nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒08‒17
thirteen papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. From workers to capitalists in less than two generations: A study of Chinese urban elite transformation between 1988 and 2013 By Li Yang; Filip Novokmet; Branko Milanovic
  2. China’s Digital Economy: Opportunities and Risks By Longmei Zhang; Sally Chen
  3. Migrants and Firms : Evidence from China By Imbert, Clement; Seror, Marlon; Zhang, Yifan; Yanos Zylberberg
  4. Why wealth inequality differs between post-socialist countries? By Michal Brzezinski; Katarzyna Salach
  5. Trade liberalization and SO2 emissions: Firm-level evidence from China's WTO entry By Li, Lei; Löschel, Andreas; Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
  6. Analyses of Corruption and Productivity with Empirical Study in Vietnam By Nhan Buu Phany; Shino Takayamaz
  7. "The political economy of protection in GVCs: Evidence from Chinese micro data" By Ludema, Rodney D; Mayda, Anna Maria; Yu, Miaojie; Yu, Zhi
  8. Spillover Effects of Russian Monetary Policy Shocks on the Eurasian Economic Union By Vladislav Abramov
  9. Putting inadequate incomes at the heart of food insecurity. A Study of the financial constraints to access a healthy diet in Europe By Tess Penne; Tim Goedemé
  10. Improving the Efficiency and Equity of Public Education Spending: The Case of Moldova By Hui Jin; La-Bhus Fah Jirasavetakul; Baoping Shang
  11. Coastal Development between Opportunity and Disaster Risk : A Multisectoral Risk Assessment for Vietnam By Braese,Johannes Michael; De Vries Robbe,Sophie Anne; Maruyama Rentschler,Jun Erik
  12. Expectations and Challenges in the Labour Market in the Context of Industrial Revolution 4.0. The Agglomeration Method-Based Analysis for Poland and Other EU Member States By Piątkowski, Marcin J.
  13. Sectoral Real Effective Exchange Rate and Industry Competitiveness in Russia By Irina Bogacheva; Alexey Porshakov; Natalia Turdyeva

  1. By: Li Yang (PSE - Paris School of Economics, WIL - World Inequality Lab); Filip Novokmet (University of Bonn); Branko Milanovic (New York University - NYU - New York University [New York] - NYU - NYU System)
    Abstract: Economic and social transformation of China during the past 40 years is without precedent in human history. While the economic transformation was extensively studied, social transformation was not. In this paper, we use for the first time harmonized household surveys covering the period 1988-2013 to study the changes in the characteristics the richest 5 percent of China's urban population. We find that the elite changed from being composed of high government officials, clerical staff, and workers in 1988 to professionals and small and large business owners in 2013. The educational level of the elite increased substantially. Membership in CCP has a positive (albeit small) effect on one's income but is particularly valuable to large business owners.
    Keywords: China,elites,income share,class,top incomes
    Date: 2019
  2. By: Longmei Zhang; Sally Chen
    Abstract: China’s digital economy has expanded rapidly in recent years. While average digitalization of the economy remains lower than in advanced economies, digitalization is already high in certain regions and sectors, in particular e-commerce and fintech, and costal regions. Such transformation has boosted productivity growth, with varying impact on employment across sectors. Going forward, digitalization will continue to reshape the Chinese economy by improving efficiency, softening though not reversing, the downward trend of potential growth as the economy matures. The government should play a vital role in maximizing the benefits of digitalization while minimizing related risks, such as potential labor disruption, privacy infringement, emerging oligopolies, and financial risks.
