nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒06‒08
twelve papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. The Impact of Labour Migration on the Ukrainian Economy By Jerzy Pieńkowski
  2. Private Educational Expenditure Inequality between Migrant and Urban Households in China’s Cities By Yiwen Chen; Ioana Salagean; Benteng Zou
  3. A propensity score matching analysis of the relationship between forest resources and household welfare in Vietnam By Hoang Van, Cuong Van; Tran Quang, Tuyen; Nguyen Thi, Yen; Lan Nguyen, Thanh
  4. Is being the only child harmful to psychological health?: Evidence from an instrumental variable analysis of China's One-Child Policy By Shuxi Zeng; Fan Li; Peng Ding
  5. TEN-T Corridors – Stairway to Heaven or Highway to Hell? By Kathrin Goldmann; Jan Wessel
  6. Cultural Diversity and Foreign Direct Investment By Wei Feng; Yanrui Wu; Yue Fu
  7. The Quality Response to Real Exchange Rate Shocks: A Panel SVAR Analysis on China’s Agricultural Exports By Mao, Rui; Xing, Mengying; Yu, Xiaohua
  8. The Effect of Inpatient User Charges on Inpatient Care By Jana Votapkova
  9. Regional trajectories of entrepreneurship: the effect of socialism and transition By Michael Fritsch; Maria Kristalova; Michael Wyrwich
  10. The Perceived Well-being and Health Costs of Exiting Self-Employment By Milena Nikolova; Boris Nikolaev; Olga Popova
  11. Static and Dynamic Analysis of Poverty in Albania (2007-2016) By Raul Caruso; Antonella Biscione
  12. Government Ability, Bank-Specific Factors and Profitability - An insight from banking sector of Vietnam By Nguyen, V.C.

  1. By: Jerzy Pieńkowski
    Abstract: This paper reviews evidence on the main economic impacts of the post-2014 wave of labour emigration on the economy of Ukraine, based on an overview of international and Ukrainian studies and surveys. Emigration reduces labour supply and pushes up wage growth for workers who stay in the country; one of the issues of concern is a skills waste – most of Ukrainians abroad work outside their qualifications or in very simple jobs. The main benefit for the Ukrainian economy is linked to an inflow of remittances equivalent to 8% of GDP. Remittances significantly improve the welfare of migrants’ families and stimulate domestic demand, pushing up the GDP in the country and playing a counter-cyclical role. A stable and substantial inflow of remittances contributes to a more sustainable balance of payments, counterbalancing permanent trade and investment income deficits. The impact of emigration and remittances on Ukraine’s public finance is mixed: remittance inflows lead to increased VAT, excise and customs revenues, while reduced labour supply diminishes revenues from labour taxes and social security contributions in Ukraine. The policy recommendations for the Ukrainian authorities include encouraging migrants, especially the skilled ones, to invest in, and return to, their home country; creating a more attractive business environment for this purpose (and beyond); a better use of the workforce remaining in the country through stimulating employability; improving social aspects of the Ukrainian migration, especially encouraging higher social security coverage of migrants.
    JEL: F22 F24 J61
    Date: 2020–04
  2. By: Yiwen Chen (Central Bank of Luxembourg); Ioana Salagean (STATEC); Benteng Zou (CREA, Université du Luxembourg)
    Abstract: China’s household registration (hukou) system restricts access to public schools to children without local city hukou. Migrant households thus need to finance privately all education-related costs their children incur. In contrast, local urban households often top- up their spending with private tutoring. Consequently, private educational expenditure of households in China’s cities reflects both willingness to investment in human capital and institutional constraints. We compare the educational expenditure of parents migrating with children to China’s cities to that of local urban parents, with a special focus on the role of the household registration system (hukou) in shaping these inequalities. We find that overall expenditure of migrants overwhelmingly exceeds that of locals after controlling for social and economic characteristics, but expenditure types are different. More detailed analysis of three subcategories of the education-related expenditure shows that migrant households spend more on tuition and sponsorship compared to households with local city hukou, but much less on private tutoring.
