nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒02‒24
eight papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. New Evidence on the Soft Budget Constraint: Chinese Environmental Policy Effectiveness in Private versus SOEs By Mathilde Maurel; Thomas Pernet-Coudrier
  2. The Wage Premium of Communist Party Membership: Evidence from China By Wang, Hongjian; Nikolov, Plamen; Acker, Kevin
  3. The cost of weak institutions for innovation in China By Andrés Rodríguez-Pose; Min Zhang
  4. The State of Mental Health Among the Elderly Chinese By Yi Chen; Hanming Fang
  5. Progress and Challenges of Upper Secondary Education in China By Chen,Dandan; Fu,Ning - HEAED; Pan,Yilin
  6. The Causal Effects of Parents’ Schooling on Children’s Schooling in Urban China By Jere R. Behrman; Yuan Hu; Junsen Zhang
  7. After-School Tutoring, Household Substitution and Student Achievement: Experimental Evidence from Rural China By Jere R. Behrman; C. Simon Fan; Xiangdong Wei; Hongliang Zhang; Junsen Zhang
  8. The English and Russian Language Proficiency Premium in the post-Maidan Ukraine – an Analysis of Web Survey Data By Brian Fabo

  1. By: Mathilde Maurel (CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Panthéon-Sorbonne); Thomas Pernet-Coudrier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Panthéon-Sorbonne)
    Abstract: This paper analyses the efficiency of a set of environmental measures introduced by the 11th FYP (Five Years Plan) in China in 2006, using a rich and unique dataset borrowed from the Ministry of Environmental Protection (MEP) and from the State Environmental Protection Agency (SEPA). The objective is to provide new evidence of the Soft Budget Constraint (SBC), which is a key concept coined by Janos Kornai. The main finding is that TCZ (Two Control Zone) cities are successful in bringing down the emission of SO2, and more importantly that this success is driven by the private sector. Sectors dominated by State-Owned Enterprises (SOEs) are less sensitive to the environmental target-based evaluation system, by a factor of 42%. We also find that one channel, through which this adjustment takes place, is Total Factor Productivity (TFP), but not in the case of SOEs. We interpret these results as pointing to the evidence of a still ongoing SBC surrounding Chinese SOEs.
    Keywords: Environmental regulation,China Kornai,Soft Budget Constraint
    Date: 2020–02
  2. By: Wang, Hongjian (State University of New York); Nikolov, Plamen (State University of New York); Acker, Kevin (The Johns Hopkins University School of Advanced International Studies and The Hopkins-Nanjing Center)
    Abstract: Social status and political connections may confer large economic benefits on an individual. Previous studies focused on China have examined the relationship between Communist Party membership and earnings and found a positive correlation. However, the correlation could be partly or totally spurious. Using data from three surveys spanning three decades, we estimate the causal effect of Chinese Communist Party membership on monthly earnings in China. We find that, on average, membership in the Communist Party of China increases monthly earnings and the wage premium has grown in recent years. We explore potential causes and discover evidence that improvements in social networks and social rank, acquisition of job-related qualifications, and greater life satisfaction likely play important roles in increased earnings.
    Keywords: wage premium, political status, China, Communist Party
    JEL: D31 J31 P2
    Date: 2019–12
  3. By: Andrés Rodríguez-Pose; Min Zhang
    Abstract: Does the variation in the quality of local government institutions affect the capacity of firms to innovate? This paper uses a unique dataset that combines the specific features of 2,700 firms with the institutional and socioeconomic characteristics of the 25 cities in China where they operate, in order to assess the extent to which institutional quality – measured across four dimensions: rule of law, government effectiveness, corruption, and regulatory quality – affects both the innovation probability and intensity of firms. The results of the econometric analysis show that poor institutional quality in urban China is an important barrier for firm-level innovation. In particular, a deficient rule of law, high corruption, and a weak regulatory quality strongly undermine firm-level innovation. The role of these factors is far more limited in the case of innovation intensity. Better institutions also reduce the amount of time firms spend dealing with government regulations in order to facilitate innovation. The results also indicate that the cost of weak institutions for innovation is higher for private than for state-owned firms, at least in the early stages of innovation. In general, differences in institutional quality generate local urban ecosystems that impinge on the propensity of firms to innovate.
    Keywords: innovation, institutions, government quality, firms, cities, China
    JEL: H1 O3 O31
    Date: 2020–02
  4. By: Yi Chen; Hanming Fang
    Abstract: China introduced its stringent family planning policies from the early 1970s, known as the "Later, Longer, Fewer" policies, and followed it with the One-Child Policy from 1979. The number of children born to Chinese parents significantly decreased from 5.7 in late 1960s to 2.5 in 1988. In Chen and Fang (2019), we show that family planning policies have drastically different effects on elderly parents' physical and mental well-beings. Whereas parents more exposed to the family planning policies consume more and enjoy slightly better physical health status, they report more severe depression symptoms. In this paper, we present a more complete picture of the difference in mental health among residents in rural and urban areas, between males and females, between different education groups, between those with one child and those with more than one children, and between widowed and non-widowed. We highlight the role of family support (from children and spouse) for the mental health status among the elderly Chinese.
