nep-tra New Economics Papers
on Transition Economics
Issue of 2018‒04‒02
sixteen papers chosen by
J. David Brown
United States Census Bureau

  1. Investment in human capital in post-Soviet countries: Why are firms not training more? By Kupets, Olga
  3. Are the Risk Weights of Banks in the Czech Republic Procyclical? Evidence from Wavelet Analysis By Vaclav Broz; Lukas Pfeifer; Dominika Kolcunova
  4. The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms By Fan, Haichao; Liu, Yu; Qian, Nancy; Wen, Jaya
  5. Is security of energy supply possible without deeper cross-border market integration? Lessons from the cold spell in South-Eastern Europe By Egenhofer, Christian; Stroia, Cristian
  6. Cooperation with bank as a competitiveness factor for the export-oriented company By Waldemar Kozio³
  7. Corruption in Russia - Historic Legacy and Systemic Nature By Günther G. Schulze; Nikita Zakharov
  8. Establishment and development of social economy concept in Slovakia - current situation and perspectives By Eva Pongrácz
  9. E-Commerce Integration and Economic Development: Evidence from China By Victor Couture; Benjamin Faber; Yizhen Gu; Lizhi Liu
  10. Manufacturing (Co)Agglomeration in a Transition Country: Evidence from Russia By Ekaterina Aleksandrova; Kristian Behrens; Maria Kuznetsova
  11. Household Fuel Use in Rural China By Christophe Muller; Huijie Yan
  12. Migration in China: To Work or to Wed? By Dupuy, Arnaud
  13. Can Media and Text Analytics Provide Insights into Labour Market Conditions in China? By Jeannine Bailliu; Xinfen Han; Mark Kruger; Yu-Hsien Liu; Sri Thanabalasingam
  14. The Impact of Chinese Technical Barriers to Trade on its Manufacturing Imports By Mahdi Ghodsi
  15. The “Family 500+” child allowance and female labour supply in Poland By Iga Magda; Aneta Kielczewska; Nicola Brandt
  16. Arbeitslosigkeit in Südosteuropa im Kontext der EU-Integration By Stefan Pavleski

  1. By: Kupets, Olga
    Abstract: Using STEP employer surveys data in Armenia, Azerbaijan, Georgia and Ukraine, this paper investigates how innovation, openness to international business contacts, use of computer at work and skills shortages affect employer-provided training in post-Soviet countries. It examines different types of training (less formal on-the-job training along with more formal in-house and external training) provided to white-collar or blue-collar workers. After controlling for a range of firm characteristics, we find a positive link between technological innovation and intensity of training of all types provided to white-collar workers that points to the technology-skills complementarity. Besides, the level of computer use at work is a significant determinant of the incidence and intensity of external training provided to white-collar and blue-collar workers.
    Keywords: employer-provided training, innovation, computerization, STEP employer survey, transition countries
    JEL: J24 M53 P36
    Date: 2018–03
  2. By: Aleksandra Kordalska (Gdansk University of Technology, Gdansk, Poland); Magdalena Olczyk (Gdansk University of Technology, Gdansk, Poland)
    Abstract: This paper aims to assess the impact of determinants on service exports in both value added terms and in gross terms for seven Central Eastern European economies in years 1995-2011. The results confirm the importance of increasing labour productivity and highly-skilled and medium-skilled workers for growth in services trade. Exports of services are also supported by linkages between domestic services, especially business services, and the manufacturing sector. The results show the impacts of the determinants are fairly similar when exports are measured in value added terms or in gross terms, however the strength of impact differs in some subgroup of analysed countries.
    Keywords: gross exports, value added exports, CEE economies, trade in services
    JEL: C23 F14 L80
    Date: 2018–03
  3. By: Vaclav Broz; Lukas Pfeifer; Dominika Kolcunova
    Abstract: We analyze the cyclicality of risk weights of banks in the Czech Republic from 2008 to 2016. We differentiate between risk weights under the internal ratings-based and those under the standardized approach, consider both the business cycle and the financial cycle, and employ wavelet coherence as a means of dynamic correlation analysis. Our results indicate that the risk weights of exposures under the internal ratings-based approach, including risk weights related to exposures secured by real estate collateral, are procyclical with respect to the financial cycle. We also show that the effect of changing asset quality on risk weights is present for the internal ratings-based approach, in line with our expectations based on regulatory standards. Our results can be employed for the purposes of decision-making on the activation of supervisory and macroprudential instruments, including the countercyclical capital buffer.
