nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒10‒16
nineteen papers chosen by
Maksym Obrizan, Kyiv School of Economics

  1. Risk Attitudes and Informal Employment in Ukraine By Dohmen, Thomas; Khamis, Melanie; Lehmann, Hartmut; Pignatti, Norberto
  2. Sympathies for Putin within the German public: A consequence of political alienation? By Lucca Hoffeller; Nils D. Steiner
  3. The development of the Central and Eastern European venture capital market in Europe By Judit Karsai
  4. Committing to Grow: Privatizations and Firm Dynamics in East Germany By Ufuk Akcigit; Harun Alp; André Diegmann; Nicolas Serrano-Velarde
  5. Why did Russian economy not collapse under sanctions: Pre-war evidence By Egorov, Konstantin
  6. Corporate credit growth determinants in Ukraine: bank lending survey data application By Anatolii Hlazunov
  7. Sparse Warcasting By Mihnea Constantinescu
  8. Nuclear Energy Acceptance in Poland: From Societal Attitudes to Effective Policy Strategies -- Network Modeling Approach By Pawel Robert Smolinski; Joseph Januszewicz; Barbara Pawlowska; Jacek Winiarski
  9. Serbia: European integration, energy, war in Ukraine By Vincent Joguet
  10. A Comparative Analysis of Information Communication Technologies Development: A Study of Azerbaijan and Balkan Countries By Niftiyev, Ibrahim
  11. A rational pension reform package: Hungary, 2025 By András Simonovits
  12. Introduction: social protection in the Western Balkans By Bartlett, Will; Uvalić, Milica
  13. Smart-working and smart cities: sustainability, social dialogue, complexity By Davide Antonioli; Marco Quatrosi
  14. The Effect of Government Cuts of Doctoral Scholarships on Science By Giulia Rossello
  15. Economic Consequences of a Regime Change: Overview By Assaf Razin; Efraim Sadka
  16. Evaluating the effect of a drastic cut in unemployment benefit duration on re-employment and wages of jobseekers By Márton Csilalg; Ágota Scharle; Balázs Munkácsy
  17. Dining and Wining During the Pandemic? A Quasi-Experiment on Tax Cuts and Consumer Spending in Lithuania By Mr. Serhan Cevik
  18. Cross-National Variations in Adolescent Sleep Patterns: A Time-Use Study By Garcia-Roman, Joan; Gracia, Pablo; Zerbini, Giulia
  19. Temperature exposure and sleep duration: evidence from time use surveys By Tamás Hajdu

  1. By: Dohmen, Thomas (University of Bonn and IZA); Khamis, Melanie (Wesleyan University); Lehmann, Hartmut (Leibniz Institute for East and Southeast European Studies (IOS)); Pignatti, Norberto (ISET, Tbilisi State University)
    Abstract: Using data from the four waves of the Ukrainian Longitudinal Monitoring Survey - ULMS (2003, 2004, 2007 and 2012), we analyze whether workers with a higher willingness to take risks are more likely to select into informal employment contracts. The data permit us to distinguish between five employment states: formal and informal self-employment, formal salaried employment, voluntary informal salaried employment, and involuntary informal salaried employment. The empirical evidence reveals risk attitudes as a strong causal determinant of the incidence of all types of informal employment but involuntary informal salaried employment. We also provide evidence that our results are not driven by reverse causality: risk attitudes impact on the choice of employment state whilst this latter does not influence risk attitudes. Linking risk attitudes with selection into employment states, we also can establish that along the formal-informal divide the Ukrainian labor market is predominantly segmented for salaried workers whilst it is integrated for the self-employed.
