nep-tra New Economics Papers
on Transition Economics
Issue of 2021‒03‒01
twelve papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. How do Economies in EU-CEE Cope with Labour Shortages? By Vasily Astrov; Richard Grieveson; Doris Hanzl-Weiss; Sebastian Leitner; Isilda Mara; Hermine Vidovic
  2. Growth, development, and structural change at the firm level: The example of the PR China By Heinrich, Torsten; Yang, Jangho; Dai, Shuanping
  3. Jobs Challenge in Slavonia, Croatia - A Subnational Labor Market Assessment By Christiaensen, Luc; Ferre, Celine; Ivica, Rubil; Matkovic, Teo; Sharafudheen, Tara
  4. Revisiting the determinants of house prices in China’s megacities: cross-sectional heterogeneity, interdependencies and spillovers By Liu, Chunping; Ou, Zhirong
  5. Elasticity of Marginal Utility of Consumption: The Equal-Sacrifice Approach Applied for the Czech Republic By Milan Scasny; Matej Opatrny
  6. Regional and Sectoral Structures and Their Dynamics of Chinese Economy: A Network Perspective from Multi-Regional Input-Output Tables By Tao Wang; Shiying Xiao; Jun Yan; Panpan Zhang
  7. The impact of "Family 500+" programme on household incomes, poverty and inequality By Brzezinski, Michal; Najsztub, Mateusz
  9. China’s state-owned enterprises and competitive neutrality By Alicia García-Herrero; Gary Ng
  10. Factors Affecting Recent U.S. Tariffs on Imports from China By Aaron Flaaen; Kathryn Langemeier; Justin R. Pierce
  11. Can shocks to risk aversion explain business cycle fluctuations in Bulgaria (1999-2018)? By Aleksandar Vasilev
  12. Mutual Embeddedness: The Architecture of Civil-Military Relations in Vietnam By Vuving, Alexander

  1. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The EU member states in Central and Eastern Europe (EU-CEE) were experiencing rising labour shortages prior to the COVID-19 pandemic, and ongoing demographic decline means that the issue is likely to resurface once the pandemic is over. As a result, the bargaining power of labour has increased, wages have been generally rising ahead of labour productivity, and industrial action (strikes) – the level of which has remained low in recent decades – has emerged in some instances. In the face of labour and skill shortages, people have been investing in education. The share of employees with tertiary education has increased and vocational training has gained in importance, although active labour market policies have been used only selectively. Employers have increasingly been investing in fixed assets, especially in manufacturing, and the degree of robotisation has risen strongly. Despite domestic concerns that automation would generate massive job losses, our findings suggest that capital deepening has taken place faster where labour was in higher demand. Thus, labour was not substituted with capital, but rather the complementary effect prevailed. Employment actually increased in EU-CEE over the past two decades. Employers could hire not only the formerly unemployed, but also the formerly inactive, and used the relaxed immigration policies to attract foreign workers, especially from Ukraine and the Western Balkan countries. Czechia, Hungary, Slovenia and Slovakia have become net receivers of migrants, while in Bulgaria and Poland immigration largely compensates for the natives who go abroad. However, immigration from non-European countries as a general solution to the problem of labour shortages in EU-CEE is highly problematic in the current domestic political context. Overall, both our findings for the EU-CEE region over recent years and the experience of Western Europe during the ‘golden age’ (1950-1973) suggest that labour shortages are not in themselves an obstacle to rapid structural change and income growth. However, for such an economic model to be sustainable, more active government policies will be needed, such as greater public investment in education and training, higher minimum wages in order to encourage automation, and more extensive welfare networks in order to deal with the possible negative short-run side-effects of automation.