    Keywords: Asia and Pacific;Supply and demand;National accounts;Unemployment;Labor market policy;Financial services;Digital economy,Fintech,Productivity,Employment,Financial stability,Government Policy and Regulation,Macroeconomic Analyses of Economic Development,General,digitalization,Tencent,Alibaba,ICT
    Date: 2019–01–17
  3. By: Imbert, Clement (University of Warwick and JPAL); Seror, Marlon (University of Bristol, DIAL, Institut Convergences Migrations); Zhang, Yifan (Chinese University of Hong Kong); Yanos Zylberberg (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
  4. By: Michal Brzezinski (University of Warsaw); Katarzyna Salach (University of Warsaw)
    Abstract: We provide the first attempt to understand how differences in households’ socio-demographic and economic characteristics account for disparities in wealth inequality between five post-socialist countries of Central and Eastern Europe. We use 2013/2014 data from the second wave of the Household Finance and Consumption Survey (HFCS) and the reweighted Oaxaca-Blinder-like decompositions based on recentered influence function (RIF) regressions. Our results show that the differences in homeownership rates account for up to 42% of the difference in wealth inequality measured with the Gini index and for as much as 63-109% in case of the P50/P25 percentile ratio. Differences in homeownership rates are related to alternative designs of housing tax policies but could be also driven by other factors. We correct for the problem of the ‘missing rich’ in household surveys by calibrating the HFCS survey weights to top wealth shares adjusted using wealth data from national rich lists. Empirically, the correction procedure strengthens the importance of homeownership rates in accounting for cross-country wealth inequality differences, which suggests that our results are not sensitive to the significant underestimation of top wealth observations in the HFCS.
    Keywords: Wealth inequality, decomposition, recentered influence function (RIF) regressions, survey weight calibration, Household Finance and Consumption Survey (HFCS), post-socialist transition, Central and Eastern Europe (CEE), housing, homeownership, missing rich.
    JEL: D31 D63 P36
    Date: 2020–07
  5. By: Li, Lei; Löschel, Andreas; Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
    Abstract: Is trade liberalization contributing to cleaner production amongst manufacturing firms? Theoretical predictions and empirical evidences are mixed. This study utilizes China's dual trade regime and China's WTO entry in 2001 to construct a unique micro dataset on manufacturing firms for China for the period 2000-2007, and performs a difference-in-difference estimation strategy to directly examine this issue. Specifically, normal exporters that saw tariff changes during the same period form the treatment group; while processing exporters that enjoy tariff-exemptions both pre- and post-WTO entry serve as the control group. Results show that China's WTO entry contributed to a lower SO2 emission intensity for normal exporting firms. We further examine the mechanism and show that the productivity channel accounted for the observed pattern. Specifically, more efficient normal exporters saw greater decline of SO2 emission intensity than average normal exporters. This study contributes to a better understanding of the impact of trade on the environment, especially in developing countries. It also complements the literature in terms of providing China's micro evidence on the impact of trade liberalization on firm's environmental performance.
    Keywords: WTO,trade liberalization,dual trade regime,SO2 emission intensity,China
    JEL: F18 Q53 Q56
    Date: 2020
  6. By: Nhan Buu Phany (School of Economics, University of Queensland); Shino Takayamaz (School of Economics, University of Queensland)
    Abstract: This paper develops a model to analyze bribery under heterogeneous firms’ productivity. In the static setting, we show that there are four possible regimes in equilibrium where firms’ bribery depends on their productivity and fundamental variables, including the state capacity. In the dynamic setting, we show that the regime in which more productive firms pay bribes converges to the regime with no bribery, while the regime where all firms pay bribes does not change. We also show that, unlike in the latter case, output increases over time in the former case. Finally, to test the validity of our theoretical results, we apply the methodology in Ackerberg et al. (2015) while including a bribery variable to a dataset of Vietnamese manufacturing firms between 2005 and 2015. We find a statistically significant and positive relationship between productivity and the likelihood of paying bribes, coinciding with one of the equilibrium regimes shown in our theoretical analysis.
    Keywords: corruption, productivity.
    JEL: D21 D24 D73
    Date: 2020–06–19
  7. By: Ludema, Rodney D; Mayda, Anna Maria; Yu, Miaojie; Yu, Zhi
    Abstract: This paper explores the political economy of import protection in a setting where imports may contain a country's own domestic value added (DVA) via domestically produced inputs that get exported and used in foreign downstream production. We show that import-competing producers and their domestic input suppliers are generally allies in favor of protection, but this alliance weakens as DVA increases, because a home tariff on finished goods decreases foreign demand for home inputs. Empirically, we examine detailed discriminatory trade policies of 23 countries toward China and use Chinese transaction-level processing trade data to construct a measure of DVA. We also measure input customization. We find that both upstream and downstream political organization increase downstream protection, but the effect of the former is smaller when DVA as a share of final imports from China is larger. Tariffs on products containing inputs that are neither customized nor politically organized appear to be unaffected by the DVA share.