    Keywords: risk attitudes, informal employment, labor market segmentation, Ukraine
    JEL: D91 J42 J46 P23
    Date: 2023–09
  2. By: Lucca Hoffeller (Goethe-University Frankfurt, Germany); Nils D. Steiner (Johannes Gutenberg University Mainz)
    Abstract: The Russian invasion of Ukraine in February 2022 has sparked significant interest in the attitudes of the German public towards the Putin regime. In this article, we analyze survey data from a German panel to investigate the factors influencing sympathies towards Vladimir Putin following his decision to launch a war of aggression. Our central argument revolves around the role of political alienation, encompassing a lack of trust of political institutions in Germany, alongside more diffuse elements such as low support for democracy as a regime, a sense of estrangement from public discourse, and an inclination towards conspiracy thinking. Using longitudinal analyses, we provide empirical evidence consistent with our argument that political alienation—particularly in terms of low political trust and a proclivity for conspiracy thinking—plays a crucial role in driving sympathies for Putin and his regime. Against the backdrop of mounting attempts by Russia and other autocratic powers to influence discourses in Western societies via certain societal segments, our findings shed light on why individuals living in democratic nations may develop sympathetic attitudes towards autocratic leaders from abroad.
    Date: 2023–09–27
  3. By: Judit Karsai (Centre for Economic and Regional Studies)
    Abstract: The working paper examines the role and development of the Central and Eastern European venture capital sector in the five years between 2016 and 2020. This period includes both the end of the recovery after the economic crisis in 2008 and the downturn due to the coronavirus crisis in 2019. A statistical analysis of venture capital funds and investments in the CEE region confirms that, while the overall position of the region in Europe did not change over the period under review, the differences between countries in the region increased sharply. The northern part of the region rivals the most developed countries in Europe, the central part is driven by an abundance of public resources, while the venture capital sector in the south is only in its infancy. The size of the venture capital funds in the region is far below the European average, so the start-ups only have a chance to become successful if they are involved in the international flow of venture capital. The role of the government in the funds in the region is extremely high, but the selection between companies is therefore not based solely on market considerations. Rent-seeking behaviour goes against the essence of venture capital. As a result of the deterioration of the global political and economic situation, the entire Central and Eastern European region is losing its ability to attract capital.
    Keywords: Keywords: venture capital; private equity; acquisition; entrepreneurship; startup; innovation
    JEL: G23 G24 G28 L26 M13
    Date: 2023–08
  4. By: Ufuk Akcigit; Harun Alp; André Diegmann; Nicolas Serrano-Velarde
    Abstract: This paper investigates a unique policy designed to maintain employment during the privatization of East German firms after the fall of the Iron Curtain. The policy required new owners of the firms to commit to employment targets, with penalties for non-compliance. Using a dynamic model, we highlight three channels through which employment targets impact firms: distorted employment decisions, increased productivity, and higher exit rates. Our empirical analysis, using a novel dataset and instrumental variable approach, confirms these findings. We estimate a 22% points higher annual employment growth rate, a 14% points higher annual productivity growth, and a 3.6% points higher probability of exit for firms with binding employment targets. Our calibrated model further demonstrates that without these targets, aggregate employment would have been 15% lower after 10 years. Additionally, an alternative policy of productivity investment subsidies proved costly and less effective in the short term.
