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on Transition Economics |
| By: | Ravi Kanbur (Cornell University, U.S.A.); Yue Wang (Cornell University, U.S.A.); Xiaobo Zhang (Peking University and International Food Policy Research Institute, China) |
| Abstract: | The high inequality in China has been a focus of interest for policy makers and researchers. However limited work has been done to evaluate its latest trend since 2010. With the change of the economic structure and new policy tools carried out recent years, a revisit of the Chinese inequality should give us the latest information about its evolution and the impacts on income distribution of these economic and policy changes. This paper argues that after a quarter century of sharp and sustained increase, Chinese inequality is now plateauing and even turning down. The argument is made using a range of data sources and a range of measures and perspectives on inequality. The evolution of inequality is further examined through decomposition by income source and population subgroups. Preliminary explanations are provided for these trends in terms of shifts in policy and structural transformation of the Chinese economy. The narrative on Chinese inequality now needs to focus on the reasons for this great turnaround. |
| Keywords: | Chinese Inequality Turnaround, Inequality Data, Inequality Trends, Inequality and Structural Transformation, Harmonious Development and Government Policy. |
| JEL: | D31 D63 O15 O53 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2017-433&r=tra |
| By: | Van Assche, Ari; Van Biesebroeck, Johannes |
| Abstract: | Functional upgrading occurs when a firm acquires more sophisticated functions within an existing value chain that require a higher skill content. In this paper, we analyze if there is evidence of this type of upgrading in China's export processing regime by investigating dynamics in the relative prevalence of Import & Assembly (IA) versus Pure Assembly (PA) processing trade over the period 2000-2013. Firms in both regimes provide similar manufacturing services to foreign companies, but IA firms also conduct the sophisticated tasks of quality control, searching, financing and storing imported materials. Consistent with a trend of functional upgrading, we show that the share of IA trade in total processing trade has increased rapidly during the period 2000-2006, both overall and within product categories. Furthermore, we find that this trend has gone hand-in-hand with improvements in a sector's labor productivity and unit values. Against expectations, we find that this process has slowed down notably during the period 2006-2013. |
| Keywords: | global value chains; industrial development; Manufacturing |
| JEL: | D2 F1 L2 O1 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11967&r=tra |
| By: | Dreger, Christian (DIW Berlin); Zhang, Yanqun (Chinese Academy of Social Sciences) |
| Abstract: | Faster urbanization plays a key role in the Chinese economic transformation. However, at the Lewis turning point, the hukou institution constitutes a serious risk to the process, as it restricts the access of migrants to public services offered by cities. To attract further migration, firms started to accept a premium on top of the wage. Thus, the social discrimination introduced by the hukou system is partially compensated by the reactions of market participants, as migrant workers receive additional pay. Based on huge cross sections of private households, this paper provides insights into the size and the evolution of the wage premium. After controlling for standard wage determinants, such as sex, education, experience and ownership of firms, we find that the premium amounts to 7 percent of the hourly wage. Because of the premium, the share of non-wage labor costs is on the rise, especially for low-skilled migrants. To avoid further distortions and reduce inefficiencies, the hukou status should be unified. Migrants should obtain urban hukou as long as they live in cities. They should keep their land use rights when they are in the rural areas. Otherwise, the system could constitute a significant barrier for further urbanization. The removal of institutional bias could restore the link between wages and productivity and improve the allocation of labor. |
| Keywords: | Chinese economic transformation, wage premium, hukou reform |
| JEL: | J30 R23 C23 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10720&r=tra |
| By: | Ho, Sin-Yu; Njindan Iyke, Bernard |
| Abstract: | The impact of financial development on poverty reduction has received attention in the literature recently. While the connection between financial development and poverty may appear straight forward in theory, in empirics it may be much complicated. This study attempted at empirically assessing the causal links between financial development and poverty reduction in China for the period 1985–2014. The study used the Toda-Yamamoto causality test to avoid pretesting bias that has featured majority of the existing studies. The study utilized two standard proxies for financial development, namely: the domestic private credit by banks as percentage of GDP, and money supply (M2) as percentage of GDP; and a standard proxy for poverty reduction namely: the household final consumption expenditure per capita growth (annual percentage). The study found a bidirectional causal flow between financial development and poverty reduction, implying that the causal flow between these important variables is independent of the proxy for financial development. This means that financial sector reforms and poverty reduction programmes are more of “win-win” strategies in the case of China. Therefore policymakers in China should continue to implement robust financial sector reforms and poverty reduction strategies. |
| Keywords: | Financial Development; Poverty Reduction; Toda-Yamamoto Test; China |
