nep-tra New Economics Papers
on Transition Economics
Issue of 2018‒09‒17
twenty-one papers chosen by
J. David Brown
United States Census Bureau

  1. Measuring herding behavior in the Russian stock market By VICTORIA NIKULINA; Maxim Bouev
  2. Factors influencing the spatial correlation network of energy environmental efficiency By Yun Zheng; Jie Huang; Jianfeng Wang
  3. Corruption determinants in developing and transition economies: Insights from a multi-level analysis By Joël CARIOLLE
  4. Requiem for the Interest-Rate Controls in China By Rongrong Sun
  5. Hungary; 2018 Article IV Consultation-Press Release and Staff Report By International Monetary Fund
  6. Optimal Capital Account Liberalization in China By Liu, Zheng; Spiegel, Mark M.; Zhang, Jingyi
  7. 'Credit Risk, Excess Reserves and Monetary Policy: The Deposits Channel' By M.Emranul Haque; Paul Middleditch; Shuonan Zhang
  8. Russian food embargo and the lost trade By Angela Cheptea; Carl Gaigné
  9. Information in Mandatory and Voluntary Earnings Announcement Date Forecasts By Barth, Mary E.; Clinch, Greg; Ma, Paul
  10. Foreign Direct Investment in New Member State of the EU and Western Balkans: Taking Stock and Assessing Prospects By La-Bhus Fah Jirasavetakul; Jesmin Rahman
  11. Fiscal decentralization and interregional capital misallocation: Evidence from China By Zheng Li; Jorge Martinez-Vazquez
  12. Legal Attitudes Towards Informality on City Levels in China By Lu Shen; Kwong Wing Chau
  13. A novel dataset of emission abatement sector extended input-output table for environmental policy analysis By Ke Wang; Jiayu Wang; Yi-Ming Wei; Chi Zhang
  14. Determinants of merger and acquisition activity in Poland By Przemyslaw Grobelny; Maciej Stradomski; Piotr Stobiecki
  16. Are dragon-head companies heading agricultural development in China? The case of apple chains. By Moustier, P.
  18. A quantitative analysis of the effects of China-Pakistan Economic Corridor on Pakistan and China By Wei, X.; Ali, T.; Huang, J.
  19. Survival of Service Firms in European Emerging Economies By Iwasaki, Ichiro; Kočenda, Evžen
  20. A new European microfinance panel data set: The European Microfinance Network survey 2006-2015 By Fabrizio Botti; Marcella Corsi; Giulia Zacchia
  21. The Determinants of Faculty Pay in Russian Universities: Incentive Contracts By Ilya Prakhov; Victor Rudakov

  1. By: VICTORIA NIKULINA (European University at Saint Petersburg); Maxim Bouev (European University at Saint Petersburg)
    Abstract: This paper attempts to examine herding behavior in the Russian stock market by implementing four different methods designed to test for herding by Chang et al. (2000), Christie&Huang (1995), Hwang&Salmon (2001) and Torrecillas et al (2016). The main goal is to investigate the implications of the interest rate and foreign exchange fluctuations for the stock market efficiency. The results of the work help to identify the sources of herding behavior in the Russian stock market.Employing different approaches towards measuring herding, it is possible to determine whether individuals copy each other?s actions (Torrecillas et al (2016)) or herd towards market views about market index (Chang et al. (2000), Christie&Huang (1995), Hwang&Salmon (2001)). This paper starts by the establishing the transition from efficient-market behavior to herding behavior by using Detrended Fluctuation Analysis (Torrecillas et al (2016)) applied to MICEX closing prices within the period from September 1997 to December 2017. The DFA reveals the presence of persistent herding behavior during the 2007-2009 crisis. Next, Christie and Huang?s CSSD measure of stock returns is used to capture if herding related to the firm-specific risk in the portfolio is present at the market. Consistent with results of the previous studies, the method fails to establish traces of herding. Christie and Huang?s improved measure of CSSD with non-linear trend by Chang et al. (2000) yields evidence of herding in the down market during monetary policy announcements. The results of the Hwang and Salmon?s state space models help to demonstrate herding related to the market risk by analyzing relative dispersion of the time-varying betas for assets. The main finding is that changes in the betas can?t be explained by movements in fundamentals, which indicates intentional herding. Therefore, bad news for the stock market (interest rate increase and currency depreciation) induce intentional herding in the Russian stock market. Intentional herding during market stress has important implications for portfolio diversification for both diversified and undiversified investors.
