nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒03‒30
ten papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Migrants and Firms: Evidence from China By Imbert, Clement; Seror, Marlon; Zylberberg, Yanos; Zhang, Yifan
  2. Higher Education Expansion, the Hukou System, and Returns to Education in China By Huang, Bin; Zhu, Yu
  3. Welfare Magnets and Internal Migration in China By Jin, Zhangfeng
  4. Income-related health inequality in urban China (1991-2015): The role of homeownership and housing conditions By Peng Nie; Andrew E. Clarck; Conchita D'Ambrosio; Lanlin Ding
  5. Is a bubble inflating on Poland’s housing market? By Adam Czerniak; Stefan Kawalec
  6. A Quantitative Evaluation of the Housing Provident Fund Program in China By Xiaoqing Zhou
  7. Does vocational education pay off in China? Instrumental-variable quantile-regression evidence By Dai, Li; Martins, Pedro S.
  8. The transmission of business cycles: Lessons from the 2004 enlargement of the EU and the adoption of the euro By Hoang Sang Nguyen; Fabien Rondeau
  9. Strategic House Price Indexes for Warsaw: An Evaluation of Competing Methods By Robert Hill; Radoslaw Trojanek
  10. Life Satisfaction, Subjective Wealth, and Adaptation to Vulnerability in the Russian Federation during 2002-2017 By Hai-Anh Dang; Kseniya Abanokova; Michael Lokshin

  1. By: Imbert, Clement (University of Warwick and JPAL); Seror, Marlon (University of Bristol, DIAL, Institut Convergences Migrations); Zylberberg, Yanos (Chinese University of Hong Kong); Zhang, Yifan (University of Bristol, CESifo, the Alan Turing Institute)
    Abstract: How does rural-urban migration shape urban production in developing countries? We use longitudinal data on Chinese manufacturing firms between 2001 and 2006, and exploit exogenous variation in rural-urban migration induced by agricultural price shocks for identification. We find that, when immigration increases, manufacturing production becomes more labor-intensive in the short run. In the longer run, firms innovate less, move away from capital-intensive technologies, and adopt final products that use low-skilled labor more intensively. We develop a model with endogenous technological choice, which rationalizes these findings, and we estimate the effect of migration on factor productivity and factor allocation across firms. JEL codes: D24; J23; J61; O15
    Date: 2020
  2. By: Huang, Bin (Nanjing University of Finance and Economics); Zhu, Yu (University of Dundee)
    Abstract: China experienced a near 5-fold increase in annual Higher Education (HE) enrolment in the decade starting in 1999. Using the China Household Finance Survey, we show that the expansion has exacerbated the large pre-existing urban-rural gap in educational attainment underpinned by the hukou (household registration) system. We then instrument years of schooling using the interaction of childhood urban hukou status and the timing of the expansion, which is analogous to a Difference-in-Differences estimator which uses rural students to control for any common time trend. The 2SLS estimates of 17% and 12% for men and women respectively are substantially larger than their OLS counterparts of 5% and 6%, both allowing for county fixed-effects. Our 2SLS results can be interpreted as a Local Average Treatment Effect (LATE), i.e. the average treatment effect of HE attendance on earnings for urban students who enrolled in HE as a result of the higher education expansion.
    Keywords: returns to education, 2SLS, higher education expansion, China
    JEL: I26 I23
    Date: 2020–02
  3. By: Jin, Zhangfeng
    Abstract: This study examines the causal effects of welfare benefits on internal migration decisions. Using a quasi-experimental migration reform across 283 Chinese cities from 2002 to 2015, combined with a difference-in-differences setup, I show that improved welfare benefits substantially increase migration. The observed impact is more pronounced for individuals such as the young, women and medium-low-skilled workers. It is relatively smaller in destinations exposed to larger positive demand shocks, suggesting that improved welfare benefits reduce migration costs. And it persists over the long term. All these findings confirm the existence of sizable welfare magnet effects.
    Keywords: Welfare Magnets,Internal Migration,China,Difference-in-differences
    JEL: H31 J61 O15 F66
    Date: 2020
  4. By: Peng Nie (Xi'an Jiaotong University); Andrew E. Clarck (Paris School of Economics); Conchita D'Ambrosio (Universite du Luxembourg); Lanlin Ding (Xi'an Jiaotong University)
    Abstract: We analyze 1991-2015 data from the China Health and Nutrition Survey to ask how housing affects income-related health inequalities in urban China. We use the Erreygers Index (EI) to measure the health gradient, and apply a re-centered influence function (RIF) decomposition to estimate its determinants. We find pro-rich inequalities in self- reported health between 2000 and 2015 but pro-poor inequalities in objective health between 1991 and 2015. Housing conditions serve to reduce the health gradient, and especially that for objective health. Homeownership, however, exacerbates the health gradient. Improving housing conditions thus appears to be an effective way of reducing the income-health gradient in urban China.
    Keywords: Income-related health inequality; housing conditions; homeownership; decomposition; urban China.