    Keywords: labour shortages, trade unions, migration policy, active labour market policy, investment, vocational training, ‘golden age’, populism
    JEL: J21 J23 J24 J31 J52 J61 N14 N34
    Date: 2021–02
  2. By: Heinrich, Torsten; Yang, Jangho; Dai, Shuanping
    Abstract: Understanding the microeconomic details of technological catch-up processes offers great potential for informing both innovation economics and development policy. We study the economic transition of the PR China from an agrarian country to a high-tech economy as one example for such a case. It is clear from past literature that rapidly rising productivity levels played a crucial role. However, the distribution of labor productivity in Chinese firms has not been comprehensively investigated and it remains an open question if this can be used to guide economic development. We analyze labor productivity and the dynamic change of labor productivity in firm-level data for the years 1998-2013 from the Chinese Industrial Enterprise Database. We demonstrate that both variables are conveniently modeled as Lévy alpha-stable distributions, provide parameter estimates and analyze dynamic changes to this distribution. We find that the productivity gains were not due to super-star firms, but due to a systematic shift of the entire distribution with otherwise mostly unchanged characteristics. We also found an emerging right-skew in the distribution of labor productivity change. While there are significant differences between the 31 provinces and autonomous regions of the PR China, we also show that there are systematic relations between micro-level and province-level variables. We conclude with some implications of these findings for development policy.
    Date: 2021
  3. By: Christiaensen, Luc; Ferre, Celine; Ivica, Rubil; Matkovic, Teo; Sharafudheen, Tara
    Abstract: A thriving region until the early 1990s, Slavonia, the eastern region of Croatia, has been confronted with stagnation and decline, ageing and outmigration as well as impoverishment ever since. This followed Croatia's homeland war of 1991-1995, with Slavonia one of the frontlines, economic restructuring of its state-led economy during the 1990s and 2000s and the global economic crisis of the late 2000s. More recently, after Croatia's EU accession in 2013 and coinciding with the economic upswing since 2014 in Croatia and the EU, Slavonia's labor market has started to tighten, with registered vacancies now exceeding the number of job seekers for highly educated as well as some unskilled and semi-skilled occupations. However, inactivity and unemployment remain high. In 2017, the share of the working-age population in work was only 51 percent, 10 percentage points below the rest of Croatia (61 percent) and 17 percentage points below the 2017 EU28 average. A legacy of war, limited availability of care services, and especially lower education levels explain an important part of Slavonia's much higher inactivity and unemployment. On the demand side, labor productivity in Slavonia's firms is systematically lower than in the rest of the country (except in agriculture and forestry), also consistent with Slavonia's sizeablewage gap. This, together with general disenchantment of the Slavonian population with the economicand business environment, has prompted outmigration. At the same time, a small number of firms alsooutperform their sectoral competitors elsewhere in Croatia, signaling Slavonia's potential.Looking ahead, private sector job creation remains a top priority, especially focusing on Slavonia's lower educated, who make up the bulk of the unemployed and inactive. This especially requires a reduction in the regulatory burden and an increase in Slavonian firms' competitiveness, which will also help to close the substantial wage gap with the rest of Croatia. Given the large share of its population in agriculture and forestry-related activities (close to 30 percent), Program Slavonia's current focus on agriculture and forestry is clearly warranted. With Slavonia's longstanding history and labor force experience in manufacturing and the rising number of vacancies in this sector, so is attention to manufacturing.
