nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒04‒15
seventeen papers chosen by
J. David Brown
United States Census Bureau

  1. Economics and Politics of the Public-Private Wage Gap (The Case of Russia) By Gimpelson, Vladimir; Lukiyanova, Anna; Sharunina, Anna
  2. Global innovation networks for Chinese high tech small and medium enterprises: the supportive role of highly skilled migrants and returnees By Lin, Jingyi; Plechero, Monica
  3. Public policy failures related to China´s Wind Power Development By Grafström, Jonas
  4. Motivation - Opportunity - Ability Nexus: Application to Regional Central Asian Student Mobility By Syed Zwick, Hélène
  5. Who is burdened by taxes in Poland? By Jakub Sawulski
  6. "An Institutional Analysis of China's Reform of their Monetary Policy Framework" By He Zengping; Jia Genliang
  7. Working Conditions on Digital Labour Platforms: Evidence from a Leading Labour Supply Economy By Aleksynska, Mariya; Bastrakova, Anastasia; Kharchenko, Natalia Nikolaevna
  8. Tax Policy and Toxic Housing Bubbles in China. By King Yoong Lim; Pengfei Jia
  9. Do enterprise zones promote local business development? Evidence from Vietnam By Tien Manh Vu; Hiroyuki Yamada
  10. Language Premium Myth or Fact: Evidence from Migrant Workers of Guangdong, China By Wei, Xiahai; Fang, Tony; Jiao, Yang; Li, Jiahui
  11. Healthcare Spending Inequality: Evidence from Hungarian Administrative Data By Aniko Biro; Daniel Prinz
  12. Albania; Technical Assistance Report-Revenue Administration: Supporting the Delivery of the Reform Agenda By International Monetary Fund
  13. Bulgaria; 2019 Article IV Consultation-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Bulgaria By International Monetary Fund
  14. Firms and Wage Inequality in Central and Eastern Europe By Magda, Iga; Gromadzki, Jan; Moriconi, Simone
  15. Policy in the Pipeline: Identifying Regional Public Investment Priorities Using a Natural Experiment By Myck, Michal; Najsztub, Mateusz
  16. Implications of the Polish 1999 Administrative Reform for Regional Socio-Economic Development By Myck, Michal; Najsztub, Mateusz
  17. Human Capital and the Economic Convergence Mechanism: Evidence from China By Zhang, Xiaobei; Li, Haizheng; Wang, Xiaojun; Fleisher, Belton M.

  1. By: Gimpelson, Vladimir (CLMS, Higher School of Economics, Moscow); Lukiyanova, Anna (NRU HSE, Moscow); Sharunina, Anna (NRU HSE, Moscow)
    Abstract: The paper explores the public-private wage gap in the Russian economy over time and along the whole wage distribution. Using the RLMS-HSE panel data set, we examine how gaps at various points of wage distribution changed from 2005 to 2015 and present decompositions of the gaps into components explained by differences in characteristics and differences in returns. The results suggest that the gap persists over time and varies along the wage distribution. During the 2000’s, low-skilled public sector workers had smaller pay gaps than higher-skilled workers had. Multiple governmental policy interventions and the economic crisis of 2008-2009 contributed to the narrowing of the gap and its partial equalization along the distribution. A new set of policy changes associated with the May 2012 Presidential Decrees strengthened these tendencies but failed to eliminate the gaps.
    Keywords: public sector, public-private wage gap, quantile regression, RLMS-HSE, Russia
    JEL: J31 J45
    Date: 2019–03
  2. By: Lin, Jingyi (Lund University); Plechero, Monica (University of Florence)
    Abstract: Literature investigating highly skilled Chinese migrants has so far focused on their role as drivers of new entrepreneurship as well as innovation in firms and regions, although their role in supporting small and medium enterprises (SMEs) engagement in global innovation networks (GINs) is still underexplored. The participation in GINs is key for high tech SMEs, which rely on sophisticated knowledge but may not have the same absorptive capacity of large firms and multinational corporations. Based on primary data from a case study on 19 SMEs in the IT and new media industry in Beijing, this paper investigates the role of returnees and highly skilled migrants in supporting the engagement of Chinese high-tech SMEs in GINs. The results reveal the important role of those individuals in bringing SMEs in former international knowledge networks and establishing new linkages for sourcing key knowledge.