    Keywords: global value chains; Lobbying; trade policy
    JEL: F10 F13 F14
    Date: 2019–11
  8. By: Vladislav Abramov (Bank of Russia, Russian Federation)
    Abstract: Russian monetary policy could translate on the countries of Eurasian Economic Union (EAEU) through different channels. However, there is still a lack of evidence of the significance of so called spillover effects of Russian monetary policy. This work investigates the influence of Russian monetary policy shocks, proxied by shocks of MIACR, on the EAEU countries. For that purpose, firstly, monetary policy shocks were identified via FAVAR model for the Russian economy, estimated on the monthly data of more than 50 indicators. Further, separately for each country of the union VAR models with previously extracted MP shocks were estimated and both impulse response functions (IRF) and forecast error variance decomposition (FEVD) were analysed. The main result of the work is that effects of shocks in MIACR on industrial production and inflation are not statistically significant. At the same time, such shocks have statistically significant effect on money supply, nominal exchange rates and money market rates in some union’s countries. However, obtained effects are mostly small and heterogeneous.
    Keywords: Transmission effects, monetary policy, Eurasian economic union
    JEL: E52 E58 E59
    Date: 2020–07
  9. By: Tess Penne; Tim Goedemé
    Abstract: In Europe, food insecurity is still a serious concern for individual and public health. Although progress has been made in reducing undernourishment, other types of malnutrition such as obesity are on the rise. Policies that aim at improving healthy eating and addressing food insecurity tend to focus on public education, and financial incentives, such as a sugar tax. These policies start from the assumption that people have sufficient income to eat healthily. In contrast, food assistance through food banks is becoming more and more popular across European countries, suggesting that a significant share of the population experiences financial constraints to access a (healthy) diet. Unfortunately, indicators of food insecurity rarely focus directly on the lack of sufficient income as a driver of food insecurity and unhealthy eating. Therefore, in this paper, we try to assess the role of adequate incomes and minimum income policies in having access to a healthy diet. We make use of estimates of the minimum cost of a healthy diet in 24 European countries, in accordance with national food-based dietary guidelines. Food prices were collected in the capital city of each country during the Spring of 2015. We use these unique data to (1) estimate the proportion of people living in urban areas with insufficient income to access a healthy diet, before and after housing costs, based on representative income survey data (EU-SILC), and, (2) compare the cost of a healthy diet with the level of minimum income schemes for specific household types using microsimulation techniques. We find that in 16 out of 24 countries at least 10% of the population in (sub)urban areas is confronted with income-related food insecurity. Especially in Eastern and Southern Europe a large share of the (sub)urban population is lacking the economic resources needed to have access to a healthy diet. Our findings show that policies directed at tackling food insecurity should be embedded in a broader set of economic and social policies that facilitate the structural realisation of an adequate income.
    Date: 2019–11
  10. By: Hui Jin; La-Bhus Fah Jirasavetakul; Baoping Shang
    Abstract: This paper, using Moldova as an example, presents a systematic approach to assess the efficiency and equity of public education spending, identify sources of inefficiencies and inequality, and formulate potential reform options. The analytical framework combines international benchmarking with country-specific analysis—such as microeconomic analysis based on household survey data—and can provide important insights into diagnosing and reforming education systems. The analysis finds significant scope to improve both efficiency and equity of the education sector in Moldova. Potential reform measures include further consolidating the oversized school network, reducing overstaffing, and better targeting government subsidies. The current remuneration policy could also be improved to attract high quality teachers and incentivize performance.