    JEL: H31 I15 I18 J13
    Date: 2020–01
  5. By: Chen,Dandan; Fu,Ning - HEAED; Pan,Yilin
    Abstract: Over the past decade, China's transition rate from lower secondary education to higher secondary education has increased significantly, from 80.5 to 93.7 percent. In light of this impressive progress, the Chinese government aimed at raising the gross enrollment rate in senior high schools to above 90 percent by 2020. Quality and relevance in vocational and academic high school education could be a key bottleneck in further expansion. The way tracking operates between academic and vocational streams could itself be a distortion for the sector's further expansion. Looking ahead, reforms in upper secondary education are imperative, given increasing demand for a highly skilled labor force and China's fast demographic change as the young population cohorts decline. The paper examines the sector's key constraints in access, financing, tracking, and informed decisions and recommends how the quality of the general and vocational education tracks can be further improved.
    Keywords: Educational Sciences,Secondary Education,Vocational Education&Technical Training,Rural Labor Markets,Labor Markets
    Date: 2019–10–15
  6. By: Jere R. Behrman (University of Pennsylvania); Yuan Hu (Jinan University); Junsen Zhang (The Chinese University of Hong Kong)
    Abstract: Parental schooling is widely thought to improve child outcomes. But most studies on parental-child relations are associative, without control for estimation problems, such as unobserved intergenerationally-correlated endowments, if causality is of interest. The few exceptions are relatively recent studies that focus on high-income countries (HICs), with their much different contexts than the low- and middle-income countries (LMICs) in which the vast majority of children globally are growing up. This paper estimates the causal (conditional on the assumptions for the model) relationships between parents’ schooling and their children’s schooling in the most populous LMIC, using adult identical (monozygotic, MZ) twins data from urban China. Our ordinary least-squares estimates show that one-year increases in maternal and parental schooling are associated, respectively, with 0.4 and 0.5 more years of children’s schooling. However, if we control for genetic and other endowment effects by using within-MZ fixed effects, the results indicate that mothers’ and fathers’ schooling have no significant effects on children’s schooling. Our main results remain with various robustness checks, including controlling for measurement error. These results suggest that the positive associations between children’s and parents’ schooling in standard cross-sectional estimates in this major LMIC are mainly due to the correlation between parents’ unobserved endowments and their schooling and not the effects of their schooling per se.
    Keywords: parental schooling; children’s schooling; endowments; China; within-twins estimates
    JEL: I2
    Date: 2020–01–20
  7. By: Jere R. Behrman (University of Pennsylvania); C. Simon Fan (Lingnan University); Xiangdong Wei (Lingnan University); Hongliang Zhang (Hong Kong Baptist University); Junsen Zhang (The Chinese University of Hong Kong)
    Abstract: Worldwide children’s access to after-school learning activities is highly depen-dent on family backgrounds. Concern over the implications of such activities for child development and educational inequality has led to a global rise of public provision of after-school learning support. However little is known about inter-actions of public after-school activities and household investments in children’s learning. This paper contributes to the literature on the e?ects of public inputs on household inputs and student achievement in after-school settings. We build a model that integrates public and private inputs to produce student achievement through two competing mechanisms – diminishing returns to total inputs and complementarity between public and private inputs. When diminishing returns dominate complementarity, the model predicts the substitution away of private inputs due to increases in public inputs for all households, although the extent of crowding-out is smaller and therefore the test score gains are larger for children from disadvantaged family backgrounds facing higher costs of private inputs. We implement a randomized controlled after-school tutoring experiment in rural China where many children are left-behind by both parents and cared for by grandparents. During the program, tutees living with parents reported large and significant reductions in the amount of tutoring received at home, whereas tutees living apart from both parents reported much smaller, and often insignificant, re-ductions. We find that tutees’ math scores improved significantly, and more for children living without parents, although there is no evidence for improvement in tutees’ endline reading scores.Length: 50 pages
    Keywords: inequality of educational opportunity; after-school tutoring; home tutoring
    JEL: F63 I24 I25
    Date: 2020–01–20
  8. By: Brian Fabo
    Abstract: The Maidan uprising and the successive fall of president Yanukovych has been a subject of substantial scholarly attention. Nonetheless, the focus has been largely on political aspects of these events, which the economic implications have not been tackled nearly to the same extent. This study aims to contribute to filling this gap by analyzing the post-Maidan changes to the Russian language earnings premium in the country. Past research has identified sizable advantage of earnings enjoyed by Russian language speakers over Ukrainian language speakers. Meanwhile, the literature on Maidan suggests, that the upheaval has strengthened Ukrainian speaking, pro-Western forces in the society over the interests rooted in the Russian speaking community and thus is could be expected that this premium could have disappeared. Our analysis, nonetheless, shows that it remains present. Additionally, we test the effect of proficiency in English, the main commerce language of the West, to see whether the proWestern orientation of the new Ukrainian government generated effect a similar effect to the Russian language premium. However, once we control for characteristics of the respondent, we found no strong evidence of such an effect.
    Keywords: Maidan, earnings differences, ethnic premium, foreign language skills, Ukraine
    JEL: J15 J70 J82
    Date: 2020–02–12

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