| JEL: | C32 E44 I32 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78922&r=tra |
| By: | Carlos Casanova; Alvaro Ortiz; Tomasa Rodrigo; Le Xia; Joaquín Iglesias |
| Abstract: | We develop an indicator to track vulnerability sentiment in China. In order to ensure robustness and depth, we use a combination of traditional macroeconomic and financial time series with textual analysis using Big Data techniques.The index is composed by the following dimensions: state owned enterprises; shadow banking; housing market bubble and exchange rate market. |
| Keywords: | Asia , China , Economic Analysis , Regional Analysis , Watch , Working Paper |
| JEL: | C55 C38 C43 D81 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:17/13&r=tra |
| By: | Asta Mikalauskiene (Vilnius University); Dalia Streimikiene (Vilnius University) |
| Abstract: | Lithuania, Latvia and Estonia successfully implemented Kyoto protocol commitments in the period from 2008 to 2012. Moreover, targets of the Europe 2020 strategy, in which countries committed to reduce the greenhouse gas emissions of 1990 by 20% until 2020 are also achievable for Lithuania, Latvia and Estonia. It is forecasted that the reduction of GHG emissions in 2020 in the Baltic States will be much higher than EU average target. Baltic States have achieved significant reduction of GHG emissions during 1990-2015, especially in energy sector which is the major sources of GHG emissions in Baltic States. During the period 1990?2013, Lithuania?s gross domestic product (GDP) per capita increased by 56.8 per cent, while GHG emissions per GDP and GHG emissions per capita decreased by 66.7 and 47.8 per cent, respectively. The major reason for the decrease in per capita emissions are the structural changes in the energy sector. At the same period, Latvia?s population decreased by 24.4 per cent, GDP per capita increased by 64.0 per cent, while GHG emissions per GDP and GHG emissions per capita decreased by 66.4 and 44.8 per cent, respectively. Latvia?s economy grew rapidly in the period 2000?2007, with a GDP increase of 82.0 per cent. Economic growth rates and climatic conditions have been the most important drivers for GHG emissions trends in Latvia. Estonia?s gross domestic product (GDP) per capita increased by 85.1 per cent, while GHG emissions per GDP and GHG emissions per capita decreased by 65.1 and 35.3 per cent, respectively. Such significant GHG emission reduction in Estonia was driven by restructuring of the economy and efficiency improvement in the energy industry and energy demand sectors. There is a significant decoupling of emissions from economic growth in all three countries however countries have very different energy supply balances and implemented various climate change mitigation policies. |
| Keywords: | GHG emissions, drivers, energy sector, Baltic States |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:4507194&r=tra |
| By: | Ke Wang; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Zhimin Huang |
| Abstract: | Appropriate measurement of environmental and emission abatement efficiency is crucial for assisting policy making in line with constructing a more sustainable society. The majority of traditional approaches for environmental efficiency measures take pollutant emissions as either undesirable outputs or environmentally determined inputs which suffer a limitation of not satisfying the physical laws that regulate the operation of economic and environmental process. In this study, we propose a DEA based approach which is combined with the materials balance principle (MBP) that accounts for laws of thermodynamics to jointly evaluate environmental and abatement efficiency. This approach is along the line of weak G-disposability based modelling but is an extension to existing models that in our approach the identification of possible adjustments on polluting mass bound in inputs and outputs, and potential adjustments on abatement of pollutants are all included. The overall environmental efficiency measured by this approach is decomposed into the measures of technical efficiency, polluting inputs allocative efficiency, and polluting and non-polluting inputs allocative efficiency with the emphasizing of incorporating pollutant abatement activities. Accordingly, new measures of abatement efficiency are proposed which help to identify the pollutant abatement potential that can be achieved from end-of-pipe abatement technology promotion associated with polluting input quality promotion and input resources reallocation. Furthermore, several global Malmquist productivity indices for identifying the changes on environmental and abatement efficiency are proposed. This approach is applied to China¡¯s thermal power industry and some empirical results verifying the necessity of introducing the MBP are obtained. |
| Keywords: | OR in environment and climate change; Electricity generation; Emission reduction; Materials balance principle; Pollutant abatement |
| JEL: | Q54 Q40 |
| Date: | 2017–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:108&r=tra |
| By: | Klingelhöfer, Jan; Sun, Rongrong |
| Abstract: | This paper studies the Chinese case to show that a central bank can use macroprudential policies to play an active role in safeguarding financial stability. The narrative approach is used to disentangle macropudential policy actions from those monetary. We show that many monetary policy tools, such as the reserve requirement, window guidance, supervisory pressure and housing-market policies, can be used for macroprudential purposes. Time series are constructed to measure macroprudential tightness/ease. The VAR estimates suggest that macroprudential policy has immediate and persistent impact on the credit cycle, but no significant effect on output. Macroprudential policy can be used either alone to retain financial stability, without harming the real economy; or as a complement to monetary policy to offset the buildup of financial vulnerabilities resulted from a monetary easing. Our analysis suggests that it is the multi-instrument framework that enables a central bank to achieve both macroeconomic and financial stability objectives. This finding has implications for the current debates on the post-crisis central bank’s operating regime. |