    Keywords: industrial policy, privatizations, productivity, size-dependent regulations
    JEL: D22 D24 J08 L25
    Date: 2023
  5. By: Egorov, Konstantin
    Abstract: This Policy Letter presents two event studies based on the pre-war data that foreshadows the remarkable way in which Russian economy was able to withstand the pressure from unprecedented package of international sanctions. First, it shows that a sudden stop of one of the two domestic producers of zinc in 2018 did not lead to a slowdown in the steel industry, which heavily relied on this input. Second, it demonstrates that a huge increase in cost of fuel called mazut in 2020 had virtually no impact on firms that used it, even in the regions where it was hard to substitute it for alternative fuels. This Policy Letter argues that such stability in production can be explained by the fact that Russian economy is heavily oriented toward commodities. It is much easier to replace a commodity supplier than a supplier of manufacturing goods, and many commodity producers operate at high profit margins that allow them to continue to operate even after big increases in their costs. Thus, sanctions had a much smaller impact on Russia than they would have on an economy with larger manufacturing sector, where inputs are less substitutable and profit margins are smaller
    Keywords: Sanctions, Russian Economy, Commodities
    Date: 2023
  6. By: Anatolii Hlazunov (National Bank of Ukraine)
    Abstract: This study investigates the determinants of corporate lending in Ukraine with a focus on distinguishing between supply and demand factors. I use a two-step process to build a credit standards index (CSI) based on disaggregated data from the Ukrainian bank lending survey (BLS). This paper describes factors that are significant for corporate lending development in Ukraine. It contributes to the existing literature by developing a measure of corporate loan supply and analyzing its ability to explain corporate credit growth in Ukraine by using bank-level BLS data. First, I employ a panel ordered logit model to transform categorical data into a continuous index that measures the likelihood of credit standards tightening. Second, I examine how this index affects new corporate lending in both national and foreign currencies. I find that the credit standard index is influenced by exchange rate movements (with depreciations leading to tighter standards), bank liquidity, and bank competition. I also demonstrate that the CSI has a negative impact on corporate loans in national currency, with a more pronounced effect for smaller banks
    Keywords: Supply and demand of corporate lending; bank lending survey data
    JEL: G22 E44 C33
    Date: 2023–09–14
  7. By: Mihnea Constantinescu (National Bank of Ukraine and University of Amsterdam)
    Abstract: Forecasting economic activity during an invasion is a nontrivial exercise. The lack of timely statistical data and the expected nonlinear effect of military action challenge the use of established nowcasting and shortterm forecasting methodologies. In a recent study (Constantinescu (2023b)), I explore the use of Partial Least Squares (PLS) augmented with an additional variable selection step to nowcast quarterly Ukrainian GDP using Google search data. Model outputs are benchmarked against both static and Dynamic Factor Models. Preliminary results outline the usefulness of PLS in capturing the effects of large shocks in a setting rich in data, but poor in statistics.
    Keywords: Nowcasting; quarterly GDP; Google Trends; Machine Learning; Partial Least Squares; Sparsity; Markov Blanket
    JEL: C38 C53 E32 E37
    Date: 2023–09–14
  8. By: Pawel Robert Smolinski; Joseph Januszewicz; Barbara Pawlowska; Jacek Winiarski
    Abstract: Poland is currently undergoing substantial transformation in its energy sector, and gaining public support is pivotal for the success of its energy policies. We conducted a study with 338 Polish participants to investigate societal attitudes towards various energy sources, including nuclear energy and renewables. Applying a novel network approach, we identified a multitude of factors influencing energy acceptance. Political ideology is the central factor in shaping public acceptance, however we also found that environmental attitudes, risk perception, safety concerns, and economic variables play substantial roles. Considering the long-term commitment associated with nuclear energy and its role in Poland's energy transformation, our findings provide a foundation for improving energy policy in Poland. Our research underscores the importance of policies that resonate with the diverse values, beliefs, and preferences of the population. While the risk-risk trade-off and technology-focused strategies are effective to a degree, we advocate for a more comprehensive approach. The framing strategy, which tailors messages to distinct societal values, shows particular promise.
    Date: 2023–09
  9. By: Vincent Joguet
    Abstract: The path of economic growth and development of Serbia, a country with a modern, diversified and outward-looking economy, depends at the same time on the fundamental reforms of its energy model, developments in the global economic environment, and a hypothetical rapidintegration into the European Union (EU).Serbia’s integration into the EU, the official governing principle of the ruling party despite its ambiguous rhetoric, could be the catalyst for stronger growth. But the convergence towards EU standards poses major challenges for the Government, starting with the strengthening of electoral democracy, the judicial system and the freedom of the media, along with the normalization of relations with neighboring Kosovo.