    Keywords: Chinese internal migrant children; educational investment; hukou registration
    JEL: O15 I31 J13 R23
    Date: 2020
  3. By: Hoang Van, Cuong Van; Tran Quang, Tuyen; Nguyen Thi, Yen; Lan Nguyen, Thanh
    Abstract: Using secondary data from a socio-economic quantitative household survey in of the North Central region of Vietnam, the main aim of our study is to analyze the causal effect of forest resources on household income and poverty. Based on the observed characteristics of a forest-based livelihood and forest-related activities, we use a propensity score matching (PSM) method to control for potential bias arising from self-selection. The PSM results indicate that households with a forest livelihood had a higher level of income and lower level of poverty than did those without. Interestingly, our findings confirm that a forest-based livelihood offers much higher income than any other type of livelihood adopted by local households. Also, the poverty rate among households with a forest livelihood is lower than those earning non-labor income or engaged in wage/crop and crop livelihoods. Moreover, households whose livelihoods depend on timber forest products (TFPs) and animals (non-TFPs) also had higher income and lower levels of poverty than did those lacking these resources. Among households and provinces, we find differing opportunities deriving from forest resources, suggesting that there are potential barriers hindering local households from pursuing a forest livelihood or participating in some forest activities. Therefore, government policy and regulations on forest management should focus on improving the access of households to forest resources, at the same time enhancing the sustainability of these resources.
    Keywords: forest resources; household income; livelihood; poverty; rural livelihood.
    JEL: I3 I32 I38 R2
    Date: 2019–08–10
  4. By: Shuxi Zeng; Fan Li; Peng Ding
    Abstract: This paper evaluates the effects of being the only child in a family on psychological health, leveraging data on the One-Child Policy in China. We use an instrumental variable approach to address the potential unmeasured confounding between the fertility decision and psychological health, where the instrumental variable is an index on the intensity of the implementation of the One-Child Policy. We establish an analytical link between the local instrumental variable approach and principal stratification to accommodate the continuous instrumental variable. Within the principal stratification framework, we postulate a Bayesian hierarchical model to infer various causal estimands of policy interest while adjusting for the clustering data structure. We apply the method to the data from the China Family Panel Studies, and we find small but statistically significant negative effects of being the only child on self-reported psychological health for some subpopulations. Our analysis also reveals treatment effect heterogeneity with respect to both observed and unobserved characteristics. We also conduct sensitivity analysis to assess the key instrumental variable assumptions, and carry out simulations to compare the proposed methods with common alternative methods.
    Date: 2020–05
  5. By: Kathrin Goldmann (Institute of Transport Economics, Muenster); Jan Wessel (Institute of Transport Economics, Muenster)
    Abstract: The European Union coordinates and co-finances supra-national transport infrastructure investments in the Trans-European Transport Network (TEN-T), which consists of road, rail, airport, and port infrastructure. To the best of our knowledge, we are the first to quantify the direct and indirect economic growth effects of newly created TEN-T core corridor roads in Eastern European countries. Both the panel data and the spatial analyses show that regional GDP growth at the NUTS3 level is between 0.5 and 2.0 percentage points higher, if a region has direct access to a newly built road. The analyses with a spatial Durbin model (SDM) show that the new construction of a TEN-T core road also causes positive spillover effects on other regions that have direct access to the corridor network, as well as on regions that are not directly connected to the corridors. The results thus indicate that the TEN-T policy, which aims to alleviate transport bottlenecks, can increase cohesion between central and peripheral regions and consequently enhance regional welfare in Eastern Europe.
    Keywords: transport infrastructure, TEN-T corridors, supra-national infrastructure investment, spatial Durbin model
    JEL: R42 O18 O47
    Date: 2020–06
  6. By: Wei Feng (School of Management and Economics, Southeast University, China); Yanrui Wu (Economics Discipline, Business School, University of Western Australia); Yue Fu (School of Management and Economics, Southeast University, China)
    Abstract: In this paper, we first propose a theoretical model and derive hypotheses about the relationship between cultural diversity and foreign direct investment (FDI). We then test these hypotheses through regression analysis of a dataset of 230 Chinese cities covering the period of 2000-2014. It is shown that cultural diversity and FDI absorption are negatively correlated. The main mechanism is that cultural diversity impedes human capital development and hence obstructs FDI absorption. However, this negative relationship disappears gradually over time. In addition, it is also shown that there are threshold and spatial spillover effects. This research not only enriches the theory of FDI location, but also has implications for FDI policy-making.
    Keywords: Cultural diversity, FDI absorption, Economic growth, China
    JEL: F21 F41 G18
    Date: 2020
  7. By: Mao, Rui; Xing, Mengying; Yu, Xiaohua
    Abstract: This paper applies a panel structural VAR model to uncover both the dynamics and inter-product/market differences in responses of product quality to real exchange rate (RER) shocks with complete data of China’s monthly agricultural exports. It finds that RER appreciations promote the quality of China’s agricultural exports on average in contrast to discouraging exports, but the effect is mostly short-run—the average response peaks in the immediate month after the shock and phases out in three months. Following domestic price and quality itself, RER shocks account for 3% on average in quality variations as the third contributor. The quality response to RER shocks, however, substantially differs across both products and markets.
