nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒06‒29
nine papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. The Bonding Effect of Deferred Compensation: Worker Separations from a Large Firm in Early Transition Russia By Ananyev, Mikhail; Dohmen, Thomas; Lehmann, Hartmut
  2. Political connections and the super-rich in Poland By Katarzyna Sałach; Michał Brzeziński
  3. Migrants and Firms : Evidence from China By Imbert, Clément; Seror, Marlon; Zylberberg, Yanos; Zhang, Yifan
  4. Short-Run Health Consequences of Retirement and Pension Benefits: Evidence from China By Plamen Nikolov; Alan Adelman
  5. Spatial Misallocation in Chinese Housing and Land Markets By Yongheng Deng; Yang Tang; Ping Wang; Jing Wu
  6. What effect has the 2015 power market reform had on power prices in China? Evidence from Guangdong and Zhejiang By Xie, B-C.; Xu, J.; Pollitt, M.
  7. Poverty in Russia: the Role of the Marital Status and Gender By Victoria Maleeva; Majlinda Joxhe; Skerdilajda Zanaj
  8. Willingness to Pay for Better Air Quality: The case of China By Liu, L-Q.; Yin, Z-L.; Xie, B-C.; Zhou, W.
  9. Hit by the Silk Road: How Wage Coordination in Europe Mitigates the China Shock By Barth, Erling; Finseraas, Henning; Kjelsrud, Anders; Moene, Karl Ove

  1. By: Ananyev, Mikhail (IZA); Dohmen, Thomas (University of Bonn and IZA); Lehmann, Hartmut (University of Bologna)
    Abstract: Deferred payments, as implicit contracts, are predicted to bind workers to firms as long as workers believe that firms adhere to these implicit contracts. We employ a unique personnel data set from a Russian manufacturing firm to investigate whether wage arrears, delayed payments of wages, induce bonding effects. We find that workers' separation rates decrease dramatically when workers experience wage arrears, providing evidence for the bonding effects of deferred compensation schemes. After workers are repaid nominal wages, but have suffered real wage losses due to unexpectedly high inflation, we observe that workers affected by wage arrears again become much more likely to separate during and after the repayment period of a second episode of wage arrears, providing evidence for the weakening of the bonding effect after the firm's reputation for adequately compensating for deferred payments has been jeopardized.
    Keywords: deferred compensation, worker turnover, wage arrears, personnel data, Russia
    JEL: J30 J63 M52 P23
    Date: 2020–06
  2. By: Katarzyna Sałach (Faculty of Economic Sciences, University of Warsaw); Michał Brzeziński (Faculty of Economic Sciences, University of Warsaw)
    Abstract: We use newly collected original panel data on the super-wealthy individuals in Poland (observed over 2002-2018) to study the impact of the rich’s political connections on their wealth level, mobility among the rich and the risk of dropping off the rich list. The multimillionaires are classified as politically connected if we find reliable news stories linking their wealth to political contacts or questionable licenses, or if a person was formerly an informant of communist Security Service or member of the communist party, or when the origins of wealth are connected to the privatization process. We find that political connections are not associated with the wealth level of Polish multimillionaires, but that they are linked to the 20-30% lower probability of upward mobility in the ranking of the rich. Moreover, being a former member of the communist party or secret police informant increases the risk of dropping off the Polish rich list by 79%. Taken together, our results show that, contrary to some other post-socialist countries such as Russia or Ukraine, there is little evidence that the Polish economy suffers from crony capitalism.
    Keywords: the super-rich, billionaires, oligarchs, wealth inequality, top wealth, political connections, crony capitalism, Poland
    JEL: D31 D63 P36
    Date: 2020
  3. By: Imbert, Clément (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 Classification: D24 ; J23 ; J61 ; O15
    Date: 2020
  4. By: Plamen Nikolov; Alan Adelman
    Abstract: This paper examines the impact of the New Rural Pension Scheme (NRPS) in China. Exploiting the staggered implementation of an NRPS policy expansion that began in 2009, we use a difference-in-difference approach to study the effects of the introduction of pension benefits on the health status, health behaviors, and healthcare utilization of rural Chinese adults age 60 and above. The results point to three main conclusions. First, in addition to improvements in self-reported health, older adults with access to the pension program experienced significant improvements in several important measures of health, including mobility, self-care, usual activities, and vision. Second, regarding the functional domains of mobility and self-care, we found that the females in the study group led in improvements over their male counterparts. Third, in our search for the mechanisms that drive positive retirement program results, we find evidence that changes in individual health behaviors, such as a reduction in drinking and smoking, and improved sleep habits, play an important role. Our findings point to the potential benefits of retirement programs resulting from social spillover effects. In addition, these programs may lessen the morbidity burden among the retired population.