    Keywords: Financial cycle, financial stability, internal ratings-based approach, risk weight
    JEL: C14 E32 G21 G28 K23
    Date: 2017–12
  4. By: Fan, Haichao; Liu, Yu; Qian, Nancy; Wen, Jaya
    Abstract: This paper uses a balanced panel of large manufacturing firms to study the dynamic effects of computerizing VAT invoices on tax revenues and firm behavior in China, 1998-2007. We find that computerization explains 10.8% of cumulative VAT revenues and increases the effective average tax rate by approximately 9-12% in the seven subsequent years. The evidence suggests that the effects of computerization change over time: tax revenue gains are likely to be smaller in the long run. Meanwhile, firms reduce output and input, and increase productivity monotonically over time.
    Keywords: economic development; Firm Growth; state capacity; taxation; technology
    JEL: H25 H26 O12
    Date: 2018–03
  5. By: Egenhofer, Christian; Stroia, Cristian
    Abstract: In late December 2016 and early 2017, South Eastern Europe experienced an extended cold spell lasting almost six weeks and triggering an electricity ‘crisis’, which seriously affected EU member states as well as Energy Community countries, notably Bulgaria, Romania, Greece and FYR of Macedonia. These countries opted to tackle the actual or perceived supply situation via a traditional path of administrative interventions, based on a purely national perspective and requiring the addition of considerable capacity. This approach departed sharply from the solutions discussed within the Central and South Eastern Europe Energy Connectivity (CESEC) initiative, launched by the European Commission in 2015 with the aim of integrating markets to address energy security in the region. One of the possible outcomes from the cold spell might well be that governments in the region come to realise that they have few options other than to integrate with their neighbours, increase energy efficiency and support renewable energy, whose cost by now is comparable to conventional sources and, given its scalability, poses less economic risks for investors.
    Keywords: electricity crisis, regional cooperation, energy security
    Date: 2017–12
  6. By: Waldemar Kozio³ (Faculty of Management, University of Warsaw)
    Abstract: The present paper concerns the evaluation of the relationship between SMEs conducting export business and the banks that support them. The evaluation will assess the share of banks in financing these companies, the reason for establishing a relationship, the intensity of the relationship and dependence of companies on the main partner bank. The analysis is based on research of Polish exporting businesses and was carried out by using standard EFIGE questionnaires.
    Keywords: SME, banks, export capacity, export financing, bank services, debt concentration, bank-company relations
    JEL: D21 F13 F23 F39 G21
    Date: 2017–03
  7. By: Günther G. Schulze; Nikita Zakharov
    Abstract: This paper argues that corruption in Russia is systemic in nature. Low wage levels of public officials provide strong incentives to engage in corruption. As corruption is illegal, corrupt officials can be exposed any time, which enforces loyalty towards the powers that be; thus corruption is a method of governance. We trace the systemic corruption back to the Mongolian empire and demonstrate its persistence to the current regime. We show the geographic distribution of contemporary corruption within Russia, survey the literature on the causes, consequences, and cures of corruption in Russia, and discuss entry points to fighting it.
    Keywords: corruption, governance, institutions, political economy, history, Russia
    JEL: D73 H11 H73 K42 N40 P37
    Date: 2018
  8. By: Eva Pongrácz (University of Economics in Bratislava, Faculty of National Economy, Department of Social Development and Labor)
    Abstract: Development of social enterprises in Slovakia is less supported. Legislation is adopted only as a social enterprise work integration (temporary employment), and it is an instrument of active labour market policies. The social economy is determined also by the new organizations or by the successfully operating entities of the third sector that are followed by a new business approach. The biggest problem is that there is no comprehensive legislation and a system of financial support for social economy entities. We focus on the identification of barriers of social economy development and on the definition of criteria of social entrepreneurship as a new area of business activities with an emphasis on social enterprise, which has different forms of organization.