| Keywords: | macroprudential policy, monetary policy, credit cycle, financial stability, China |
| JEL: | E44 E52 E58 |
| Date: | 2017–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79033&r=tra |
| By: | Hyeongwoo Kim; Wen Shi |
| Abstract: | This paper empirically investigates the determinants of the two key benchmark interest rates in China using an array of constrained ordered probit models for quarterly frequency data from 1987 to 2013. Specifically, we estimate the behavioral equation of the People's Bank of China that models its decision-making process for revisions of the benchmark deposit rate and the lending rate. Our findings imply that the PBC's policy decisions are better understood as responses to changes in inflation and money growth, while output gaps and the exchange rate play negligible roles. We also implement in-sample fit analyses and out-of-sample forecast exercises. Our empirical findings show robust and reasonably good performances of our models in understanding dynamics of these benchmark interest rates. |
| Keywords: | Monetary Policy; People's Bank of China; Ordered Probit Model; Deposit Rate; Lending Rate; In-Sample Fit; Out-of-Sample Forecast |
| JEL: | E52 E58 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2017-04&r=tra |
| By: | Chen, Xi (Yale University); Eggleston, Karen (Stanford University); Sun, Ang (Central University of Finance and Economics) |
| Abstract: | China launched a new rural pension scheme (hereafter NRPS) for rural residents in 2009, now covering almost all counties with over 400 million people enrolled. This implementation of the largest social pension program in the world offers a unique setting for studying the economics of intergenerational relationships during development, given the rapidity of China's population aging, traditions of filial piety and co-residence, decreasing number of children, and dearth of formal social security, at a relatively low income level. We draw on rich household surveys from two provinces at distinct development stages – impoverished Guizhou and relatively well-off Shandong – to better understand heterogeneity in the impact of pension benefits. Employing a fuzzy regression discontinuity design, we find that around the pension eligibility age cut-off, the NRPS significantly reduces intergenerational co-residence, especially between elderly parents and their adults sons; promotes pensioners' healthcare service consumption; and weakens (but does not supplant) nonpecuniary and pecuniary transfers across three generations. These effects are much larger in less developed Guizhou province. |
| Keywords: | social pensions, intergenerational relationships, regional comparisons, coresidence, old-age care, service consumption, transfers |
| JEL: | H55 I18 J14 R28 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10731&r=tra |
| By: | Khusainov, Bulat; Kireyeva, Anel; Sultanov, Ruslan |
| Abstract: | The aim of the study is to assess the asymmetry of influence of factors of economic growth of national economies, which are included in the integration. Unlike previous research, the scientific significance of the obtained results consists in the use of a new method of study – external demand as a factor of economic growth, disaggregated into two components. The first is net exports mutual trade in goods within integration associations. The second is net exports of foreign trade in goods outside the integration. By use of these methods we have evaluated the contribution of these factors on economic growth of the Customs Union and the Common Economic Space (CU/CES), as well as Kazakhstan, Russia and Belarus. In the conducted analysis of scientific research was based on the fact that the economies of the member (CU/CES) are very different in scale, economic potential and volume of foreign trade. Based on this research we conclude: integration is developing successfully and efficiently only with the rise of the national economies of the member countries; to enhance economic growth and competitiveness of the countries of the Eurasian integration it is necessary to increase the volume of mutual trade of member countries of this integration. |
| Keywords: | Globalization; Integration; Economic Growth; External Demand; Domestic Demand; Net Exports Trade |
| JEL: | F1 F10 F13 F15 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78841&r=tra |
| By: | Pollitt, M.; Yang, C-H.; Chen, H. |
| Abstract: | We begin with a brief background to the current Chinese power market reforms which began with the State Council No.9 Document of March 2015. We introduce 14 different electricity reform elements from international experience. Under each of these reform elements we will discuss: its theoretical significance; general reform experiences with it; and its application in the Chinese context. Our motivation is how China might bring down the currently high industrial price of electricity. We identify four promising sources of price reduction: the introduction of economic dispatch of power plants; rationalisation of electricity transmission and distribution; reduction of high rates of investment; and rebalancing of electricity charges towards residential customers. We draw out some overall lessons and identify some important points for future research into Chinese power market reform. |
| Keywords: | power market reform, international experience, China, industrial electricity price |