    Keywords: herd behavior, equity return dispersion, Russian stock market, state space models, market efficiency, detrended fluctuation analysis, financial crisis
    JEL: G14 C21 C58
    Date: 2018–06
  2. By: Yun Zheng (Xinyang Normal University); Jie Huang (Xinyang Normal University); Jianfeng Wang (Millersville University of Pennsylvania)
    Abstract: Improving energy and environmental efficiency is an inevitable choice for developing countries to achieve sustainable economic and social development. Using VAR Granger causality test method (Granger, 1969), this study identifies the spatial correlation of energy environmental efficiency based on provincial panel data sample between 1995 and 2015 in China; further through the QAP analysis model (Liu, 2014), the factors influencing the spatial correlation network of energy environmental efficiency is empirically analyzed. The results show that the differences of economic development level, energy consumption structure, industrial structure, environmental regulation and technological innovation are significantly correlated with spatial correlation network of energy environmental efficiency; similar economic development level, technical level and industrial structure are beneficial to the formation of spatial correlation network of energy environmental efficiency while the differences of energy consumption structure and environmental regulation have little impact on this process.
    Keywords: energy environmental efficiency; spatial correlation network; impact factors.
    JEL: Q43 Q48 Q40
    Date: 2018–06
  3. By: Joël CARIOLLE (Ferdi)
    Abstract: This paper re-examines the contribution of five major corruption determinants emphasized by the literature, through an empirical analysis based on a hierarchical modelling of firm-level corruption data. Exploiting a baseline sample of 34,358 bribe reports of firms from 71 developing and transition countries, I use a three-level estimation framework to study the contribution of the economic and human development levels, the size of governments, trade openness, and democracy. Multi-level estimations stress that the negative effect of income per capita on bribery is found to be mostly driven by improvement in human capital, more particularly by the decline in fertility rates. They also allow the reconciling of some contrasting findings of the literature on other corruption determinants, but point that the contribution of corruption determinants is context-dependent.
    Keywords: corruption, bribery, firm, multi-level model, hierarchical model
    JEL: D73 D02 D22 P48 O57
    Date: 2018–06
  4. By: Rongrong Sun (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)
    Abstract: This paper reviews the retail interest-rate-control deregulation in China over the 1993-2015 period and provides a preliminary assessment of the PBC’s replacement monetary framework. I show that the interest-rate controls triggered the development of deposit substitutes that banks used to circumvent the restrictions, which in turn drove deposits out of commercial banks. Concerned by deterioration of bank profits and build-up of financial frangibility, the PBC has been pushing strongly for interest-rate liberalization. I quantify the distortionary effects of these controls: disintermediation, a rising shadow banking system and financial repression. Despite the official lift-off of the controls, the retail interest rates are still subject to the PBC’s window guidance and other pricing mechanism guidance. The interest-rate corridor does not function well in confining money market rates. This suggests that the PBC adopt a target money market rate system.
    Keywords: interest-rate control, deregulation, China, financial repression, interest-rate corridor
    JEL: E52 E58
  5. By: International Monetary Fund
    Abstract: Growth rebounded in 2017 and the first half of 2018 on the back of buoyant domestic demand due to the accelerated absorption of EU funds and strong disposable income. External debt declined substantially over the past few years and so did public debt, albeit much less. The policy stance remained highly procyclical, with a significant deterioration in the structural primary fiscal balance since 2015. At the same time, structural reforms are lagging and the external current account surplus has been moderating rapidly from its 2016 high peak. There has been some downward pressure on the forint (HUF) in the second quarter of 2018. The budget for 2019 is broadly cyclically neutral. The central bank (MNB) adjusted its communication, stressing its commitment to the inflation target and keeping all options open to achieve it.
    Keywords: Hungary;Europe;
    Date: 2018–08–03
  6. By: Liu, Zheng (Federal Reserve Bank of San Francisco); Spiegel, Mark M. (Federal Reserve Bank of San Francisco); Zhang, Jingyi (Shanghai University)
    Abstract: China maintains tight controls over its capital account. Its prevailing regime also features financial repression, under which banks are often required to extend a fraction of funds to state-owned enterprises (SOEs) at below-market interest rates. We incorporate these features into a general equilibrium model. We find that capital account liberalization under financial repression incurs a tradeoff between aggregate productivity and intertemporal allocative efficiency. Along a transition path with a declining SOE share, the second-best policy calls for a rapid removal of financial repression, but gradual liberalization of the capital account.