    Keywords: social economy, work integration social enterprises (WISE), social capital, unemployment, social inclusion
    JEL: L31 E24 A13
    Date: 2017–10
  9. By: Victor Couture; Benjamin Faber; Yizhen Gu; Lizhi Liu
    Abstract: The number of people buying and selling products online in China has grown from practically zero in 2000 to more than 400 million by 2015. Most of this growth has occurred in cities. In this context, the Chinese government recently announced the expansion of e-commerce to the countryside as a policy priority with the objective to close the rural-urban economic divide. As part of this agenda, the government entered a partnership with a large Chinese e-commerce firm. The program invests in the necessary logistics to ship products to and sell products from tens of thousands of villages that were largely unconnected to e-commerce trading. The firm also installs an e-commerce terminal at a central village location, where a terminal manager assists households in buying and selling products through the firm's e-commerce platform. This paper combines a new collection of survey and administrative microdata with a randomized control trial (RCT) that we implement across villages in collaboration with the e-commerce firm. We use this empirical setting to provide evidence on the potential of e-commerce integration to foster economic development in the countryside, the underlying channels and the distribution of the gains from e-commerce across households and villages.
    JEL: O12 R13
    Date: 2018–03
  10. By: Ekaterina Aleksandrova (National Research University Higher School of Economics); Kristian Behrens (National Research University Higher School of Economics); Maria Kuznetsova (National Research University Higher School of Economics)
    Abstract: We document geographic concentration patterns of Russian manufacturing using microgeographic data. About 42–52% of 4-digit and 63–75% of 3-digit industries are localized, with a higher share in the European part than in the Asian part. About 70% of 3-digit industry pairs are coagglomerated, especially those with stronger buyer-supplier links, more knowledge sharing, and lower transport costs. Pairs with a more similar workforce are, however, less coagglomerated, which points to impediments in labor mobility between regions and firms. Overall, the agglomeration forces are fairly similar to those operating in developed countries, with transportation likely to be a key driver.
    Keywords: agglomeration; coagglomeration; determinants of geographic concentration; manufacturing industries; Russia.
    JEL: R12
    Date: 2018
  11. By: Christophe Muller (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales); Huijie Yan (CEARC - Cultures, Environnements, Arctique, Représentations, Climat - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The household transition from dirty to clean fuels is important because of its economic, health and environment consequences, locally, nationally and globally. In order to study fuel choices, a non-separated farm household model for fuel demands is developed. Then, discrete choice equations of fuel uses, consistent with this theoretical model, are estimated using microeconomic household panel data from rural China. The estimation results support the theoretical approach that implies that the fuel demands depend not only on income, fuel prices, and demand-side socioeconomic factors, as would occur in the standard fuel demand models in the literature, but also on food prices, agricultural assets, and original household and community characteristics that shape the household responses to market failures. Finally, we present a few policy simulations that reveal the complex substitution impact of energy price policies in China. We provide the first evidence on: price sensitivity of fuel stacking, that food prices exert some pressure on the fuel transition, the role of farm work and activity specialization in fuel choices. Policies should incorporate some of the complexity of the non-separated decisions of rural households in this context of market failures. The complex cross-price effects imply that the policy pricing mechanisms should account for all energy types and food prices. Finally, market-based policies should be coupled with policy interventions aimed at increasing the opportunity cost of dirty fuels. .
    Keywords: fuel use,China,consumption demand,energy
    Date: 2018–03–16
  12. By: Dupuy, Arnaud (University of Luxembourg)
    Abstract: This paper develops a model encompassing both Becker's matching model, and Tinbergen-Rosen's hedonic model. We study its properties and provide identification and estimation strategies. Using data on internal migration in China, we estimate the model and compute equilibrium under counter-factual alternatives to decompose the migration surplus. Our findings reveal that about 1/5 of the migration surplus of migrant women is generated in the marriage market and 3/5 in the labor market. We also find that the welfare of urban men married with a migrant wife would have been 10% lower had their migrant wives not entered the urban marriage market.