    Keywords: Balkans occidentaux
    JEL: E
    Date: 2023–09–22
  10. By: Niftiyev, Ibrahim
    Abstract: evelopment of information and communication technologies (ICTs) plays a pivotal role in promoting overall technological progress in a nation and enabling transformative changes in various sectors. By providing a solid foundation for digital infrastructure, ICTs facilitate innovation, increase productivity, and spur economic growth, placing a nation at the forefront of the global technological landscape. The main objective of this study is to compare Azerbaijan's ICTs development with that of Balkan countries. The growing cooperation between Azerbaijan and the Balkan countries is primarily focused on the energy sector, but there is limited understanding of the technological similarities and differences. To further enhance this cooperation, a comprehensive study of the technological infrastructure and the identification of areas of convergence and divergence are essential. This study will facilitate informed decision-making, pave the way for expanded cooperation in various sectors beyond the energy sector, and promote mutually beneficial relations between Azerbaijan and the Balkan countries. The results of this study, based on hierarchical cluster analysis (HCA), show that Azerbaijan is similar to Balkan countries such as Albania, North Macedonia, and Bosnia and Herzegovina when calculating the average values (between the years 2010 and 2020) for various ICTs variables (e.g., 4G coverage, Internet users). The HCA of recent years, like 2020, shows the same picture. This means that there are some similar patternsof ICTs usage and investment in these countries. At the same time, an oil-rich country like Azerbaijan could be comparable to the leading Balkan countries like Greece, Romania, Slovenia, etc. While this gives the Azerbaijani government food for thought, the findings also highlight the potential for cooperation and knowledge sharing between Azerbaijan and the Balkan countries in the field of ICTs, as they can learn from each other's experiences and work together to further improve their respective ICTs sectors.
    Keywords: Azerbaijani economy, Balkan countries, hierarchical cluster analysis, information communication technologies, technological change
    Date: 2023
  11. By: András Simonovits (Centre for Economic and Regional Studies)
    Abstract: As part of the Recovery and Resilience Plan (RRP, 2023), the Hungarian government pledged to reform the pension system. The main themes are sustainability and adequacy. The pension plan is to be discussed publicly and put into law by March 2025. The last detailed official pension study was the 2016-discussion paper of the Hungarian National Bank which should be updated. The present study is a private work which may contribute to the improvement of the current pension system. The current and the projected states of the Hungarian pension system are outlined, and then simple and complex reforms are formulated. Naming just two reform steps, I start with the simplest step: the return to public discussion steered by a revitalized Fiscal Council and end with the most complex: the introduction of the flexible (variable) retirement age.
    Keywords: Keywords: pension systems, pension policies, pension reforms, Hungary
    JEL: H55
    Date: 2023–08
  12. By: Bartlett, Will; Uvalić, Milica
    Abstract: This introductory essay situates the papers in this Thematic Section within the background of social policy development in the Western Balkans during the long period of transition following the break-up of former Yugoslavia. We identify three stages of transformation of social protection policies. The first, in the 1990s, was characterised by a continuation of the Yugoslav legacy of social insurance, while many work-based benefits were lost during privatisation. In the second stage, international institutions promoted individualised social protection policies, taken up in some countries but avoided in others. In the third phase, EU influence on social policies accompanied the prolonged EU accession process, with an emphasis on the introduction of work-care policies, early childhood education and the remediation of in-work poverty. The four papers address these issues in greater detail and provide a basis for re-evaluating progress with social protection policies in the Western Balkans in the future.
    Keywords: social expenditure; social protection; Western Balkans
    JEL: E6
    Date: 2022–09–15
  13. By: Davide Antonioli; Marco Quatrosi
    Abstract: In this paper, we present a comparative review of five countries: France, Italy, Poland, Romania, and Spain, focusing on the interplay between smart-working and smart cities. This aims to derive insights relevant for industrial relations. We spotlight the differences and similarities these nations share in the evolution of smart-working and smart cities. Our analysis dives deep into the territorial aspect, such as urban vs. rural areas, leveraging a comprehensive data set we've gathered. We conclude by addressing upcoming challenges in industrial relations.
