEA); Emission reduction; Energy efficiency; Environmental economics; Material balance; Sulfur dioxide (SO2) |
| JEL: | Q54 Q40 |
| Date: | 2018–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:114&r=tra |
| By: | Vladislav A. Plotnikov (National Research University Higher School of Economics) |
| Abstract: | As of 2017, the main principles, values and goals of the Russian health care system are still under discussion, but the role of non-profit organisations in this sphere remains poorly defined and little understood, following the introduction of a controversial 2012 law restricting the role of foreign funding of Russian NGOs. We find that the evolution of civil society in Russia has given rise to a unique model of civil-state interaction, characterised as an uneasy union, in pursuit of scarce financial resources, between the most influential NGOs in the health sphere and the public authorities |
| Keywords: | Russian NGOs, Russian health policy, civil society – state relations. |
| JEL: | L31 L38 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:15/psp/2018&r=tra |
| By: | Tyrowicz, Joanna (University of Warsaw); Smyk, Magdalena (University of Warsaw) |
| Abstract: | Income inequality in the context of large structural change has received a lot of attention in the literature, but most studies relied on household post-transfer inequality measures. This study utilizes a novel and fairly comprehensive collection of micro data sets from between 1980's and 2010 for both advanced market economies and economies undergoing transition from central planning to market based system. We show that wage inequality was initially lower in transition economies and immediately upon the change of the economic system surpassed the levels observed in advanced economies. We find a very weak link between structural change and wages in both advanced and post-transition economies, despite the predictions from skill-biased technological change literature. The decomposition of changes in wage inequality into a part attributable to changes in characteristics (mainly education) and a part attributable to changes in rewards does not yield any leading factors. |
| Keywords: | wage inequality, structural change, transition, skill biased technological change |
| JEL: | E24 D31 N34 O57 P36 P51 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11250&r=tra |