nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒05‒11
ten papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Exposure to Transit Migration, Public Attitudes and Entrepreneurship By Aksoy, Cevat Giray; Ajzenman, Nicolás; Guriev, Sergei
  2. The Perceived Well-being and Health Costs of Exiting Self-Employment By Nikolova, Milena; Nikolaev, Boris; Popova, Olga
  3. A spatial analysis of inward FDI and rural-urban wage inequality: Evidence from China By Wang, Hao; Fidrmuc, Jan; Luo, Qi
  4. Trends in occupational segregation by gender in a post-communist country By Jan Gromadzki
  5. Dinner for three - EU, China and the US around the geographical indications table By Hu, Weinian
  6. Hometown Ties and the Quality of Government Monitoring: Evidence from Rotation of Chinese Auditors By Jian Chu; Raymond Fisman; Songtao Tan; Yongxiang Wang
  7. Declining Market Competition in China By Daniel Berkowitz
  8. East Prussia 2.0: Persistent regions, rising nations By Polugodina, Maria; Grigoriadis, Theocharis
  9. Levels of structural change: An analysis of China's development push 1998-2014 By Torsten Heinrich; Jangho Yang; Shuanping Dai
  10. Degrowth in the Context of Sustainability Transitions: In Search for a Common Ground By Yaryna Khmara; Jakub Kronenberg

  1. By: Aksoy, Cevat Giray; Ajzenman, Nicolás; Guriev, Sergei
    Abstract: Does exposure to mass migration affect economic behavior, attitudes and beliefs of natives in transit countries? In order to answer this question, we use a unique locality-level panel from the 2010 and 2016 rounds of the Life in Transition Survey and data on the main land routes taken by migrants in 18 European countries during the refugee crisis in 2015. To capture the exogenous variation in natives’ exposure to transit migration, we construct an instrument that is based on the distance of each locality to the optimal routes that minimize travelling time between the main origin and destination cities. We first show that the entrepreneurial activity of natives falls considerably in localities that are more exposed to mass transit migration, compared to those located further away. We then explore the mechanisms and find that our results are likely to be explained by a decrease in the willingness to take risks as well as in the confidence in institutions. We also document an increase in the anti-migrant sentiment while attitudes towards other minorities remained unchanged. We rule out the possibility of out-migration of natives or of trade-related shocks (potentially confounded with the mass-transit migration) affecting our results. Using locality-level luminosity data, we also rule out any effect driven by changes in economic activity. Finally, we find no statistically significant effects on other labor market outcomes, such as unemployment or labor force participation.
    Date: 2020–04–21
  2. By: Nikolova, Milena; Nikolaev, Boris; Popova, Olga
    Abstract: We explore how involuntary and voluntary exits from self-employment affect life and health satisfaction. To that end, we use rich longitudinal data from the German Socio-Economic Panel from 1985 to 2017 and a difference-in-differences estimation. Our findings suggest that while transitioning from self-employment to salaried employment (i.e., a voluntary self-employment exit) brings small improvements in health and life satisfaction, the negative psychological costs of business failure (i.e., switching from self-employment to unemployment) are substantial and exceed the costs of involuntarily losing a salaried job (i.e., switching from salaried employment to unemployment). Meanwhile, leaving self-employment has no consequences for selfreported physical health and behaviors such as smoking and drinking, implying that the costs of losing self-employment are largely psychological. Moreover, former business owners fail to adapt to an involuntary self-employment exit even two or more years after this traumatic event. Our findings imply that policies encouraging entrepreneurship should also carefully consider the costs of business failure.
    Keywords: entrepreneurship,self-employment,health,well-being,unemployment,job switches
    JEL: E24 I10 I31 J28 L26
    Date: 2020
  3. By: Wang, Hao; Fidrmuc, Jan; Luo, Qi
    Abstract: When investigating the relationship between inward FDI and rural-urban inequality, previous studies overlook the inter-regional interactions. Building on the literature that highlights the significant role of rural-urban migration in inequality, this article investigates spatial spillover effect of inward FDI on the rural-urban wage inequality by utilizing the Spatial Durbin Model (SDM) both in the short run and long run. In particular, we carefully consider the heterogeneity of inward FDI and categorize it with respect to entry modes and sectoral distribution. On the basis of a panel dataset covering 30 provinces in China from 2000 to 2016, our results show that overall the inward FDI should not be blamed for the exacerbation of rural-urban wage inequality. We do not find significant relationship between inward FDI in secondary and tertiary sector while the FDI in primary sector has a slight negative effect. When we separate the FDI according to entry modes, we find that WFE is shown to have a negative effect on the rural-urban wage inequality and this effect is more pronounced in the long run when we conduct a period average estimation. This change also similarly applies to the equity joint ventures.
    Keywords: Spatial spillovers,foreign direct investment,rural-urban wage inequality,SDM
    JEL: C21 F21 O19
    Date: 2020
  4. By: Jan Gromadzki
    Abstract: The communist states promoted women’s participation in the labour market and encouraged women to enter male-dominated occupations, which should have resulted in relatively low levels of occupational segregation by gender. I show that after the transition to the market economy, the level of occupational segregation by gender in Poland did not increase, but remained rather stable. I exploit the cohort and regional variation in exposure to communist propaganda to analyse the role of social norms in shaping occupational segregation by gender. The results suggest that the fostering of women’s empowerment by communist authorities may have been limited to the early phase of the communist era.