    Date: 2020–06
  5. By: Yongheng Deng; Yang Tang; Ping Wang; Jing Wu
    Abstract: Housing and land prices in China have experienced dramatic hikes over the past decade or two. Moreover, housing and land prices have also become more dispersed across Chinese cities. This paper intends to explore how housing and land market frictions may affect not only the aggregate but also the spatial distribution of housing and land prices and hence the extent of spatial misallocation. We first document the spatial variations of housing and land market frictions. In particular, larger tier-1 cities receive less housing and land subsidies, compared to tier-2 and tier-3 cities, whereas land frictions have been mitigated over time. We then embed both types of market frictions into a dynamic competitive spatial equilibrium framework featured with endogenous rural-urban migration. The calibrated model can reasonably mimic the price hikes in the data. Our counterfactual analysis reveals that, in a frictionless economy, the levels of housing and land prices would both be higher; while the housing price hike would slow down, the land price would grow more rapidly. Moreover, the housing price would not be slow down unless housing frictions can be largely mitigated.
    JEL: E20 R20
    Date: 2020–05
  6. By: Xie, B-C.; Xu, J.; Pollitt, M.
    Abstract: This paper presents an analysis of the impact of the recent power market reform process in China – following the No.9 Document of March 2015 – on the industrial price of electricity. We do this by picking a typical power price for a medium sized industrial customer in two of China’s leading reform provinces: Guangdong and Zhejiang. We find that power market reform, which is characterised by the introduction of wholesale electricity markets, has substantially reduced prices. Our detailed analysis shows that these price falls have come from a number of different sources: falls in the prices paid to generators, reductions in grid charges and falls in government taxes and additional charges. We show that the regulated price falls by 26.4% in Guangdong and by 26.9% in Zhejiang. The market price falls even further by 27.7% in Guangdong and 30.4% in Zhejiang. We conclude that while the impact of the power markets is significant, the associated changes to network charges and other government determined components of the price are more significant.
    Keywords: Chinese power market reform, electricity prices, No.9 Document
    JEL: L94
    Date: 2020–05–21
  7. By: Victoria Maleeva (Department of Economics and Management, Université du Luxembourg); Majlinda Joxhe (Department of Economics and Management, Université du Luxembourg); Skerdilajda Zanaj (Department of Economics and Management, Université du Luxembourg)
    Abstract: Contrary to conventional thinking, this paper shows that divorced women exhibit lower levels of poverty than divorced men. We use data from the Russian Longitudinal Monitoring Survey (RLMS- HSE) for the period of 2010-2017. The result remains qualitatively invariant when considering assortative mating along education to alleviate possible endogeneity between divorce and poverty. Investigating an inter-related dynamic model of poverty and female labor market participation, we find that higher female labor participation partly explains why a divorce is harder on husbands than on wives.
    Keywords: Divorce; Gender; Russia; Labor Market; Dynamic Bivariate estimation; Longitudinal Survey.
    JEL: I31 I32 J12 J16 J60
    Date: 2020
  8. By: Liu, L-Q.; Yin, Z-L.; Xie, B-C.; Zhou, W.
    Abstract: Air pollution is a big threat to human beings and has attract worldwide attention from governments and scholars. Based on the survey of happiness in China, this paper attempts to analyze the impact of local air quality on the happiness of individuals, and to evaluate the monetary value of mitigating air pollution. Through merging individual happiness data in a nationally representative survey with daily air quality index (AQI) according to the date and location of each respondent, it calculates the marginal rate of substitution (MRS) between air quality and income, and then estimates respondents’ willingness to pay (WTP) for better air quality. Moreover, it has further explored the differences of WTPs among groups. This study reaches the conclusion that happiness is positively associated with income but negatively correlated with air pollution. Besides, individual happiness is heavily influenced by income, age, gender, health condition, marital status and other variables. Furthermore, WTPs differ greatly among groups and the estimated average WTP of whole sample is 549.36RMB(or 0.90% of annual household income) per year per family for one unit reduction in AQI.
    Keywords: Happiness, Willingness to pay, Air pollution, China
    JEL: L94
    Date: 2020–05–21
  9. By: Barth, Erling (Institute for Social Research, Oslo); Finseraas, Henning (Norwegian University of Science and Technology (NTNU)); Kjelsrud, Anders (University of Oslo); Moene, Karl Ove (University of Oslo)
    Abstract: Coordination in collective wage setting can constrain potential monopoly gains to unions in non-traded-goods industries. Countries with national wage coordination can thus stabilize overall employment against fluctuations and shocks in the world economy. We test this theory by exploring within-country variation in exposure to competition from China in 13 European countries. Our causal estimates demonstrate that in countries with uncoordinated wage setting, regions with higher import exposure from China experienced a marked fall in employment, while countries with wage-coordination experienced no such employment effects. We test our main mechanism against other explanations, and show that our findings are robust to alternative measures of wage coordination, industry classifications, and trade exposure.
    Keywords: wage-coordination, employment, globalization, China-shock
    JEL: F16 F66 J51 J60
    Date: 2020–05

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