    JEL: D63 I10 I12 R21
    Date: 2020–03
  5. By: Adam Czerniak; Stefan Kawalec
    Abstract: The year 2019 brought double-digit growth in Polish housing prices, for both new and existing homes. In some cities, real prices for residential real estate have reached the highest levels in history, even higher than at the peak of the boom in 2008. As a result, some are saying that there is a growing price bubble. But thus far no research has been produced that would comprehensively verify this hypothesis on the basis of data from 2006-2019. This work aims to fill that gap. This is exceptionally important, because assessing the likelihood that a housing price bubble is emerging is key for the conduct of monetary and macroprudential policy in Poland. Because if we’re really dealing with growth in macroeconomic imbalances, then taking pre-emptive action to limit further price growth and prepare the economy (including the financial sector) for a potential collapse in housing prices is essential for limiting fluctuations in growth.
    Keywords: real estate market, price bubble, flipping, housing investments, crowdfunding
    JEL: R31 R32 R38
    Date: 2020–03–10
  6. By: Xiaoqing Zhou
    Abstract: The Housing Provident Fund (HPF) is the largest public housing program in China. It was created in 1999 to enhance homeownership. This program involves a mandatory saving scheme based on labor income. Past deposits are refunded when the worker purchases a house or retires. Moreover, the program provides mortgages at subsidized rates to facilitate these home purchases. I calibrate a heterogeneous-agent life-cycle model to quantify the effects of these policies. My analysis shows that a housing program with these features is expected to raise the rate of homeownership by 8.7 percentage points and to increase the average home size by 20%. I discuss the economic mechanisms by which these outcomes are achieved and which features of the HPF program are most effective. I also consider several extensions of the model such as requiring employers to contribute to the program and allowing renters to withdraw funds from the HPF.
    Keywords: Public policy; Housing Provident Fund; Policy evaluation; China; Life-cycle model; Homeownership
    JEL: E2 E6 H3 R2 R3
    Date: 2020–03–19
  7. By: Dai, Li; Martins, Pedro S.
    Abstract: As China's firms upgrade their position in the quality ladder, vocational education may become more important. In this paper, we study returns to secondary vocational education in China paying attention to individual heterogeneity. We use instrumental variables based on geographical and longitudinal changes in enrolment to address the selection between the two types of education. We find that vocational education provides a wage premium vis-à-vis academic education of over 30% but which applies only for individuals at the middle of the conditional wage distribution.
    Keywords: Human capital,vocational education,quantile treatment effects
    JEL: I26 I25 J24 J31 C36
    Date: 2020
  8. By: Hoang Sang Nguyen (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Fabien Rondeau (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper evaluates macroeconomic interdependencies of seven Central and Eastern European Countries (CEECs) with the Euro Area (EA) through trade relationship. We estimate a near-VAR model and we simulate responses of activity in those CEECs to output shocks for twelve former members of the EA before and after the 2004 enlargement of the European Union (EU). During both periods, empirical results show that spillover effects come through the main economies of the EA: Germany, France and Italy. Furthermore, CEECs are more responsive to output shocks in the EA after 2004 than before (3.3 times larger on average). Increases in spillover effects are larger for the three CEECs that adopted the Euro early (Slovenia, Slovakia, and Estonia) than the other CEECs (4.9 versus 2.1) but without higher trade intensity with the EA (1.07 versus 1.12). Our results show that trade effects are positive inside the same currency area but negative for the CEECs without the euro. JEL Classifications: F13, F15, F45
    Keywords: OCA,Enlargement,European Union,Trade Spillovers,Euro,Near-VAR
    Date: 2019–03–24
  9. By: Robert Hill (University of Graz, Austria); Radoslaw Trojanek (Poznan University of Economics and Business, Poland)
    Abstract: Using a detailed micro-level dataset we compute house price indexes (HPIs) for Warsaw over the period 2006 to 2018. We find that when a hedonic approach is used, the resulting index is reasonably robust to the choice of method. Nevertheless, the hedonic HPIs computed by the National Bank of Poland (NBP) and Statistics Poland (SP) both have some weaknesses. More problematic than hedonic indexes are HPIs computed using the repeat-sales method, which is widely used in the US. We find that such indexes are unreliable, suffering from sample selection bias, and prone to significant revisions when new periods are added to the dataset. Overall, we recommend using either the hedonic time-dummy or rolling time dummy (RTD) methods. These methods when applied to our dataset provide the most reliable HPIs for Warsaw.
    Keywords: The residential real estate market in Warsaw; Hedonic house price index; Repeat-sales price index; Sample selection bias; Robustness to revisions; Robustness to deletion of data
    JEL: C13 R31
    Date: 2020–03
  10. By: Hai-Anh Dang (World Bank); Kseniya Abanokova (National Research University); Michael Lokshin (World Bank)
    Abstract: We offer the first study on vulnerability adaptation to subjective well-being, using rich panel data over the past two decades for Russia. We found no adaption to vulnerability for life satisfaction and subjective wealth, with longer vulnerability spells being associated with more negative subjective welfare. Similar results hold for other outcomes including satisfaction with own economic conditions, work contract, job, pay, and career. Some evidence indicates that despite little differences between urban and rural areas with life satisfaction, rural areas exhibit a stronger lack of adaptation for subjective wealth, particularly for longer durations of vulnerability. Higher education levels generally exhibit a stronger lack of adaptation. The lack of adaptation to vulnerability is, however, similar at different education levels for subjective wealth. We also find a U-shaped relationship between age and durations of vulnerability and disability to have the most negative impacts on life satisfaction and subjective wealth.
    Keywords: vulnerability; adaptation; satisfaction; subjective wealth; gender; panel data; Russia.
    JEL: D6 I3 O1
    Date: 2020–03

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