    JEL: G18 O41
    Date: 2018–08–02
  7. By: M.Emranul Haque; Paul Middleditch; Shuonan Zhang
    Abstract: This paper investigates the contrasting business cycle characteristics of China and the US, speci cally in terms of economic activity and total factor productivity. To help explain the differing pro les for these two variables for both countries, we build and estimate a DSGE model with extended fi nancial markets and endogenous technology creation to identify key structural parameters, comparing the decomposition of the shock processes in our analysis. We reveal stark differences in the contributing factors of business cycle fluctuations for both countries, and demonstrate the importance of the stock market for economic recovery after a sizable and persistent financial shock. Macroeconomic intervention in China works well but is unable to smooth total factor productivity (TFP) due to the presence of multiple shocks transmitted through the endogenous technology creation channel. Whilst the US achieves a similar pro le for economic activity with less volatility in TFP, it also contends with additional risks, fed in by the existence of the stock market. The stock market allows firms to hedge fi nance during periods of fi nancial instability, though this is not cost free.
    Date: 2018
  8. By: Angela Cheptea; Carl Gaigné
    Abstract: We analyse the impact of the Russian food embargo on European and Russian trade patterns using a triple-difference estimation strategy. We quantify the effects on the value of trade, the trade price of products covered by the ban, and the new trade flows generated by the ban. Our results point to an average e 125 million loss in monthly EU28 exports to Russia due to the ban (with Lithuania, Poland, and Germany bearing the largest losses). However, only 45% of the drop in EU28 exports of banned products to Russia would be due to the ban. In addition, EU products banned from the Russian market were sold elsewhere at lower prices. The reorientation of EU exports to other markets translated into selling larger amounts to old trade partners, as well as in accessing new markets. EU member states were unevenly affected by the ban. Germany and Poland compensated their large losses on the Russian market by a strong increase in exports to other trade partners (mostly intra-EU), at the expense of other EU countries, such as France and Denmark.
    Keywords: international trade, Russian embargo, trade diversion
    JEL: F13 F14 F17
    Date: 2018
  9. By: Barth, Mary E. (Stanford University); Clinch, Greg (University of Melbourne); Ma, Paul (University of Minnesota)
    Abstract: We address whether mandatory forecasts of earnings announcement dates are informative and what are the informational tradeoffs between mandatory and voluntary forecasts. We find China mandatory forecasts predict actual earnings announcement dates and yet-to-be-announced firm performance, and the market reacts to the initial and revised forecasts accordingly. Regarding informational tradeoffs we find the following. China mandatory forecasts are informative, even by firms less likely to issue a voluntary forecast; this information is unavailable in a voluntary regime. The act of US voluntary forecasting and its timing reveal information incremental to the forecasted announcement date, which is unavailable in a mandatory regime. Perhaps surprisingly, US voluntary and China mandatory initial forecasts convey a similar amount of earnings news, which is noteworthy because the China forecasts are issued substantially earlier and suggests the amount of information in the act and timing of voluntary forecasts is small.
    JEL: D84 G14 M48
    Date: 2018–04
  10. By: La-Bhus Fah Jirasavetakul; Jesmin Rahman
    Abstract: FDI has played a strong role in the export-led growth of eastern European countries that are now members of the European Union (EU). Largely sourced from advanced Europe, FDI inflows were motivated by the intention to pursue new markets and cost efficiency. Over time, foreign investment has restructured the exports sector in these countries in favor of products that are considered more technology-intensive. As these countries face skills shortage and rising wages, what is needed for FDI to continue playing a strong role? Can the Western Balkan countries, who are not yet EU members and have in recent years stepped up financial incentives and policy initiatives to court investors, emulate the experience? This paper takes stock of the FDI experience of both these groups and tries to estimate their potential gains from additional policy efforts.