| JEL: | L94 |
| Date: | 2017–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1713&r=tra |
| By: | Lucie Kureková (Office of Government); Pavlína Hejduková (University of West Bohemia, Faculty of Economics, Department of Finance and Accounting) |
| Abstract: | The aim of this paper is to define the relationship between migration, income, and unemployment rates, and therefore estimate these relationships using vector autoregression and the Granger causality test. This study focused on inter-regional migration at NUTS3 level in the Czech and Slovak Republics. The analysed period is from the year 2004 to 2013, and the final panel data is set for one variable, and therefore contains a total of 220 observations. According to the results, the regional migration in the Czech and Slovak Republics was determined by income differences and it is in accordance with the neoclassical theory. The causal relation was not confirmed for differences in unemployment rate. The changes of income and unemployment rates in the Czech Republic and Slovakia were not caused by migration. These results do not support conclusions of the neoclassical model of migration. |
| Keywords: | globalization, migration, panel data, Granger Causality Test, economic indicators, NUTS3 |
| JEL: | C01 J60 F02 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:4507339&r=tra |
| By: | Jacek Liwinski (University of Warsaw) |
| Abstract: | Although it has been over 40 years since labour economists started testing human capital vs. signalling explanation of the wage premium from education, the debate is still going on and authors keep on proposing new methods of testing. The human capital theory postulates that investment in education enhances the productive capacity of individuals, while according to the signalling hypothesis the value of a graduation diploma follows from the fact that it signals innate abilities of its holder. We apply the approach proposed by Wiles to test for the signalling hypothesis and, in particular, to find out if there is a positive relation between education and productivity. For this purpose, we construct a job match index based on information if school provided knowledge and skills are useful at work and the job performed is relevant to the field of study. Then we check if the quality of job matching is related to wages of graduates in Poland. To answer this question, a wage equation was estimated using OLS on the basis of data from a representative, nationwide tracer survey of Poles who left secondary schools or graduated from higher education institutions over the period of 1998-2005. We find out that knowledge and skills acquired in the course of formal education bring wage benefits only to university graduates. Besides, this group receives a wage premium, which may be attributed to their high innate abilities. In sum, the outcomes are consistent with the weak signalling hypothesis, since they show that tertiary education signals a high level of innate abilities and at the same time it provides knowledge and skills which enhance individual productivity at work. Besides, we find evidence of the strong signalling hypothesis with regard to the secondary vocational schools leavers. |
| Keywords: | education, human capital, signalling, job matching, wage equation |
| JEL: | J24 J31 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:4507121&r=tra |
| By: | Bozena Kaderabkova (Czech Technical University in Prague); Ond?ej Ptá?ek (University of Economics, Prague, Faculty of Economics) |
| Abstract: | The paper analyses later stage venture capital and growth capital investment activity in the Czech Republic. These segments of private equity investments follow up with early stage venture capital segments such as start-up capital. Our earlier research has shown that the development of the Czech venture capital market does not comply with European activity over 2007-2015. This paper further enhances the research for this following private equity segments and provides comparison with early stage venture capital market development. The later stage and growth capital investments follow the overall European trends with only more substantial jumps in investment activity caused by relatively more important occurance of larger transactions due to smaller market size. |
| Keywords: | venture capital, growth capital, asset management, private equity, financial markets, market failure, government failure |
| JEL: | G24 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:4507446&r=tra |
| By: | Francesconi, Marco; Slonimczyk, Fabian; Yurko, Anna |
| Abstract: | In 2009, Russia introduced a reform that changed the admissions process in all universities. Before 2009, admission decisions were based on institution-specific entry exams; the reform required universities to determine their decisions on the results of a national high-school test known as Unified State Exam (USE). One of the main goals of the reform was to make education in top colleges accessible to students from peripheral areas who typically did not enroll in university programs. Using panel data from 1994 to 2014, we evaluate the effect of the USE reform on student mobility. We find the reform led to a substantial increase in mobility rates among high school graduates from peripheral areas to start college by about 12 percentage points, a three-fold increase with respect to the pre-reform mobility rate. This was accompanied by a 40-50% increase in the likelihood of financial transfers from parents to children around the time of the move and a 70% increase in the share of educational expenditures in the last year of the child's high school. We find no effect on parental labor supply and divorce. |
| Keywords: | Human Capital; Russia; Student migration; University admission |
| JEL: | J61 O15 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11996&r=tra |