    Keywords: Education spending;Public expenditures and education;Social safety nets;Unemployment;Expenditure efficiency;public education spending,spending efficiency,inequality,education reform,education spend,non-teaching staff,education outcome,non-teaching,education sector
    Date: 2019–02–26
  11. By: Braese,Johannes Michael; De Vries Robbe,Sophie Anne; Maruyama Rentschler,Jun Erik
    Abstract: This paper presents a multisectoral risk assessment, analyzing natural risks faced by key drivers of socioeconomic development in coastal Vietnam. The analysis quantifies the exposure of assets and economic activity to the following natural hazards: riverine flooding, coastal flooding, typhoon winds, coastal erosion, and saline intrusion. These hazards are analyzed according to their impact on agricultural production, aquaculture, human settlements, industrial zones, tourism, health care facilities, schools, and the electricity transmission network. Overall, the results show the complex nature of natural risk in Vietnam, with significant exposure of key economic sectors, public services and assets. The estimates suggest that exposure varies greatly between hazards, sectors, and provinces. This paper provides detailed technical descriptions of the methodologies, data sources, and analytical assumptions employed to obtain the estimates, and acts as a technical background paper to Resilient Shores: Vietnam's Coastal Development between Opportunity and Disaster Risk (Rentschler et al., 2020).
    Date: 2020–08–05
  12. By: Piątkowski, Marcin J.
    Abstract: Technological revolution brings forth major changes in the labour market as well as the necessity to adapt to the shifting conditions on the part of both employees and entrepreneurs. This notion fits in with the European Policy of “Lifelong Learning” which presents the necessity to constantly improve skills and participate in the process of learning through the entire period of professional engagement. The aim of the article is to diagnose the current situation in the labour market and expectations towards employees as a result of the technological revolution and digitization, and to analyze whether there are groups of countries in the EU with similar features describing the labour market and to present the differences between these groups. The study uses research methods based on literature research, content analysis and comparative analysis, and the empirical part uses cluster analysis – the Ward method, using secondary statistical data from the Eurostat database. It was verified which groups of the Member States exhibited similarities to the extent of: forms of employment; work productivity; commitment of entrepreneurs and employees to the process of continuing vocational training (CVT) and lifelong learning; educating future employees of the economy at the level of higher education (HE) in STEM fields and development of digital skills as well as commitment of governments of each EU Member State to financing research and development in higher education institutions (HEIs). It may be ascertained that the average values of variables describing the pattern followed by “new” Member States which joined the EU in 2004 or later are, in majority, lower than the values of the same variables describing the pattern followed by the ”old” Member States. It cannot be unambiguously stated that the affiliation with the Eurozone in any way determined whether a given group of Member States is better or worse than the other. The resulting figures may become significant at the stage of developing the employment policy as well as the education policy and the professional career development policy in the respective Member States. Those results may be applied to both evaluation and planning of actions to be taken against the background of the development strategy in order to reduce clearly visible inequalities between the European Union Member States.
    Keywords: labour market; labor market; employment; Industry 4.0; cluster analysis; lifelong learning; employee competences; enterprises; Continuing Vocational Training; CVT; STEM; digital skills; precarious employment; higher education; employment policy; inequalities; Poland; European Union
    JEL: C38 I23 J0 J01 J11 J24 J40 O52 O57
    Date: 2020–07
  13. By: Irina Bogacheva (Bank of Russia, Russian Federation); Alexey Porshakov (Bank of Russia, Russian Federation); Natalia Turdyeva (Bank of Russia, Russian Federation)
    Abstract: One of the most popular measures for the economy’s cost competitiveness in foreign trade is the real exchange rate. The common approach to its calculation consists in adjusting the nominal exchange rates for the trade-weighted CPI-based inflation differentials between the domestic economy and its major trade partners. Although such approach is most often used for official statistics, the CPI-based real exchange rate does not accurately capture an economy’s competitiveness in foreign trade. The latter is explained by the fact that the CPI naturally considers price changes for both tradable and non-tradable goods. We aim at constructing a set of alternative indicators of REER that would more extensively account for the structure of the Russian economy and its foreign trade and, hence, provide more reliable estimates of changes in Russian economy's cost competitiveness over time. This is done by taking into an account the structure of the Russian economy combined with the specificities of production processes in industries that are extensively involved in foreign trade, as well as integration of Russian industries into global value chains. Against this background, we also show the importance of distinguishing between the output-based and cost-based real exchange rate concepts when addressing the country’s trade competitiveness issue.
    Keywords: Real Effective Exchange Rate, Global Value Chains, Input-Output Tables, Industry Competitiveness
    JEL: F3 F41 F63
    Date: 2020–07

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