    Keywords: Occupational segregation, Gender, Economic transition, Communism, Culture
    JEL: J16 J24 P26
    Date: 2019–11
  5. By: Hu, Weinian
    Abstract: China is the EU’s second biggest agri-food exports market. It is also the second destination for the export of EU products protected by geographical indications (GI), accounting for 9% of its value, including wines, agri-food and spirits. The EU-China Agreement on the Protection of Geographical Indications, concluded in November 2019, is expected to realise higher potential for exporting EU GIs to the country since market access is now guaranteed. But the US-China Economic and Trade Agreement, signed in January 2020, has set down a couple of precautionary measures, including a consultation mechanism with China before new GIs can be recognised for protection in the Chinese market because of international trade agreements. As a result, EU GIs could be brought under tighter US scrutiny before being recognised for protection in China. Analysis reveals, however, that only a handful of EU GIs may be affected by the latter Agreement, if at all.
    Date: 2020–04
  6. By: Jian Chu; Raymond Fisman; Songtao Tan; Yongxiang Wang
    Abstract: Audits are a standard mechanism for reducing corruption in government investments. The quality of audits themselves, however, may be affected by relationships between auditor and target. We study whether provincial chief auditors in China show greater leniency in evaluating prefecture governments in their hometowns. In city-fixed-effect specifications – in which the role of shared background is identified from auditor turnover – we show that hometown auditors find 38 percent less in questionable monies. This hometown effect is similar throughout the auditor’s tenure, and is diminished for audits ordered by the provincial Organizations Department as a result of the departure of top city officials. We argue that our findings are most readily explained by leniency toward local officials rather than an endogenous response to concerns of better enforcement by hometown auditors. We complement these city-level findings with firm-level analyses of earnings manipulation by state-owned enterprises via real activity manipulation (a standard measure from the accounting literature), which we show is higher under hometown auditors.
    JEL: D73 G3 H83 M42
    Date: 2020–04
  7. By: Daniel Berkowitz
    Abstract: Using methods in Hall and Jorgenson (1967) and Barkai (2020), we find that pure profitshares rose 25.6 percentage points in China during a period when reforms were enacted thatshould have strengthened market competition. Increases in firms' markups accounts for roughlyfive-sixths of the increase of pure profit shares in manufacturing. Firms that raised markupsoperated primarily in industries where state owned enterprises (SOEs) were pervasive, net entryof firms was slow, and there was a strong reallocation of market shares to SOEs and a weakreallocation to competitive firms. While there was an overall decline in market competition,markets became more competitive in industries where SOEs had small market shares.
    Date: 2020–01
  8. By: Polugodina, Maria; Grigoriadis, Theocharis
    Abstract: In this paper, we examine the economic and political effects of the breakup of East Prussia into what is today Poland, Russia and Lithuania. We explore the dissolution of imperial regions into the boundaries of modern states, adding new insights to the research on the imperial legacies. We expect that German imperial legacies in the form of advanced economic institutions, and specifically East Prussian legacies of nationalistic and conservative political preferences, persist in the territories of former East Prussia in Poland, Russia and Lithuania compared to neighboring regions in their respective countries. We find no pattern of persistence in former East Prussian territories of contemporary Poland, whereas East Prussian persistence appears to be robust in Lithuania. We find strong evidence for the comparative persistence of political preferences in the Kaliningrad region, whereas we observe no economic spillovers. Drawing evidence from West German electoral data in the aftermath of World War II, we find that the presence of East Prussian refugees is conducive to conservative and nationalist support in the FRG. Hence, the East Prussian legacy relates primarily to the persistence of political preferences and migrating agents.
    Keywords: institutions,political economy,political preferences,migration,East Prussia,West Germany
    JEL: F14 N74 O52 P51
    Date: 2020
  9. By: Torsten Heinrich; Jangho Yang; Shuanping Dai
    Abstract: We investigate structural change in the PR China during a period of particularly rapid growth 1998-2014. For this, we utilize sectoral data from the World Input-Output Database and firm-level data from the Chinese Industrial Enterprise Database. Starting with correlation laws known from the literature (Fabricant's laws), we investigate which empirical regularities hold at the sectoral level and show that many of these correlations cannot be recovered at the firm level. For a more detailed analysis, we propose a multi-level framework, which is validated with empirically. For this, we perform a robust regression, since various input variables at the firm-level as well as the residuals of exploratory OLS regressions are found to be heavy-tailed. We conclude that Fabricant's laws and other regularities are primarily characteristics of the sectoral level which rely on aspects like infrastructure, technology level, innovation capabilities, and the knowledge base of the relevant labor force. We illustrate our analysis by showing the development of some of the larger sectors in detail and offer some policy implications in the context of development economics, evolutionary economics, and industrial organization.
    Date: 2020–05
  10. By: Yaryna Khmara (University of Lodz); Jakub Kronenberg (University of Lodz)
    Abstract: The aim of this paper is to study how sustainability transitions analytical framework can help to make other concepts of sustainable socio-economic development more specific and operational. Specifically, we investigate the linkages between sustainability transitions and degrowth. Both approaches to transitions – degrowth and sustainability transitions – are closely related. Ideologically, degrowth represents one of the most far-reaching forms of sustainability transitions, yet it would benefit from a more stringent conceptualization using the analytical framework of sustainability transitions. Based on a literature review of both degrowth and sustainability transitions, we distinguish several aspects which provide a common ground for both approaches. We apply some conceptual notions from sustainability transitions theory to describe the idea of a degrowth transition. Then, we analyse case studies of degrowth practices (mainly in an urban context), which demonstrate that they may be understood and managed as transition experiments.
    Keywords: niche, regime, landscape, transition experiment, degrowth practices, transition management
    JEL: Q00 Q01 Q56
    Date: 2020–01–27

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