    Keywords: Labor Market; Program for International Student; information and communication technology; Technical and Vocational Education; female labor market participation; Life in Transition Survey; participation in higher education; inefficient allocation of resource; active labor market program; private sector job creation; small and medium enterprise; working-age population; unemployment rate; agriculture and forestry; share of employment; rural area; labor productivity; Early childhood education; upper secondary education; working age population; state owned enterprise; availability of care; old age group; global economic crisis; household budget survey; labor market performance; structure of employment; public sector employment; total employment; care for child; household survey data; skill development program; child care options; agriculture and industry; access to care; labor market shortages; unpaid family worker; flexible work arrangement; human capital formation; Gender and Education; high failure rate; privileges and immunity; income from employment; labor market need; source income; compulsory military service; labor force participation; source of income; register unemployment rate; high unemployment rate; depreciation and amortization; earnings before interest; local private sector; local labor market; access to finance; demand for labor; people with disability; decline in unemployment; foreign direct investment; labor market situation; human capital stock; labor market dynamic; private sector wage; global financial crisis; wage employment; firm size; financial agency; wage gap; female employment; early retirement; work experience; skill mismatch; married woman; Food Services; Public Employment; probit regression; disability pension; high share
    Date: 2019–07–01
  4. By: Liu, Chunping (Nottingham Trent University); Ou, Zhirong (Cardiff Business School)
    Abstract: We revisit the determinants of house prices in Chinaís megacities. Previous work on similar topics fails to account for the widespread cross-sectional heterogeneity and interdependencies, despite the importance of them. Using a PVAR estimated by the Bayesian method allowing for these features, we Önd each city is rather unique, especially on the extent to which local house prices are disturbed by external house price shocks. The spillovers are mainly due to direct housing market interdependence, which seems related more to demand before 2010, but more to supply thereafter due to property purchase restrictions. The new evidence we establish therefore suggests that city-level stabilisation of house prices should fully respect local features, including how local markets respond to external disturbances.
    Keywords: House price; Chinese megacities; PVAR; cross-sectional heterogeneity and interdependencies
    JEL: C11 R15 R31
    Date: 2021–02
  5. By: Milan Scasny (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic; Environmental Centre, Charles University, Czech Republic); Matej Opatrny (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic; Environmental Centre, Charles University, Czech Republic)
    Abstract: We provide the first estimate of the elasticity of marginal utility of consumption, η, for a post-transition economy in the Central & Eastern European region, the Czech Republic, based on individual-level data. The parameter η is a crucial component of the social discount rate (SDR), which determines the inter-temporal allocations that are acceptable to society. Using the equal-sacrifice income tax approach, we obtain a central estimate of η at 1.34, which varies between 1.24 and 1.42 within the study period that covers 2005-2019. Moreover, the estimate of elasticity of marginal utility of consumption differs between various income groups and employment status. Importantly, the magnitude of η estimate depends on whether social benefits are included into gross income or social and health insurance payments are included in the definition of taxes. Our results suggest that SDR for the Czech Republic may be around 3–5 percent for a reasonable pure rate of time preference and positive forecast for per capita consumption growth.
    Keywords: elasticity of marginal utility of consumption; equal-sacrifice approach; income tax schedules; marginal tax rate; social discount rate
    JEL: D60 D61 H24 R13
    Date: 2021–02
  6. By: Tao Wang; Shiying Xiao; Jun Yan; Panpan Zhang
    Abstract: A multi-regional input-output table (MRIOT) containing the transactions among the region-sectors in an economy defines a weighted and directed network. Using network analysis tools, we analyze the regional and sectoral structure of the Chinese economy and their temporal dynamics from 2007 to 2012 via the MRIOTs of China. Global analyses are done with network topology measures. Growth-driving province-sector clusters are identified with community detection methods. Influential province-sectors are ranked by weighted PageRank scores. The results revealed a few interesting and telling insights. The level of inter-province-sector activities increased with the rapid growth of the national economy, but not as fast as that of intra-province economic activities. Regional community structures were deeply associated with geographical factors. The community heterogeneity across the regions was high and the regional fragmentation increased during the study period. Quantified metrics assessing the relative importance of the province-sectors in the national economy echo the national and regional economic development policies to a certain extent.
    Date: 2021–02
  7. By: Brzezinski, Michal; Najsztub, Mateusz
    Abstract: We use the microsimulation approach and household budget survey data from 2015 to estimate the short-term impact of the “Family 500+” programme on household incomes, poverty and inequality. The results suggest that the programme will have the strongest impact on the incomes of households at the lower end of income distribution. Extreme consumption poverty in the whole population is reduced in the range from 35 to 37%, while child poverty in the range from 75 to 100%, depending on the choice of equivalence scale and assumptions about changes in household expenditures. The paper shows also that the programme will reduce the Gini index of income inequality in Poland by a few percentage points. The programme can lead to a lower risk of extreme poverty for households with children as compared to small households (e.g. single-person households). Analysis based on certain equivalence scales suggests that even before the implementation of the “Family 500+” programme extreme poverty among households with children was comparable or lower than among one-person or childless households. The progressive impact of “Family 500+” programme on income distribution in Poland may be reduced in the longer run if labour market activity of low income households will be affected negatively.