    Date: 2018–08–21
  11. By: Zheng Li (School of Economics and Finance, Xi’an Jiaotong University, China); Jorge Martinez-Vazquez (International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State Univeristy)
    Abstract: Misallocation of factors of production has been recently viewed as a promising explanation accounting for the large difference in total factor productivity (TFP) across countries. This paper differs from previous studies by concentrating on interregional capital misallocation and by focusing on the role of fiscal decentralization in shaping misallocation. Using a municipal level panel data set, we measure intra-provincial and inter-municipal capital misallocation in China over 2003-2015. The empirical results based on provincial level panel data suggest that revenue decentralization mitigates interregional misallocation while expenditure decentralization fails to exert a significant impact. We further find that this positive effect is more significant and much larger when it is the market rather than government intervention that is driving the flow of capital. The results are robust to different specifications, IV estimations and alternative measurement of interregional misallocation. Our study complements the literature on the causes of misallocation and enriches the understanding of the consequences of fiscal decentralization, especially in terms of economic growth and interregional inequality.
    Date: 2018–09
  12. By: Lu Shen; Kwong Wing Chau
    Abstract: Informal housing are housing units without legal title. Despite the lack of legal title, there is a huge black market for informal housing in China. Though it is clearly stated in the law that such transactions are prohibited by the law, in reality, under the pressure of high formal housing prices, the transactions of informal housing have never stopped. Since the informal property rights transferred in those transactions are neither recognized nor protected by the legal institution, disputes arise from these transactions. Different from foreign countries such as the United States, each state of which has its own law and legal system, China practices a unified legislative system. Under the system, various administrative regions may work out local statutes as long as they do not violate the Constitution or the state law or the administrative law. Though the marketization and transactions of informal housing in China is illegal according to the law, there is no criminal conviction on illegal selling or buying. Different from illegal behaviour such as drug selling, disputes over illegal selling of informal housing can always seek legal decisions from courts. Nonetheless, among the disputes over contract validity, ownership, or even will validity where informal housing is involved, different court decisions have been given to similar disputes over the transactions of informal housing though one of the national administrative law has clearly stated the prohibitions of transactions of informal housing in China. Despite under the uniform legal system in China and referring to the same national laws including contract law and relevant administrative law, courts in different cities interpret and practice laws in various manners and even lead to opposite decisions, suggesting certain ambiguity in the legislations. This study aims to explore court decisions and local statutes if there is any, which are relevant to informal housing issues in various cities and provinces in China. Court decisions in a way can reflect where legal institutions stand in the cases of informal housing issues and the variety of decisions given by the courts based on almost the same statues and legislations also imply a certain degree of ambiguity and flexibility in interpretation, which may also contribute to the pricing and transaction volume of informal housing units in real life.
    Keywords: China; Court cases; Informal Housing; Law; Property Rights
    JEL: R3
    Date: 2018–01–01
  13. By: Ke Wang; Jiayu Wang; Yi-Ming Wei; Chi Zhang
    Abstract: Environmentally extended input-output table (EEIOT), a balanced matrix of industrial commodity and environmental resources, is widely used to evaluate environmental policy impacts. However, the existing EEIOTs contain energy consumption and pollution emission but neglect emission abatement cost and benefit. In this study, a novel Chinese emission abatement sector extended input-output table (EAS-IOT) is developed through introducing abatement cost, emission charge and abatement benefit into the conventional input-output table. Furthermore, this new EAS-IOT is applied to estimate the environmental efficiency and assess the effects of environmental policies on economy and environment. Results show that the new framework of EAS-IOT has advantage on solving the problem of biased efficiency estimation related to the conventional input-output table.
    Keywords: Data on emission abatement cost and benefit; extended input-output table; emission abatement sector; environmental policy
    JEL: Q54 Q40
    Date: 2018–09–05
  14. By: Przemyslaw Grobelny (Uniwersytet Ekonomiczny w Poznaniu); Maciej Stradomski (Poznan University of Economics and Business); Piotr Stobiecki (Poznan University of Economics and Business)
    Abstract: Despite the increasing importance of the emerging mergers and acquisitions (M&A) markets, the theoretical backgrounds of factors determining the level of activity of enterprises in taking up consolidation processes have not been adequately recognized. Not much attention has yet been paid in global researches to those markets for corporate control which are at earlier stage of development than highly mature markets with long history, such as the US, UK, Germany, or Japan. The primary purpose of the research is to identify the factors determining the level of activity on the M&A market in Poland, the leading M&A market among CEE countries. Analysis covers the impact of factors identified in prior researches conducted on mature corporate control markets on the degree of activity on the M&A market, as well as unique factors selected for the Polish market. According to the prevailing theoretical paradigm, particular markets - due to their institutional environment and degree of development - have a specific set of factors that determine their tendency for exogenous growth and acquisitions by other market players, such as investment funds or individual investors. Research commences with structuring, classification and analysis of the current state of knowledge. With the use of descriptive methods, the objective of identifying and characterizing the collection of universal factors determining M&A market activity has been achieved. Reasoning on specific research problems has been proceeded using deduction, followed by statistical analysis to test the formulated hypothesis. With the use of relevant statistical and econometric methods, including multiple regression analysis, a relationship has been sought between the number of M&A transactions in Poland and the previously identified and selected explanatory variables and groups thereof. The results of regression analysis have been supplied with results of relative value analysis in order to determine, whether importance of national specific factors in explaining the dynamics of M&A deals is greater than universal factors.Both the applied methodology and the extent of contemplated research in terms of space and time is innovative for an emerging M&A market. Unlike such areas as transaction efficiency, choice of payment method in acquisition, or business valuation in M&A processes, no comprehensive research has yet been carried out on factors determining the activity on the Polish corporate control market involving state-of-the-art econometric analysis.