    Keywords: International Relations/Trade
    Date: 2020–05–28
  8. By: Jana Votapkova (Institute of Economic Studies, Faculty of Social Sciences, Charles University Opletalova 26, 110 00, Prague, Czech Republic)
    Abstract: The essay assesses the infuence of inpatient user charges in the Czech Republic on the amount of inpatient hospital care provided, namely the number of patient days. We apply the difference-indifferences approach on a panel of 76 general hospitals in 2008-2009. The introduction and subsequent partial reimbursement of user fees charged on an inpatient day in the Czech Republic satisfies the criteria of a natural experiment - the decision to reimburse patients for user charges applied to hospitals under the control of the Social Democratic (ÄŒSSD) regional governments in the year 2009, and was unrelated to other hospital characteristic. Our treatment group comprises hospitals where patients could ask for reimbursement, i.e. user charges were effectively abolished. The control group covers hospitals where it was not possible to get reimbursement. The base year is 2008 when user charges were introduced. The observed effect of user-charge abolition was small and marginally significant (between 2.7 % and 4.1 %) having controlled for exogenous hospital and regional characteristics.
    Keywords: Cost-sharing, inpatient care, difference-in-difference, Czech Republic
    JEL: I12 I18
    Date: 2020–05
  9. By: Michael Fritsch (Friedrich Schiller University Jena and Halle Institute for Economic Research (IWH), Germany); Maria Kristalova (Friedrich Schiller University Jena, Germany); Michael Wyrwich (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany)
    Abstract: We investigate how major historical shocks affect regional trajectories of economic activity. To this end, we conduct a comparative analysis of the development of entrepreneurship in East and West Germany after World War II. The introduction of an anti-entrepreneurial socialist economy in East Germany in 1949, and the subsequent transformation to a market economy four decades later were major historical shocks to the economy in general, and to entrepreneurship specifically. Our comparative analysis of East and West Germany assesses how these shocks affected the level of entrepreneurship at the regional level. Surprisingly, our results show that socialism does not have a long-run negative effect on the prevalence of self-employment in East Germany, despite the severe anti- entrepreneurial policies prevalent in Soviet-style socialism. Quite to the contrary, there is actually a positive treatment effect of German separation and reunification. Further analyses suggest that current structural differences in regional levels of self-employment in Germany are not pre- dominantly due to the socialist legacy of the East, but mainly a result of the shock transformation that occurred with reunification.
    Keywords: Entrepreneurship, self-employment, transition, socialism, regional development, GDR
    JEL: L26 R11 N94 P25
    Date: 2020–06–02
  10. By: Milena Nikolova (Institute of Labor Economics (IZA), Bonn, Germany. The Brookings Institution, Washington, DC, USA. Global Labor Organization (GLO).); Boris Nikolaev; Olga Popova
    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 selfemployment 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 self-reported 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: 2020–05
  11. By: Raul Caruso (Department of Economic Policy and CSEA, Catholic University of Sacred Heart CESPIC, Catholic University 'Our Lady of Good Counsel'); Antonella Biscione (Department of Bioeconomic Strategies in the European Union and in the Balkans/ CESPIC, Catholic University 'Our Lady of Good Counsel')
    Abstract: Using data coming from the Household Budget Surveys conducted in 2007-2016 by the Albanian National Statistics Institute (INSTAT), in this paper we set out to investigate the poverty level in Albania. In particular, we employ the static and dynamic approaches to evaluate the effect of growth and inequality in changes in poverty both at national and macro-region level. The results show that: (i) the increase in poor population is due to the lack of growth in consumption and (ii) the improvement in the distribution of consumption has stopped further increases in poverty level.
    Keywords: FGT class index, poverty, poverty decomposition, elasticity of poverty, Albania
    Date: 2020–03
  12. By: Nguyen, V.C.
    Abstract: To the best of our knowledge, a very few studies have focused on the effects of government ability on bank performance in developing and emerging countries. The aim of this work is to study the impact of government ability, bank-specific factors on profitability in the banking system in Vietnam. Using a panel data analysis in the period over 2014-2018, the study analyzes based on the methods of fixed, random effects, and pooled ordinary least squares. Data were collected from Vietnam’s Stock Exchange, General Statistics Office, and Worldwide Governance Indicators. Our results demonstrate that government ability has negatively affected bank efficiency while economic growth will not affect bank efficiency. In addition, the prime bank-specific factors that can significantly impact on bank efficiency are non-performing loan, loan-to-deposit ratio, loan loss reserves. A bank with a higher loan-to-deposit ratio can positively impact on the probability of a bank. In contrast to the risk, a bank with a greater risk as well as a higher level in non-performing loan in operation will negatively impact on its efficiency.
    Date: 2020–03–24

This nep-tra issue is ©2020 by Maksym Obrizan. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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