    Keywords: Industrial relations; sustainability; labour organisation
    JEL: J08 J81 K31
    Date: 2023–09–21
  14. By: Giulia Rossello
    Abstract: I provide estimates of the impact of government cuts on PhD scholarships in Science. I leverage a unique quasi-natural experiment, the staggered cuts made by the Hungarian Government between 2010 and 2021 to expand Orban's political influence over the university system. The political aim of the cut ensures that it is exogenous to the economic cycle and to the scientific activity of universities. My analysis couples the complete enrolment records of doctoral students in the country around the years of scholarship cuts with a generalized difference-in-differences approach. I find that while government cuts of PhD scholarships have an ambiguous effect on students' attainments, the policy has a clear negative effect on Science. That is, the severe reduction of scholarships increases the chance of completing the PhD by 1 pp, and the effect is stronger for female students. However, this positive effect is counterbalanced by a reduction of a similar amount of entry rates for females and non-traditional students. This suggests that besides training might improve, or the system might become more efficient, this is at the expense of social inclusion. Additionally, the effects of cuts on scientific production are negative both in terms of quantity and quality. The productivity of doctoral students drops by 2 pp while their scientific quality decreases between 0.2 pp and 1 pp. My results suggest that the reduction of doctoral scholarships might produce efficiency in terms of student attainment but at the expense of social inclusion, scientific production, and quality.
    Keywords: Government Appropriation; Higher Education; Doctoral Scholarships; Event Study; Difference in Differences.
    Date: 2023–09–26
  15. By: Assaf Razin; Efraim Sadka
    Abstract: Regime changes toward autocracy typically reshape the judicial framework, effectively eroding the separation of powers and leading the nation toward an autocratic path. Recent instances of regime shift in Hungary, Poland, and Turkey offer templates of democratic erosion through manipulation and “democratic” means. Israel is in now amid a conflicting judicial overhaul. Whereas the manifestations of these patterns differ based on the distinct political, social, and historical contexts of each country, they invariably erode the Rule of Law and the democratic institutions. Their ideological stance sharply contrasts with the democratic norms upheld by major Western nations: the separation of powers, judicial autonomy, and the intricate web of political, civic, and social organizations cultivated since the Enlightenment. These century-old trends have been instrumental in fostering unprecedented prosperity. This paper overviews the economic consequences of regime changes from liberal democracy towards autocracy.
    JEL: F0 P1
    Date: 2023–09
  16. By: Márton Csilalg (Centre for Economic and Regional Studies, Budapest Institute for Policy Analysis); Ágota Scharle (Budapest Institute for Policy Analysis); Balázs Munkácsy (Budapest Institute for Policy Analysis)
    Abstract: We evaluate the effect of a drastic cut in potential benefit duration, reducing the maximum length of UI benefits from 9 to 3 months in Hungary at the end of 2011. We rely on rich longitudinal matched administrative data, which allows us to obtain information on a large sample of UI benefit claimants, and we use matching methods to evaluate the effect of the benefit cut. While UI claimants found jobs more rapidly as a result of the reform, this is a relatively small change, and we find only negligible negative effects of reemployment wages overall. The notion that changes are due to the reform is reinforced by the result that the effect on employment is largest for the group where the ‘bite’ of the reform was the largest. Our heterogeneity analysis reveals that the drastic cut seems to have reduced moral hazard for the most employable (those with tertiary education) and forced them to be ‘less picky’. This means that they took up lower wage jobs, but this effect was only temporary. Overall, the reform led to significantly lower income for over 60 percent of jobseekers, since the increase in labour income did not compensate for the large reduction in UI benefits paid; while only benefiting less than 10 percent of jobseekers, over a two-year horizon.