    Date: 2021–02–14
  8. By: Anton N. Afanasiev (National Research University Higher School of Economics); Ksenia V. Komosa (National Research University Higher School of Economics)
    Abstract: The article examines the self-identification and professional values of the university community in post-Soviet Russia. On the basis of the corpus of the interviews, which were recorded by the Poletayev Institute for Theoretical and Historical Studies in the Humanities (Moscow) in the 2010s, the authors analyse how the contemporary Russian scholars consider the problems of university autonomy and university management, as well as the criteria to define an ideal University and an ideal Professor. Instead of the unique perceptions on the specifics of research and educational characteristics of university space and people, the present investigation represents the problematization of the basic definitions of university and its purposes by the contemporary Russian scholars.
    Keywords: oral history, history of post-soviet universities, university community, academic persona
    JEL: Z
    Date: 2021
  9. By: Alicia García-Herrero; Gary Ng
    Abstract: As China’s economic weight continues to grow, so does the global impact of its companies. Chinese state-owned enterprises (SOEs) produce a large share of Chinese goods and services. Given their importance both in China and increasingly globally, it should be measured whether SOEs introduce distortions into markets and how significant those distortions are. Foreign governments negotiating trade or investment deals with China need this information so they can better measure...
    Date: 2021–02
  10. By: Aaron Flaaen; Kathryn Langemeier; Justin R. Pierce
    Abstract: The period from January 2018 to September 2019 saw an unprecedented increase in tariffs placed on U.S. imports, especially on those originating in China. We document the extent to which tariff exclusions and other factors lowered the average effective tariff on Chinese goods. Given that the large majority of tariff exclusions expired on December 31, 2020, our analysis also indicates that U.S. effective tariffs on Chinese goods increased notably at the start of 2021.
    Date: 2021–02–17
  11. By: Aleksandar Vasilev (Lincoln International Business School, UK.)
    Abstract: Stochastic risk aversion is introduced into a real-business-cycle setup augmented with a detailed government sector. The model is calibrated to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). The quantitative importance of the presence of shocks to risk aversion is investigated for the propagation of cyclical fluctuations in Bulgaria. In particular, allowing for a stochastic risk aversion in the setup improves the model fit vis-a-vis data by increases variability of employment and decreasing the variability of investment. However, those improvements are at the cost of decreasing the volatility of investment and wages.
    Keywords: business cycles, stochastic risk aversion, Bulgaria.
    JEL: E24 E32
    Date: 2021–01
  12. By: Vuving, Alexander
    Abstract: This chapter explores the architecture of civil-military relations in Communist Party-ruled Vietnam. Contrary to the dominant paradigm of civil-military relations in the West, civil-military relations in Vietnam follow a very different logic, that of the Leninist system. The relationship between the military and the party-state in Vietnam is characterized by mutual embeddedness. This is not a zero-sum game as the concept of civilian control implies. In the Leninist system, the military's politicization, political influence and involvement in politics are critical for the Communist Party's hegemony. The Party's absolute, direct, and comprehensive control of the military is the core of civil-military relations in the Leninist system. However, Party control is a reciprocal relationship that gives military leaders more say and more privileges than they would have under more democratic conditions. This reciprocity explains the system’s endurance as well as its internal stability. The Vietnam People's Army is deeply politicized and the political control of the military serves the interests of both the Party and the military leadership. Barring a major political reform in the Vietnam Communist Party itself, the Vietnam People's Army will remain more political than professional and commercial.
    Date: 2021–02–20

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