Can Poverty be Alleviated in China?

The 2000s witnessed the third poverty alleviation wave in China. Compared with its predecessors, the third wave distinguished itself by new interventions and redefined standards for the National Poor Counties. This paper evaluates the effectiveness of the new program using a data set consisting of 1,411 of China's western and central counties from 2000 to 2010. It combines the propensity score matching method with the difference‐in‐differences approach, which helps to avoid selection bias and track the policy impact on variables of interest at each time point. It is found that the non‐western local governments tended to manipulate data on income and output growth to maintain the special transfer payments disbursed exclusively to the National Poor Counties. It is also shown that the program failed to improve the infrastructure and sanitary conditions in general.     

Does distance matter for institutional delivery in rural India?

This article estimates the causal effect of distance to health facility on in-facility birth in rural India, taking into account the endogenous placement of the health facility. We find that women living farther away from the health facilities are less likely to give birth at a health facility. Each additional kilometre from the nearest health facility is associated with a 4.4% decline in the probability of in-facility birth. Policy simulation results indicate that providing access to a health facility within 5 km would increase institutional delivery by 10%. Overall, our findings confirm that distance is an important barrier to in-facility births in rural India.     

Moving toward markets? Labor allocation in rural China

China's economic reforms have brought rapid growth in rural off-farm employment, raising questions about the assumption that rural China is labor surplus and has poorly functioning factor markets. We investigate this by testing for separability between household labor demand and supply using panel data. We find that separability is rejected overall, indicating that factor markets remain underdeveloped. Nonseparability, however, is associated with labor surplus in some areas and labor shortage in others. Moreover, separability holds where substantial employment opportunities exist in the wider township, suggesting that such employment promotes competitive allocation within villages as well as the inter-village movement of resources.     

Choice of specialization: do peers matter?

Social influence is an important factor in learning and decision-making. We estimate peer influence on student choice of specialization using data on undergraduate students of a Russian university. Information about individual social ties has been gathered from a questionnaire survey. We show that specialization choice is significantly influenced by friends as well as by study partners. The strongest effect is produced by friends who are study partners and those who have similar academic achievements. Reciprocal friendship ties have a stronger influence on the choice than nonreciprocal ones. Also, the decision is affected by classmates with similar academic achievement. The results allow us to better understand the mechanisms of peer effects in the specialization choice.     

Do dynamics and heterogeneity in panel data models matter?

This article investigates empirically the determinants of central banks’ reserve holdings for a large panel data set of developing and transition countries covering the period from 1975 to 2003. It estimates both a static and a dynamic relationship and applies estimators for homogeneous and heterogeneous panel data. Thereby, it examines the extent to which conclusions of panel data studies on the determinants of international reserve holdings are robust to the inclusion of dynamics as well as to the consideration of heterogeneity across countries. The results show that the neglect of dynamics and heterogeneity in country behaviour may lead to misleading inferences. Independently of the chosen estimation method, the findings suggest that trade openness and external debt are robust determinants of the level of reserves. Central banks take precautionary measures against the downside of the increasing international economic integration.     

Lower bounds of concentration in Taiwan's manufacturing industries: do exports matter?

This article aims to test Sutton's ‘lower bounds’ approach on the analysis of market concentration in a small open economy like Taiwan. Exporting, which is important to a small open economy, is also considered in order to investigate the role of foreign competition on the market structure. Using a stochastic frontier approach, the estimate findings are in accordance with Sutton's predictions, whereby the lower bounds for high advertising and/or R&D-intensive industries are higher than those for low advertising and/or R&D-intensive industries in Taiwan. At the same time, the lower bounds of concentrations for export-intensive industries do not differ significantly from that of nonexport-intensive industries. The deviations from the lower bound are explained by industry characteristics such as the cost disadvantage ratio, the share of small and median-size enterprises, turnover rate and growth rate.     

Effectiveness of One-Euro-Jobs: do programme characteristics matter?

Recent German labour market reforms introduced a large scale workfare programme called One-Euro-Jobs to activate welfare recipients and improve their employment prospects. In programme design leeway is left to regional actors. Using administrative data and Propensity Score (PS) matching, this article investigates the association between programme design and effectiveness, so as to provide insight on how to increase programme effectiveness. First, effects of different types of One-Euro-Jobs according to planned duration and weekly working hours compared to ‘waiting’ are estimated. Second, programme types are compared directly to disentangle selection and programme effects. As expected lock-in effects are larger for participations with a longer planned duration, but not for those with longer weekly working hours. One-Euro-Jobs do not generally increase the employment prospects for East German men beyond 2 years after programme start and longer and more intensive participations even decrease employment prospects. In West Germany, One-Euro-Jobs generally increase the employment chances and longer participations lead to slightly greater employment opportunities roughly 2 years after programme start. The initial advantages of short participations decrease over time. Following these results, a reallocation of participants might improve programme effectiveness.     