    Keywords: Mergers and Acquisitions, M&A, emerging market, CEE, Poland
    JEL: G34 G10 G39
    Date: 2018–06
  15. By: Svetlana Mihic (Provincial secretariat for higher education and scientific research); Milan Mihajlovic (University EDUCONS); Danijela Dasic (Branch manager Erste Bank Serbia)
    Abstract: In many European Union countries, regional and rural development strategies also include rural tourism, which helps to retain the local population, creates new jobs and contributes to the socio-economic progress of underdeveloped areas. Through specialized institutions and funds, the European Union helps and through various forms directly participates in tourism development in rural areas, and the strengthening of rural development policy has become one of the highest priorities of the European Union. Although not a member of the EU, the Republic of Serbia has defined its path of development, which implies strengthening the competitiveness and attractiveness of tourism products, taking into account new world experiences, while relying on own innovations and pre-accession EU funds. This aspect was the starting point for the development of these research and the aim of the authors was to point out one of the ways to use the excess labor force in the tourism sector, how to develop rural tourism and how to use the European funds for the development of regional tourism in the region of Vojvodina.
    Keywords: : tourism, employees, organizations, European Union, funds
    JEL: R58 F15 Z19
    Date: 2018–06
  16. By: Moustier, P.
    Abstract: The purpose of this paper to empirically document the role and impact of agri-business development in the case of apple chains in China, and to investigate the role that the provision of services and marketing plays in this impact. We compare some performance indicators, including yields and profits between farmers belonging to chains with and without dragon-head companies, i.e. companies which invested in various infrastructures, and provide services to farmers including extension services, storage and input provisioning. The data is based on a survey of 355 apple farmers in Shandong and Shaanxi provinces. Dragon-head companies have no significant impact on the yield and profit obtained by farmers, in contrast with belonging to a cooperative. They do not have a significant impact on training relative to cooperatives. They do not propose higher prices for farmers, even though farmers’ practices may be more eco-friendly and reduce the use of chemical pesticides. The conclusion is that the optimal conditions for agri-business development to be conducive to economic development as shown by the literature do not seem to be gathered in the apple sector of China.
    Keywords: Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade
    Date: 2018–07
  17. By: REN, Yanjun; CASTRO CAMPOS, Bente; LOY, Jens-Peter; BROSIG, Stephan
    Abstract: Previous literature has demonstrated that low-income people are more likely to settle for poor health choices in developed countries. By using income as a budget constraint and signal for future wellbeing in a life-course utility model, we examine the connection amongst income and overweight. The data used for this study are from the China Health and Nutrition Survey (CHNS). Estimations are conducted for overweight initiation, cessation, and participation mirroring a decision to begin and a past decision to not terminate. Our findings propose that body weight and the likelihood of overweight commencement rise with additional income but at a diminishing degree, representing a concave relation; while the likelihood of overweight discontinuance declines with additional income but at an accelerating degree, suggesting a convex relation. We presume that, as opposed to developed countries, low-income people are less inclined to be overweight in China, a country in transition. This could be explained by an income constraint for unhealthy foodstuff. Nevertheless, it will switch when income surpasses the critical threshold of the concave or inverted U-shape curve indicating that low-income people appear to receive not as much utility from future health. Specifically, this adjustment seems to occur earlier for females and inhabitants of urban areas.