    Keywords: sorting in many local markets, marriage market, hedonic and matching models
    JEL: D3 J21 J23 J31
    Date: 2018–02
  13. By: Jeannine Bailliu; Xinfen Han; Mark Kruger; Yu-Hsien Liu; Sri Thanabalasingam
    Abstract: The official Chinese labour market indicators have been seen as problematic, given their small cyclical movement and their only-partial capture of the labour force. In our paper, we build a monthly Chinese labour market conditions index (LMCI) using text analytics applied to mainland Chinese-language newspapers over the period from 2003 to 2017. We use a supervised machine learning approach by training a support vector machine classification model. The information content and the forecast ability of our LMCI are tested against official labour market activity measures in wage and credit growth estimations. Surprisingly, one of our findings is that the much-maligned official labour market indicators do contain information. However, their information content is not robust and, in many cases, our LMCI can provide forecasts that are significantly superior. Moreover, regional disaggregation of the LMCI illustrates that labour conditions in the export-oriented coastal region are sensitive to export growth, while those in inland regions are not. This suggests that text analytics can, indeed, be used to extract useful labour market information from Chinese newspaper articles.
    Keywords: Econometric and statistical methods, International topics, Labour markets
    JEL: C38 E24 E27
    Date: 2018
  14. By: Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: In the past few decades, China has put substantial efforts into liberalising its trade and economy that accelerated after its accession to the World Trade Organisation (WTO) in December 2001. In this period China has significantly reduced its tariffs on manufacturing imports. However, the proliferation of non-tariff measures (NTMs) imposed by China has made it the country notifying the second largest number of technical barriers to trade (TBTs) to the WTO after the United States. This paper investigates the impact of Chinese TBTs and tariffs on the imports of manufacturing products at the 6-digit level of the Harmonised System (HS) during 2002-2015. Heterogeneity of exporting firms, sample selection bias, multilateral resistances, and endogeneity bias are controlled for according to the recent strands of gravity modelling. Results suggest a positive impact of tariff reduction and the imposition of TBTs by China on its import values and quantities. The impact of Chinese TBTs is also differentiated across exporting countries. Since import prices are not significantly affected by TBTs, the imposed standards and regulations embedded in these trade policy measures allowed the economy to gain access to more products from the more developed economies, leading to trade creation.
    Keywords: World Trade Organisation, trade liberalisation, trade policy, technical barriers to trade
    JEL: F13 F14
    Date: 2018–03
  15. By: Iga Magda; Aneta Kielczewska; Nicola Brandt
    Abstract: In 2016 the Polish government introduced a large new child benefit, called “Family 500+”, with the aim to increase fertility from a low level and reduce child poverty. The benefit is universal for the second and every further child and means-tested for the first child. Increasing out-of-work income significantly, the transfer reduces incentives to participate in the labour market through an income effect. We study the impact of the new benefit on female labour supply, using Polish Labour Force Survey data. Based on a difference-in-differences methodology we find that the labour market participation rates of women with children decreased after the introduction of the benefit compared to childless women. The estimates suggest that by mid-2017 the labour force participation rate of mothers dropped by 2.4 pp as a result of the 500+ benefit. The effect was higher among women with lower levels of education and living in small towns.
    Keywords: child allowance, social transfers, family policy, labour market participation
    JEL: E24 H53 I38 J13 J21 J22
    Date: 2018–03
  16. By: Stefan Pavleski
    Abstract: This dissertation consists of three essays. The first essay („Labor Market Policy in South East Europe: From transition to EU Integration“) discusses the economic and political developments in South East Europe since 1991, which have had a strong impact on the labor markets in the region. The analysis of the effect of unemployment (as a system-independent phenomenon) on the EU integration process of the post-Yugoslav countries (without Slovenia) and Albania is in the focus of this chapter of the dissertation. What is the impact of mismatch between labor demand and labor supply on the unemployment rate in Croatia? In order to answer this question, the second essay („Unemployment in Transition: Qualification and Regional Mismatch in Croatia“) focuses on the mismatch in Croatia, which is analyzed statically by using mismatch indicators as well as dynamically within the matching function framework. The matching function is estimated by using panel data for nine occupational groups and 21 regions in the period between January 2004 and June 2015. Does the introduction of a new unemployment benefit legislation according to EU standards lead to an improvement of labor market outcomes in South East Europe? In order to answer this question panel data for the period 1996–2014 for five Southeast European countries are being used in the third essay of the dissertation („Incomplete Integration: A Difference in Differences Analysis of the South East European Labor Markets“).
    Keywords: EU integration; South East Europe; economic transition; institutional economics; labor market economics
    Date: 2018–05

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