Adolescent premarital childbearing: do economic incentives matter?

This paper develops and tests a three-stage nested logistic model of teenage childbearing that is influenced by economic incentives and costs created by US public policy. The modeling of teenage childbearing involves becoming pregnant, the choice to have an abortion or to bear the child, and the choice to bear the child premaritally or maritally. Data were obtained from a sample of 1718 Black and White women aged 14-16 years in 1979 from the National Longitudinal Survey of Youth. In 1990, the birth rate among unmarried youth was 29.5/1000 unmarried White women vs. 110.1/1000 unmarried Black women. In the sample, the pregnancy rate was 24% among White teenagers and 48% among Black teenagers. Miscarriages or stillbirths occurred among 11% of Whites and 12% of Blacks. Abortions were performed for 37% of Whites and 12% of Blacks. An incentive variable is the welfare guarantee. Cost variables include the cost of obtaining an abortion and the cost of obtaining contraceptive services and supplies. Access to family planning services is also accounted for in the model. Findings indicate that welfare, abortion, and family planning policy variables have a racially specific impact. For White teenagers, these variables have significant effects on pregnancy outcomes. For Black teenagers, the insignificance may reflect differences in sample size or important unmeasured racial differences in factors that influence fertility and marital behavior. The authors suggest that the rational choice perspective does not adequately explain premarital childbearing. It is also suggested that the specification of the variables on abortion, family planning, and adolescent sexual behavior may be fundamentally different and reflect differences in state attitudes and social customs. Only if the policy variables really change the costs of different pregnancy outcomes will changes in social policy change individual adolescent behavior. The authors state that focusing on only economic incentives did not rule out other influences on premarital childbearing.     

Household income mobility in rural China: 1989–2006

This article analyzes household income mobility in rural China between 1989 and 2006. The results indicate that incomes in rural China are highly mobile. The high degree of rank and quantity mobility implies re-ranking and mean convergence in income distribution, but the disparity between them also enlarged with leveling-up and Gini divergence brought about by economic growth. In addition, there exists considerable transitorily poor and rich in positional mobility. Though, transitory movement provides an opportunity for both poor and rich and decreases long-term inequality, it also causes considerable income fluctuations and economic insecurity. Moreover, the equalizing effect of income mobility on income inequality is weakening.     

Unemployment and output dynamics in CIS countries: Okun’s law revisited

Okun’s law is a well-known relationship between the change in the unemployment rate and output growth. The main objective of this article is to provide a rigorous econometric analysis of Okun’s law for several CIS countries using different models and theoretically justified econometric methods. The traditional approach to Okun’s law estimation using OLS regressions does not account for possible endogeneity of regressors and the implied inconsistency of the estimates obtained. These problems point out to incorrectness of applications of the standard OLS estimation techniques. Our study addresses these issues by using econometrically justified instrumental variable regression methods. The article provides the results and discussions on practical use of Okun’s relationships for evaluation of average effects of economic growth on the unemployment rate, and vice versa; importance of accounting for confidence intervals in applications of Okun’s models to economic development analysis and cross-country comparisons and evaluation of effects of crises and other structural shocks on the economies considered. We also discuss in detail the results of formal econometric tests and economic motivation for validity of instrumental variables used in the study. The formal econometric tests, together with economic arguments, allow us to determine the most appropriate Okun-type models for each of the CIS countries under consideration.     

Macroeconomic conditions and well-being: do social interactions matter?

We investigate the role played by social interactions in the transmission of the effects of macroeconomic conditions on well-being. Using survey data for a representative sample of Italian individuals, we find that social interactions play a dual role. On the one hand, the well-being of people who spend more time with their friends or go out more often is less sensitive to macroeconomic fluctuations. On the other hand, social interactions are negatively affected by worsening macroeconomic conditions, thus playing a relevant role in the transmission of macroeconomic shocks to subjective well-being. More specifically, the negative impact of downturns on the frequency of going out and active participation in associations significantly contributes to the adverse effects of recessions on satisfaction with life and with individual life domains.     

Gender and culture: do they matter for norms?

In a natural experiment, we observed that the influence of a norm depended upon the gender and cultural background of participants. Both gender and cultural background contributed to the effect of peer pressure that partly controlled against the act of cheating among participants as they completed a group task. Furthermore, both factors served to describe the characteristics of hardworking individuals in the group. We therefore conclude that the effectiveness of a norm in a group is expected to depend upon the presence of hardworking individuals therein.     

