nep-tra New Economics Papers
on Transition Economics
Issue of 2022‒12‒12
ten papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Russian Agricultural Industry under Sanction Wars By Alexandra Lukyanova; Ayaz Zeynalov
  4. Inflation Persistence in Europe: The Effects of the Covid-19 Pandemic and of the Russia-Ukraine War By Guglielmo Maria Caporale; Juan Infante; Luis A. Gil-Alana; Raquel Ayestaran
  5. How do Economies in EU-CEE Cope with Labour Shortages? By Vasily Astrov; Richard Grieveson; Doris Hanzl-Weiss; Sebastian Leitner; Isilda Mara; Hermine Vidovic; Zuzana Zavarská
  6. EU Cohesion Policy on the Ground: Analyzing Small-Scale Effects Using Satellite Data By Julia Bachtrögler-Unger; Mathias Dolls; Carla Krolage; Paul Schüle; Hannes Taubenböck; Matthias Weigand
  7. Sensing Population Displacement from Ukraine Using Facebook Data: Potential Impacts and Settlement Areas By Rowe, Francisco; Neville, Ruth; González-Leonardo, Miguel
  8. Brothers in Arms: The Value of Coalitions in Sanctions Regimes By Sonali Chowdhry; Julian Hinz; Katrin Kamin; Joschka Wanner
  9. Privatizations Spark Socialist Backlash: Evidence from East Germany's Transformation By Anselm Hager; Moritz Hennicke; Werner Krause; Lukas Mergele
  10. Children and Female Employment in Mongolia By Elena Nikolova; Jakub Polansky

  1. By: Alexandra Lukyanova; Ayaz Zeynalov
    Abstract: The motivation for focusing on economic sanctions is the mixed evidence of their effectiveness. We assess the role of sanctions on Russian international trade flow after 2014. The main expectation was that the Russian economy would take a hit since it had lost its importers. We use a differences-in-differences model of trade flows data for imported and exported agricultural products from 2010 to 2020 in Russia. We assess the economic impact of the Russian food embargo on agricultural commodities, questioning whether it has achieved its objective and resulted in a window of opportunity for entrepreneurs as well as investors to take advantage of. We estimate the impact of sanctions by Russia imposed on European and American food exports that resulted in the food independence of Russia and facilitated the development of local businesses in the agriculture sector of Russia.
    Date: 2022–11
  2. By: Tamilina, Larysa
    Abstract: This study uses a comparative perspective to analyse social trust in Ukraine and Russia. Drawing upon the assumption that the two countries share many similarities, I focus on exploring the degree to which their trust formation processes resemble each other. I demonstrate that the modes of trusting behaviour differ significantly between both societies. I argue that these differences can be explained by the recent gap between Ukraine and Russia in their political and social systems. Special attention is paid to the impact of the war in the east of Ukraine on intensifying the divergence in how trust is built and preserved among individuals. The findings are used to question the pervasive effects of cultural similarities with Russia on the Ukrainian population's behavioural values and preferences.
    Keywords: Ukraine, culture, social trust, conflict, WVS.
    JEL: K00
    Date: 2022–09–30
  3. By: Tamilina, Larysa
    Abstract: This study focuses on comparing the identity formation processes between Ukraine and Russia. Drawing upon recent findings on the diversity of ethnicities, this analysis distinguishes between national, civic, and social identity types. World Values data are used to demonstrate that each of these identities is significantly influenced by the political values and preferences of the respondents. To define the political dimension, I discuss the contrasts between the two countries in terms of their political systems and dominant narratives of nationalism. My results suggest that of the wide range of the selected predictors, the value of voting, past participation in national elections, intolerance to control, and greater trust in the press essentially increase the likelihood of opting for Ukraine for at least one of the chosen identities. For Russia, strong evidence supports the current discourse on the imperial vision. My analysis demonstrates that individuals are more likely to identify themselves with Russia if they display greater trust in the government and support more authoritarian methods of governance such as tolerating surveillance and restrictions on freedom.
    Keywords: Ethnic identity, civil identity, social, identity, Ukraine, the WVS, political factors of identification
    JEL: Z10
    Date: 2022–10–30
  4. By: Guglielmo Maria Caporale; Juan Infante; Luis A. Gil-Alana; Raquel Ayestaran
    Abstract: This note analyses the possible effects of the Covid-19 pandemic and of the Russia-Ukraine war on the degree of inflation persistence in both the euro zone and the European Union as a whole (EU27). For this purpose a fractional integration model is estimated, first using the full sample and then recursively. Although the recursive analysis provides clear evidence of a significant increase in inflation persistence (especially in the case of the EU27, for which in addition to jumps an upward trend is clearly identifiable), the full-sample results imply long-lasting but only temporary effects of the two shocks being examined. These findings suggest that the required policy response to both shocks should also have a temporary nature.