    Keywords: lobal innovation networks; GIN; knowledge sourcing; small and medium enterprises; SMEs; Beijing; China; highly skilled migrants; returnees; IT and new media industry
    JEL: F20 O30
    Date: 2019–04–04
  3. By: Grafström, Jonas (The Ratio Institute)
    Abstract: An anecdote about the failure of the Soviet economic system tells about a factory which were evaluated based on tons of nails produced – unsurprisingly the nails became heavy. China is currently hailed as the worlds primer wind power producer; however, a closer examination reveals a string of policy failure making the Chinese wind power development resemble the infamous Soviet nail example. From a technological transition perspective, policy failures in China's wind power program from 1980-2016 is documented and analysed. Five overarching topics are analysed including: Conflicting policies, quality problems, underwhelming technological development, lacking technological standards and insufficient grid transmission system. One conclusion is that when the Chinese government set a command and control target of how much new installed capacity that was going to be constructed the state utilities delivered to target but with an abundance of power plants without grid connectivity, severe quality problems and low technological development.
    Keywords: China; Wind power; Economic Planning; Soviet; Technology; Energy
    JEL: E61 O32 Q28 Q58
    Date: 2019–04–02
  4. By: Syed Zwick, Hélène
    Abstract: This study analytically distinguishes between motivational, opportunistic and ability (MOA) factors to extract important questions on international student mobility’s decision-making process in its modern configurations. We use primary data from an online questionnaire associated with semi-structured interviews submitted to Central Asian Alumni from five different countries (Afghanistan, Kazakhstan, Tajikistan, Turkmenistan, and Uzbekistan), to test the hypothesis of a significant variation in the MOA to study abroad across five nationalities. Our findings show minimal cross-country differences. The main differences remain modest in scale and are threefold: firstly, Tajik respondents prioritize physical opportunity and capital mobility within the ability factor; Turkmen respondents emphasize the role of constrained educational supply and imaginary experience, while Uzbek respondents are the most intrinsically motivated while deciding to study abroad.
    Keywords: student mobility, motivation-opportunity-ability nexus, Central Asia
    JEL: C83 F29 J61
    Date: 2019
  5. By: Jakub Sawulski
    Abstract: The aim of the study is to find out differences in taxes paid by low earners in comparison to taxes paid by high earners. Our analysis leads to the conclusion that the Polish tax system is regressive: it imposes a greater burden on people with low incomes than on those with high incomes. This is neither in line with the rules of social policy nor with the trends in other countries.
    Keywords: tax system, social policy, redistribution, income inequalities
    JEL: H20 H21 H23
    Date: 2019–03
  6. By: He Zengping; Jia Genliang
    Abstract: This paper traces the history of China's reform of its monetary policy framework and analyzes its success and problems. In the context of financial marketization and the failure of the quantity-targeting framework, the People's Bank of China transformed its monetary policy framework toward one that targets interest rates. The reform includes two important institutional changes: establishing an interest rate corridor and decreasing the difficulty the Open Market Operations room faces in estimating the market demand for reserves. The new monetary policy framework successfully stabilizes the interbank offered rate. However, this does not mean that the new framework is sufficient. One important problem remaining to be solved is how to manage the effects of fiscal activities on monetary policy operations. This paper analyzes the fiscal effects on reserves in China's Treasury Single Account system. The missing role of the Treasury in monetary policy operations increases the difficulty for the central bank to achieve its interest rate target. A further reform is therefore needed to provide a coordination mechanism between the Treasury and the People's Bank of China.
    Keywords: China; Monetary Policy Framework; Interest Rate Target; Fiscal Effects on Reserves
    JEL: E42 E52 E58 P24
    Date: 2019–04
  7. By: Aleksynska, Mariya (IZA); Bastrakova, Anastasia (Kiev International Institute of Sociology); Kharchenko, Natalia Nikolaevna (Kiev International Institute of Sociology)
    Abstract: Online labour platforms matching labour supply and demand are profoundly modifying the world of work. Businesses use them to outsource tasks to a world-wide pool of workers; while workers can access work opportunities transcending national boundaries. Increasingly, workers are located in developing and transition economies. This paper is based on survey of online workers of Ukraine, which in 2013-2017 occupied the first place in Europe, and the fourth place in the world in terms of the amount of financial flows and the number of tasks executed by workers through online labour platforms. Focusing on working conditions of digital workers, the paper shows that while the majority of these workers are satisfied with their online work, a sizeable proportion faces risk of being in disguised or dependent employment relationship, works informally, and has a poor social protection. The earnings through the platforms are generally comparable to the earnings in the local labour market, but they do undercut payments for equivalent work that could have been performed in other countries. There is an important gender pay gap in online work. The paper also shows how these working conditions are shaped by both local and international business practices of posting tasks on such platforms. Based on these findings, it presents a set of policy reflections, both for Ukraine and for the future global governance in the world of digital work.