    Date: 2018–09–01
  18. By: Wei, X.; Ali, T.; Huang, J.
    Abstract: China is investing huge funds into Pakistan’s transport infrastructure under China Pakistan Economic Corridor. Both countries stand to benefit from these developments via improved trade and lower export prices. We use a global economics models (GTAP) to assess the effects of transport infrastructure by developing several policy scenarios in 2025. Our results show that both Pakistan and China will get positive effects in terms of GDP growth and welfare. The effects are particularly significant on Pakistan. In terms of mutual trade, Pakistan’s net exports of agricultural commodities to China will increase more than the exports non-agricultural commodities. On the other hand, non-agricultural exports from China will improve significantly to Pakistan. Due to changing trade relations, there will be some adjustment in Pakistan’s production structure. Pakistan could experience some leveling of income due to slight increase in rural incomes. The expected benefits can only be realized by speedy and smooth implementation of the projects under CPEC.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2018–07
  19. By: Iwasaki, Ichiro; Kočenda, Evžen
    Abstract: Using a dataset of 126,591 service firms in 17 European emerging economies, this paper aims to estimate firm survivability in the years 2007–2015 and examine its determinants. We found that 31.3%, or 39,557 firms, failed during the observation period. At the same time, however, the failure risk greatly differed among regions, perhaps due to the remarkable gap in the progress of economic and political reforms. Moreover, the results of survival analysis revealed that large shareholding, labor productivity, and firm age played strong roles in preventing business failure beyond differences in regions and sectors.
    Keywords: European emerging economies, Service industry, Survival analysis, Cox proportional hazards model
    JEL: D22 G01 G33 L89 P34
    Date: 2018–08
  20. By: Fabrizio Botti; Marcella Corsi; Giulia Zacchia
    Abstract: Since 2004, with the aim to provide a consistent picture of the European microfinance sector, the European Microfinance Network (EMN) carried out, on a biennial basis, a survey of microfinance institutions (MFIs) in Europe. The MFIs surveyed by EMN self-report data mainly about their mission, target, social and financial impact; an overview of the main results of these surveys are reported on EMN overview publications1. The surveys covered a growing and changing group of participants in terms of institutional types and geographical coverage (from 394 microlenders from 16 European countries in 2006 to 195 institutions from 29 countries in 2014) through a survey questionnaire subject to adjustments throughout the different editions.The last survey (run in 2016 with reference to the years 2014-2015) has been jointly managed by the EMN and the Microfinance Center (MFC2) and it included a wider participation of Eastern European MFIs members of the MFC.The significant volatility of observed institutions, questionnaire structure, and variables definition undermined so far the quality and comparability of collected data and prevented to conduct a comprehensive analysis of European MFIs’ performance through time.
    Keywords: Overview survey
    Date: 2018
  21. By: Ilya Prakhov (National Research University Higher School of Economics); Victor Rudakov (National Research University Higher School of Economics)
    Abstract: This paper evaluates the design of current contractual incentive mechanisms in Russian universities depending on the type of higher education institution after recent significant contractual reforms in the national academic sector. We employ the theoretical framework of incentive contracts in order to identify and assess performance measures of university faculty determining the total income received from teaching, research and administrative duties. We estimate returns from academic productivity in Russia to be reflected in the academic salary by an evaluation of empirical models of the determinants of faculty pay depending on their productivity, current academic and administrative position, gender and seniority. We show that for the entire sample, faculty salary is positively associated with publication activity. Teaching is significant only for the entire sample, but not significant for subsamples. Administrative duties (expressed in the position held) are positively related to faculty pay: the largest effect is for rectors and vice-rectors, but for deans and heads of departments or laboratories the effect is also strong. Heads of universities and structural units receive a significant bonus for their administrative position. For research-oriented universities the largest effect in publication activity is for the number of papers in high ranking journals. In universities with no research status we discovered a significant gender gap: the male faculty earn more than their female colleagues. There is a positive linear relationship between salary and seniority for the entire sample and in universities with no special status, which corresponds to human capital theory. Salaries in universities requiring higher entrance exam scores are higher than in less selective higher education institutions. The salary in Moscow universities is higher than in the regional higher education institutions.
    Keywords: academic contracts, faculty pay, merit pay, incentive contract, international rankings, competitiveness of higher education.
    JEL: I21 I23 J31
    Date: 2018

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