    Keywords: inflation persistence, fractional integration, recursive estimation, Covid-19 pandemic, Russia-Ukraine war
    JEL: C22 E31
    Date: 2022
  5. 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); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The EU member states in Central and Eastern Europe (EU-CEE) have been experiencing increasing labour shortages, which only briefly subsided in the wake of the COVID-19 pandemic. Ongoing demographic decline suggests that labour shortages will only get stronger over time. 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 – despite the shrinking working-age population. 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 Balkans. Czechia, Hungary, Slovenia and Slovakia and most recently Poland have become net receivers of migrants, while in Bulgaria 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 the region 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: 2022–11
  6. By: Julia Bachtrögler-Unger; Mathias Dolls; Carla Krolage; Paul Schüle; Hannes Taubenböck; Matthias Weigand
    Abstract: We present a novel approach for analyzing the effects of EU cohesion policy on local economic activity. For all municipalities in the border area of the Czech Republic, Germany and Poland, we collect project-level data on EU funding in the period between 2007 and 2013. Using night light emission data as a proxy for economic development, we show that the receipt of a higher amount of EU funding is associated with increased economic activity at the municipal level. Our paper demonstrates that remote sensing data can provide an effective way to model local economic development also in Europe, where no comprehensive cross-border data is available at such a spatially granular level.
    Keywords: Regional Development, EU Cohesion Policy, Remote Sensing
    Date: 2022–11–29
  7. By: Rowe, Francisco (University of Liverpool); Neville, Ruth; González-Leonardo, Miguel
    Abstract: The escalation of conflict in Ukraine has triggered the largest refugee crisis in Europe since WWII. As of 17 August 2022, over 6.6 million people have fled Ukraine. Large-scale efforts have been made to collect data and measure the scale of forced population displacements, and identify the major receiving countries of these population flows. Current evidence has thus focused on providing a country level representation of the unfolding refugee crisis. Less is known about the subnational patterns of population displacement within Ukraine, and potential subnational settlement areas of the continuous flow of Ukrainian refugees in major receiving countries. Highly granular geographical data in real time are critical to these ends to ensure the appropriate delivery of humanitarian assistance where it is most needed. Drawing on digital trace data from Meta-Facebook, this paper aims to identify and assess the potential settlement areas and impacts of population displacements on the demographic and economic structures of sub-national communities within and outside Ukraine. We reveal large population losses in eastern, southern and northern Ukraine, particularly Khersonska (59%), Kharkivska (55%) and Kyiv (45%), and gains in western areas, specially in Livivska (16%). We also find reductions in female and young populations across the country, and increases in male and older populations in central and western regions. We identify likely settlement areas in some countries (Poland, Czechia, Slovakia, Hungary, Italy, Germany and Spain), noting that Ukrainian refugees are less likely to remain in countries which have recorded large refugee influxes but lack of local social networks, such as Romania and Turkey. We also reveal the potential impact of refugees moving to areas with old population structures and low unemployment. Yet, these impacts appear to differ across countries.
    Date: 2022–08–30
  8. By: Sonali Chowdhry; Julian Hinz; Katrin Kamin; Joschka Wanner
    Abstract: This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition set-ups, we (i) dissect welfare losses for sanction-senders and target; (ii) compare prospective coalition partners and; (iii) provide bounds for the sanctions potential — the maximum welfare change attainable — when sanctions are scaled vertically, i.e. across sectors up to an embargo, or horizontally, i.e. across countries up to a global regime. To gauge the significance of simulation outcomes, we implement a Bayesian bootstrap procedure that generates confidence bands. We find that the implemented measures against Iran and Russia inflicted considerable economic harm, yielding 32 – 37% of the vertical sanctions potential. Our key finding is that coalitions lower the average welfare loss incurred from sanctions relative to unilateral implementation. They also increase the welfare loss imposed on Iran and Russia. Adding China to the coalition further amplifies the welfare loss by 79% for Iran and 22% for Russia. Finally, we quantify transfers that would equalize losses across coalition members. These hypothetical transfers can be seen as a sanctions-equivalent of NATO spending goals and provide a measure of the relative burden borne by coalition countries.
    Keywords: Sanctions, embargoes, alliances, sectoral linkages
    JEL: F13 F14 F17 F51
    Date: 2022
  9. By: Anselm Hager; Moritz Hennicke; Werner Krause; Lukas Mergele
    Abstract: The fall of the Berlin Wall in 1989 brought the end of socialism, yet pro-socialist sentiment regained momentum surprisingly quickly across Eastern Europe. Why did voters move back to an ideology that was associated with unfree elections and lackluster economic performance? This paper points to the rushed privatization of East European economies as one plausible driver of the revival of socialist voting. Using micro-level data from East Germany, we show that firm privatizations led to a marked resurgence of the former Socialist Unity Party. We argue that this effect is likely due to perceived inequity: Socialist voting thrived whenever firms were sold to Western elites, which East Germans took as a sign that capitalism was not meritocratic.
    Keywords: privatization, socialist backlash, structural change, democratization
    Date: 2022
  10. By: Elena Nikolova; Jakub Polansky
    Abstract: Although a large body of literature has argued that motherhood has a profound and long-lasting negative effect on the employment and earnings of women, there is little evidence focusing on the post-communist region. This paper exploits the latest round of the EBRD-World Bank Life in Transition Survey (LiTS) and of the Mongolian National Statistics Office Household Socio-Economic Survey (HSES) to examine the correlation between the presence of children of different age categories in a family and female employment in Mongolia in 2016. We examine the availability of childcare, social norms and attitudes towards women, as well as household decision-making as potential explanations. We find that small children decrease the probability of female employment relative to women with no small children. In particular, women with two children aged one to six years are 21.5 percentage points less likely to be employed. Our results also suggest that cultural biases against women may be – at least partially – responsible for the low female employment levels which we uncovered. These results are unlikely to be driven by omitted variable bias.
    Date: 2022–07–20

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