nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒10‒12
nine papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Business Cycle Sensitivity of Statutory Health Insurance: Evidence from the Czech Republic By Petra Landovska
  2. Returns to Education in the Russian Federation: Some New Estimates By Melianova, Ekaterina; Parandekar, Suhas; Patrinos, Harry A.; Volgin, Artëm
  3. The Relationship between Product Complexity and Exchange Rate Elasticities: Evidence from the People's Republic of China's Manufacturing Industries By Willem THORBECKE; CHEN Chen; Nimesh SALIKE
  4. Do Capabilities Reside in Firms or in Regions? Analysis of Related Diversification in Chinese Knowledge Production By Yiou Zhang; David L. Rigby;
  5. China’s mobility barriers and employment allocations By Ngai, L Rachel; Pissarides, Christopher A; Wang, Jin
  6. Regional resilience in China: The response of the provinces to the growth slowdown By Anping Chen; Nicolaas Groenewold
  8. One transition story does not fit them all: Initial regional conditions and new business formation after socialism By Michael Fritsch; Maria Kristalova; Michael Wyrwich
  9. A New Financial Stress Index for Ukraine By Vladyslav Filatov; ;

  1. By: Petra Landovska (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic)
    Abstract: Since the Czech healthcare system financing is based on Statutory Health Insurance scheme, it relies heavily on wage-based contributions from employers and employees and thus may be prone to business cycle fluctuations. This turned out to be a problem after the 2008 financialcrisis when the government had to issue loans to the insurance funds in order to cover the loss of revenue from the economically active population. This paper examines how the insurance funds' revenues react to economic downturns and expansions, and whether the effect is visible immediately or with a lag. The data from Ministry of Health, Czech Republic, are used, as well as several macroeconomic variables representing the business cycle. The static and lagged regression models on log differenced data are employed throughout the analysis. Significant pro-cyclicality in total health insurance funds' revenues and contributions from employers/employees is found, with the lagged effect being slightly stronger. On the contrary, contributions from state on behalf of economically inactive people do not display a significant relationship with business cycle. These results imply the need to increase state contributions during economic downturns in order to compensate for the loss of health insurance funds' revenues from economically active individuals.
    Keywords: health system financing, sensitivity analysis, business cycle, Czech Republic, social health insurance
    JEL: E32 G28 I13 I18
    Date: 2020–09
  2. By: Melianova, Ekaterina (Higher School of Economics, St. Petersburg branch); Parandekar, Suhas (World Bank); Patrinos, Harry A. (World Bank); Volgin, Artëm (Higher School of Economics, St. Petersburg branch)
    Abstract: This paper presents new estimates of the returns to education in the Russian Federation using data from 1994 to 2018. Although the returns to schooling increased for a time, they are now much lower than the global average. Private returns to education are three times greater for higher education compared with vocational education, and the returns to education for females are higher than for males. Returns for females show an inverse U-shaped curve over the past two decades. Female education is a policy priority and there is a need to investigate the labor market relevance of vocational education. Higher education may have reached an expansion limit, and it may be necessary to investigate options for increasing the productivity of schooling.
    Keywords: returns to education, Russian Federation
    JEL: I26 I28 J16
    Date: 2020–09
  3. By: Willem THORBECKE; CHEN Chen; Nimesh SALIKE
    Abstract: More complex products are less substitutable in international trade and may therefore have lower price elasticities. We investigate this issue using 960 types of Chinese manufactured exports to 190 partner countries disaggregated at the Harmonized System 4-digit level. We measure complexity using Hausmann and Hidalgo's (2009) product complexity index. We find that price elasticities are lower for more complex goods. These results imply that the People's Republic of China can reduce its exporters' exposure to tariffs, trade wars, and exchange rate volatility by upgrading its export basket.
    Date: 2020–09
  4. By: Yiou Zhang; David L. Rigby;
    Abstract: Do capabilities reside in firms, in regions, or in both? Most models of related diversification, building on the early work of Hidalgo et al. (2007), examine how the structure of economic activity within a region conditions the trajectory of diversification. Inter-regional flows are sometimes added to these models. The logic here is that capabilities are largely built-up within regions and sometimes shared between them. We challenge that logic, exploring whether capabilities are more likely to be built within the firm and to flow across spatial boundaries than they are to be built within the region flowing across firm boundaries. Analysis focuses on Chinese patent data spanning 286 cities over the period 1991 to 2015. We develop standard models of related diversification before examining how the branches of multi-locational firms diversify their knowledge portfolios. Evidence shows that the knowledge structure of firms is more important than the knowledge structure of regions in shaping branch diversification. We show that the influence of the firm and the region on diversification vary significantly between headquarters (HQ) branches and non-HQ branches of firms, and between the non-HQ branches of firms that are located in core and peripheral cities of China.