    Keywords: gig-economy, online labour, digital labour platforms, working conditions
    JEL: J2 J3 J4 L2
    Date: 2019–03
  8. By: King Yoong Lim; Pengfei Jia
    Abstract: This paper explores the effects of a government tax policy in a growth model with economic transition and toxic housing bubbles applied to China. Such a policy combines taxing entrepreneurs with a one-time redistribution to workers in the same period. Under the tax policy, we find that the welfare improvement for workers is non-monotonic. In particular, there exists an optimal tax at which social welfare is maximized. Moreover, we consider the welfare effects of setting the tax at its optimum. We show that the tax policy can be welfare-enhancing, compare to the case without active policies. The optimal tax may also yield a higher level of welfare than the case even without housing bubbles. Finally, we calibrate the model to China. Our quantitative results show that the optimal tax rate is about 23 percent, and social welfare is signicantly improved with such a tax policy.
    Keywords: China, Economic Transition, Housing Bubbles, Welfare.
    JEL: O18 P31 R21 R28
    Date: 2018–09
  9. By: Tien Manh Vu (Asian Growth Research Institute); Hiroyuki Yamada (Faculty of Economics, Keio University)
    Abstract: We examined the effects of Vietnamese enterprise zones on local businesses based on different patterns of place-based policies as well as the ownership structure of the zone infrastructure developers (ZIDs). We constructed a panel of communes during 2000-2007 using a census survey of firms having more than nine employees and a census of zones and zone-based firms. We found that place-based policies led to growth in the number of jobs and firms in the communes where enterprise zones were located, even after excluding zone-based firms. Our findings also suggest that privately owned ZIDs worked best under corporate-tax incentives, while zones with a designated central government agency as the ZID had adverse spillover effects on business development in neighboring communes of the same district.
    Keywords: Enterprise zone, Place-based policy, Infrastructure, Private sector, Local business development
    JEL: O14 O25 L53
    Date: 2019–03–05
  10. By: Wei, Xiahai (Huaqiao University); Fang, Tony (Memorial University of Newfoundland); Jiao, Yang (Fort Hays State University); Li, Jiahui (Peking University)
    Abstract: Using unique matched employer-employee data from China, we discover that migrant workers in the manufacturing industry who are proficient in the local dialect earn lower wages than those who are not. We also find that workers with better dialect skills are more likely to settle for lower wages in exchange for social insurance. We hypothesize that they are doing so in the hope of obtaining permanent residency and household registration status (hukou) in the host city where they work. Further tests show that the phenomenon of "exchanging wages for social insurance participation" is more pronounced among workers employed in smaller enterprises. Moreover, migrant workers with better language skills have a stronger desire to stay in the host city. Our conclusions are robust to different specifications, even after addressing the endogeneity issue for language acquisition. The present study provides a new perspective on the impact of language fluency on social integration among migrants, one of the most disadvantaged groups in developing countries.
    Keywords: wages, language ability, dialect, social insurance, migrants, China
    JEL: J32 J61 R23
    Date: 2019–03
  11. By: Aniko Biro (“Lendület” Health and Population Research Group Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Daniel Prinz (Health Policy and Economics at Harvard and a Pre-Doctoral Fellow in Disability Policy Research at NBER)
    Abstract: Using administrative data on incomes and healthcare spending, we develop new evidence on the distribution of healthcare spending in Hungary. We document substantial geographic heterogeneity and a positive association between income and public healthcare spending.
    Keywords: administrative data, healthcare expenditures, inequality
    JEL: H51 I14 I18
    Date: 2019–03
  12. By: International Monetary Fund
    Abstract: The General Directorate of Taxes (GDT) continues to make good progress in modernizing its administration of the taxation system. With strong support from the Minister of Finance and Economy, a dedicated management team led by a reform-minded Director General is driving the modernization agenda and has created the momentum for real change across the organization. There is now evidence that reform initiatives in the three components of the administration—people, processes and technology—–are delivering tangible outcomes. Investments continue to be made to improve the competency and professionalism of the workforce. Business process changes particularly in compliance risk management (CRM) and arrears collection areas are supporting the transition to a more modern administration and the Information Technology system (successfully implemented from 2015) is providing the platform for more efficient and effective internal operations of the GDT and increased availability of e-services for taxpayers.