    Keywords: Keywords: unemployment insurance benefits; potential benefit duration; statistical matching
    JEL: J64 J65
    Date: 2023–09
  17. By: Mr. Serhan Cevik
    Abstract: Could temporary tax cuts stimulate consumer spending? Sector-specific measures to the COVID-19 pandemic provides a quasi-experimental variation in consumption patterns to infer a causal effect of tax policy changes. Using a novel dataset of daily debit and credit card transactions, this paper investigates the effectiveness of Lithuania’s decision to cut the standard value-added tax (VAT) rate from 21 percent to 9 percent on restaurants and catering services during the pandemic in a difference-in-differences regression framework. I obtain robust evidence that the VAT reduction has had no statistically significant impact on consumer spending on restaurants and catering services, while other policy interventions such as mobility restrictions and vaccination have more pronounced effects. These results have important policy implications in terms of the expected stimulative effect of sector-specific VAT reductions and the effective design of fiscal policy interventions to counter the impact of pandemics during which mobility is highly constrained.
    Keywords: Tax policy; value-added tax; consumer spending; pandemic; difference-in-differences; Lithuania
    Date: 2023–09–08
  18. By: Garcia-Roman, Joan; Gracia, Pablo (Trinity College Dublin); Zerbini, Giulia
    Abstract: INTRODUCTION: Adolescents’ poor sleep is a major public health problem that can be influenced by national context. This study adopts a novel 24-hour approach to examine cross-country variations in adolescents’ sleep patterns. METHODS: We use high-quality 24-hour time-diary data from the Multinational Time Use Study (N = 25, 248 diaries; mean age 15.4 years; 50.3% girls) across nine countries (i.e., Finland, France, Hungary, Italy, Netherlands, South Africa, South Korea, Spain, and the UK) to examine cross-country variations in adolescents’ sleep duration and timing, including sleep onset (i.e., start of the sleep period) and wake-up time (i.e., end of the sleep period). RESULTS: Results show large cross-national differences in sleep duration on both schooldays (from 7:21 hours in South Korea to 8:51 hours in South Africa) and non-schooldays (from 9:26 hours in South Korea to 10:27 hours in the Netherlands), but also in sleep timing, with earliest sleep onsets and wake-up times in South Africa, and latest sleep onsets and wake-up-times in Spain. The incidence of insufficient sleep duration (i.e., less than 8 hours) on schooldays varies from 19% in South Africa to 68% in South Korea. Participation in four key activities (i.e., eating, screen-based time, socializing, studying) during the two hours prior to adolescent sleep onset differs strongly across countries. Boys sleep slightly longer than girls in most countries, and younger adolescents sleep longer, with some relevant country variations. CONCLUSIONS: Adolescents’ sleep duration and timing, and the nature of activity patterns before sleep onset, differ markedly across national contexts.
    Date: 2023–09–06
  19. By: Tamás Hajdu (Centre for Economic and Regional Studies)
    Abstract: The Earth’s climate is projected to warm significantly in the 21st century, and this will affect human societies in many ways. Since sleep is a basic human need and part of everyone's life, the question of how temperature affects human sleep naturally arises. This paper examines the effect of daily mean temperature on sleep duration using nationally representative Hungarian time use surveys between 1976 and 2010. Compared to a mild temperature (5-10 °C), colder temperatures do not influence sleep duration. However, as daily mean temperatures rise, sleep duration starts to strongly decline. The effect of a hot (>25 °C) day is −12.4 minutes. The estimated sleep loss is especially large on weekends and public holidays, for older individuals, and for men. Combining the estimated effects with temperature projections of twenty-four climate models under four climate change scenarios shows that the warming climate will substantially decrease sleep duration. The projected impacts are especially large when taking into account of the effects of heatwave days. This study also shows that different groups in society are likely to be affected in significantly different ways by a warming climate.
    Keywords: Keywords: temperature; climate change; sleep; time use survey; Hungary
    JEL: I12 Q54
    Date: 2023–09

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