    Keywords: Related diversification; Patents; Capabilities; China
    Date: 2020–09
  5. By: Ngai, L Rachel; Pissarides, Christopher A; Wang, Jin
    Abstract: China’s hukou system imposes two main barriers to population movements. Agricultural workers get land to cultivate but are unable to trade it in a frictionless market. Social transfers (education, health, etc.) are conditional on holding a local hukou. We show that the land policy leads to over-employment in agriculture and it is the more important barrier to industrialization. Effective land tenure guarantees and a competitive rental market would correct this inefficiency. The local restrictions on social transfers also act as disincentives to migration with bigger impact on urban migrations than to job moves to rural enterprises.
    Keywords: Chinese immigration; Chinese land policy; imperfect rental market; mobility barriers; hukou registration; social transfers
    JEL: J61 O18 R23
    Date: 2019–10–01
  6. By: Anping Chen (School of Economics, Jinan University); Nicolaas Groenewold (Economics Discipline, Business School, University of Western Australia)
    Abstract: Since 2007 China’s real GDP growth rate has slowed from a level of over 10% per annum to below 7%. Given China’s regional diversity, an important aspect of the slowdown is the possible spatial variation in its experience. This is the issue we consider in this paper and we analyse this question in the context of the regional economic resilience framework. We proceed in two stages. In the first we analyse a measure of provincial slowdown (a sensitivity index) and of the variability of the slowdown based just on growth rates and examine the correlation of these measure with a number of commonly-used provincial characteristics. In the second stage we decompose regional growth rates into national and province-specific components using a VAR model and argue that since resilience concerns the response of provinces to a national shock, it is properly analysed using just the national component of the growth rate rather than the growth rate as such. We therefore analyse a sensitivity index and a variability index based just on the national component of growth and find that this extension is important both for ranking provinces according to resilience and for correlations of resilience with determinants capturing provincial characteristics. Generally we find that provinces close to the coast with new- rather than old-industry structures are less resilient and tended to suffered greater variability in growth during the slowdown.
    Keywords: China, growth, provincial growth, provincial response, regional resilience
    JEL: E37 O47 O53 R12 R15
    Date: 2020
  7. By: Polina Bugakova (National Research University Higher School of Economics); Ilya Prakhov (National Research University Higher School of Economics)
    Abstract: Despite the unified system of admission to universities in Russia, applicants can still face unequal access to higher education. This can lead to an inefficient choice of the educational strategy and result in the increased inequality. This paper analyzes the barriers which restrict the interregional accessibility of higher education in the context of the Unified State Exam (USE). We propose an analytical model, reflecting the influence of channels such as family, school characteristics, and place of birth, on the educational strategies of youth. We assume that these factors affect the likelihood of being enrolled at university both directly and indirectly through USE scores. Given the unequal regional economic development and the differences in educational opportunities, we argue that university choice can be limited for certain cohorts of applicants, depending on their place of origin, because of differences in the magnitude of the barriers. An empirical examination of the model, based on data from the longitudinal study ‘Trajectories in education and careers’, shows that students from Moscow or Moscow Region are most likely to enroll at university, since they face the lowest barriers. The problem of the accessibility of higher education is more acute for residents of large cities or regional capitals: their likelihood of matriculating is limited by a large number of factors (cognitive abilities, SES, school characteristics). Residents of other settlements (small towns or villages), are least likely to be admitted to university, facing the highest barriers and gender inequality.
    Keywords: higher education, accessibility of higher education, regional educational markets, the Unified State Exam
    JEL: Z
    Date: 2020
  8. By: Michael Fritsch (Friedrich Schiller University Jenam and Halle Institute for Economic Research (IWH)); Maria Kristalova (Friedrich Schiller University Jena); Michael Wyrwich (University of Groningen, and Friedrich Schiller University Jena)
    Abstract: We investigate the reasons for the pronounced regional differences of new business formation after the transformation from a socialist planned system to a market economy in East Germany. Relatively high start-up rates are found in regions that had a well-qualified workforce and a relatively high share of remaining self-employed at the end of the socialist period. This also holds for high-tech manufacturing start-ups. Based on our conclusion that policy should account for these initial regional conditions, we use two criteria to introduce a classification of regions.
    Keywords: Entrepreneurship, new business formation, regional conditions, transformation, East Germany
    JEL: L26 R11 N94 P25
    Date: 2020–09–18
  9. By: Vladyslav Filatov (National Bank of Ukraine); ;
    Abstract: This study improves on the methodology for calculating the financial stress index (FSI) for Ukraine by introducing time-varying correlation into the aggregation of 5 sub-indices (representing the banking sector, households, the corporate sector, government securities, and the foreign exchange (FX) market). The index consists of 20 indicators selected from an initial list of 47 potential candidates. To check the performance of the indicators, sub-indices, and index, we use area under the receiver operating characteristic curve (AUROC) and logit tests. Each sub-index is assigned a weight that reflects the impact of each market on the financial system. This new FSI peaks during periods of crisis that are in line with the consensus of financial experts and performs better than the previous FSI, which makes it more attractive for policy decisions. In particular, the new FSI can be used as a monitoring tool for the macroprudential policy of the National Bank of Ukraine.
    Keywords: financial stability, financial stress index, indicator performance
    JEL: E44 G01 G18
    Date: 2020–09–22

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