    Date: 2019–04–02
  13. By: International Monetary Fund
    Abstract: Economic performance remains robust but risks to the outlook are tilted to the downside amid slowing external demand. Sound macroeconomic policies notwithstanding, Bulgaria faces a sizable income gap vis-à-vis the EU average and unfavorable demographic prospects. The main policy challenge is to raise growth potential, which calls for broad-based structural reforms to improve public goods provision and institutions. Bulgaria’s preparations for ERM II and the banking union are strengthening financial sector supervision and are generally conducive to reforms.
    Keywords: Economic growth;Monetary statistics;Central banks;Gross domestic product;Consumption;BNB;staff report;HICP;ERM II;SOEs
    Date: 2019–03–22
  14. By: Magda, Iga (Warsaw School of Economics); Gromadzki, Jan (Warsaw School of Economics); Moriconi, Simone (IÉSEG School of Management)
    Abstract: Recent studies show that firms are playing an increasingly important role in shaping wage inequality in advanced economies. We contribute to this literature by analysing wage inequality patterns and their firm dimension in Central and Eastern European countries. We use large, linked employer-employee datasets with data from the 2002-2014 period. We find that unlike in many other advanced economies, wage inequality levels have decreased in CEE countries, and particularly in those countries that previously had the highest wage inequality levels. The relative size of the between-firm component varied substantially across countries, and was largest in countries with the highest wage inequality levels. We further estimate the recentered influence function (RIF) regression and the Blinder-Oaxaca decomposition in order to investigate the micro-level determinants of wage inequality. Our findings indicate that the changes in wage inequality levels were mainly attributable to returns to workplace characteristics.
    Keywords: wages, wage inequality, RIF regression, linked employer-employee data
    JEL: D22 J31 J40
    Date: 2019–03
  15. By: Myck, Michal (Centre for Economic Analysis, CenEA); Najsztub, Mateusz (Centre for Economic Analysis, CenEA)
    Abstract: We identify regional public investment priorities by studying the development of the water pipe system in the largest district in Poland. For this purpose, we take advantage of a major administrative re-form, implemented on 1 January 1999, which substantially changed the structure of Polish local government and reduced the number of top-tier administrative regions from 49 to 16. We treat the reform as a natural experiment, and apply the difference-in-differences approach to study developments along the boundary of the new Mazovian voivodeship. We find strong and positive implications for the development of the water pipe system in municipalities within the Mazovian voivodeship compared with those just outside its boundaries. The overall post-reform difference in the length of the total water pipe network is 25% and the difference in the per-capita length of the network is 30%. Local public investment priorities at the voivodeship level, potentially related to effective use of EU funds, are the most likely determinants of these differences.
    Keywords: public investment policy, water pipe system, administrative reform
    JEL: H43 H73 P35
    Date: 2019–03
  16. By: Myck, Michal (Centre for Economic Analysis, CenEA); Najsztub, Mateusz (Centre for Economic Analysis, CenEA)
    Abstract: On 1 January 1999, four major reforms took effect in Poland in the areas of health, education, pensions and local administration. After 20 years, only in the last case does the original structural design remain essentially unchanged. We examine the implications of this reform from the perspective of the distance of municipalities from their regional administrative capital. We show that despite fears of negative consequences for peripheral regions, the reform did not result in slower socio-economic development for those municipalities that found themselves further from the new administrative centres. We argue that regional inclusiveness in the process of development is likely to be an important factor behind the stability of Poland's administrative design.
    Keywords: regional development, administrative reform, distance to capitals, differences in differences
    JEL: P30 R11 R50
    Date: 2019–03
  17. By: Zhang, Xiaobei (Zhejiang University); Li, Haizheng (Georgia Tech); Wang, Xiaojun (University of Hawaii at Manoa); Fleisher, Belton M. (Ohio State University)
    Abstract: We examine the mechanism by which human capital affects economic growth and convergence, using provincial level panel data from China. We specify alternative measures of human capital and apply them to an enhanced growth model which we estimate parametrically, nonparametrically, and with a threshold model. Our results show that economic convergence is pronouncedly conditional on human capital across all our measures of human capital. The positive "benefit of being backward" due to lower initial income is almost trumped by the negative impact of low levels of human capital among the poorest areas.
    Keywords: human capital, economic convergence, regional economic development
    JEL: R11 O47 C33
    Date: 2019–03

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