Do search frictions matter for inflation dynamics?

We assess the empirical relevance for inflation dynamics of accounting for the presence of search frictions in the labor market. The new Keynesian Phillips curve explains inflation as being mainly driven by current and expected future marginal costs. Recent empirical research has emphasized different measures of real marginal costs to be consistent with observed inflation persistence. We argue that, allowing for search frictions in the labor market, real marginal cost should also incorporate the cost of generating and maintaining long-term employment relationships, along with conventional measures, such as real unit labor costs. In order to construct a synthetic measure of real marginal costs, we use newly available labor market data on worker finding and separation rates that reflect hiring and firing costs. We then estimate a new Keynesian Phillips curve by generalized method of moments (GMM) using the imputed marginal cost series as an observable and find that the contribution of labor market frictions in explaining inflation dynamics is small.     

The impact of aid on growth revisited: Do donor motives matter?

The typical identification strategy in aid effectiveness studies assumes that donor motives do not influence the impact of aid on growth. We call this homogeneity assumption into question, constructing a model in which donor motives matter and testing the assumption empirically.     

Agricultural disaster payments in the southeastern US: do weather and climate variability matter?

Governments around the world are forced to react to disasters caused by weather. The agricultural sector is particularly susceptible to weather extremes and adverse climate conditions. In the US, agricultural disaster payments account for a significant part of total agricultural subsidies. The payments, and their distribution, are more important in the areas most affected by disastrous weather events, usually coinciding with areas of pronounced impact of the El Nino Southern Oscillation (ENSO). In this article, the impact of weather and climate, as well as some economic variables, on disaster payments is analysed using county level data from four states in the southeastern United States. The results suggest that weather and climate variables explain most of the crop disaster payments at the county level while socioeconomic variables do not, suggesting that advancements in weather and climate forecasts could be helpful in planning for disaster compensation.     

Survival chances of new businesses: do regional conditions matter?

This article analyses the effects of industry-, regional- and firm-level characteristics on the post-entry performance of new businesses by means of an econometric survival time model. First preference is given to an accelerated failure time model assuming a log-logistic distribution. The data involve a representative sample of businesses in the private sector of West Germany during 1993 to 2002 period. The results demonstrate that the regional dimension is most important; whereas firm-level characteristics play a subordinated role.     

Immigration and economic growth: do origin and destination matter?

This article assesses the heterogeneous effects of immigration on economic growth depending on both the origin and the destination countries. Following the development of a growth model augmented by human capital of immigrants, we estimate it in a dynamic panel setup using the system-GMM estimator. We find that the growth-enhancing effect of immigration is significantly larger when immigration flows from developed to developing economies than when it does to those that include both developed and developing economies. We interpret these results as evidence of immigrants from developed countries bringing with them their advanced knowledge into the developing countries.     

What drives housing dynamics in China? A sign restrictions VAR approach

We study housing dynamics in China using vector autoregressions identified with theory-consistent sign restrictions. We study seven potential drivers: (1) population increases; (2) a relaxation of credit standards, for example, due to the shadow banking system; (3) increasing preferences towards housing, for example, due to a housing bubble, or to housing being a status asset in the marriage market; (4) an increase in the savings rate; (5) expected productivity progress; (6) changes in land supply; and (7) tax policy, a proxy for policy stimulus. Our results show that, even if all shocks play relevant roles, productivity, savings glut, and policy stimulus have been the dominant drivers. When the sample is closer to 2014, housing preferences and credit shocks increase their importance to explain house prices and volume, while population shocks explain a larger share of the dynamics of residential investment. The results show some differences if we use house price indices constructed by the government or by private sources. The official indices show smaller increases in house prices and assign a smaller role to credit and preference shocks.     

Spillover effects of fiscal policy in a monetary union: Why do fiscal instruments matter?

Using a two‐country DSGE model, we analyse the spillover effects of fiscal policy in a monetary union. Based on a non‐Walrasian labour market with a labour force participation decision and involuntary unemployment and a detailed fiscal sector, we focus on the relative cross‐border effects of different kinds of fiscal shocks (government expenditure and tax shocks). Among the major lessons from this analysis, five general and striking results are worth highlighting : (1) spillover effects differ widely according to the fiscal instrument, (2) all fiscal instruments produce positive spillover effects on foreign GDP except a rise in government consumption, (3) the response of unemployment is not always negatively correlated with the response of output (4) the different fiscal shocks trigger different effects on foreign inflation and the term of trade, which implies heterogeneous interest‐rate and trade channels, and (5) a more accommodative monetary policy and a scenario of ‘fiscal dominance’ alter greatly the effects of fiscal policy shocks.