the distribution of income in china preface notes on the contributors introduction k griffin z renwei part 1 the distribution of income household income and its distribution a r khan k griffin c riskin z renwei three features of the distribution of income during the transition to reform z renwei part 2 income and wealth in rural china the determinants of household income in rural china a r khan the distribution of wealth in rural china t mckinley income distribution and poverty in rural china c riskin part 3 employment and human capital workers in china s rural industries j knight s lina why urban wages differ in china j knight s lina the determinants of educational attainment j knight l shi annex the 1988 household sample survey m eichen z ming index

more shock than therapy market transition employment and income in russia 1991 1995 sixteen predictions from market transition theory are assessed using survey data on employment earnings and income in russia during the first five years of market reform although the private sector has grown self employment is still rare incomes are down and unemployment is up a distended income distribution reflects unprecedented income inequality distinctive features of late soviet era stratification persist low returns to education a gender gap in earnings and low earnings among professionals the russian market transition offers more opportunity in trade consumer services and speculation and less in manufacturing than do other emerging makets this corresponds to merchat capitalism and contradicts the predictions of market transition theory everything the communists told us about communism was a lie everything they told us about capitalism turns out to be true popular russian joke circa 1996

international institutions and the volatility of international trade during the past half century states have established a large number of international trade institutions both multilateral and regional in scope the existing literature on this topic emphasizes that these agreements are chiefly designed to liberalize and increase the flow of overseas commerce yet such institutions have another function that has been largely ignored by researchers namely reducing volatility in trade policy and trade flows exposure to global markets increases the vulnerability of a country s output to terms of trade shocks governments seek to insulate their economies from such instability through membership in international trade institutions particularly the world trade organization wto and preferential trading arrangements ptas we hypothesize that these institutions reduce the volatility of overseas commerce we further hypothesize that because market actors prefer price stability trade institutions increase the volume of foreign commerce by reducing trade variability this article conducts the first large scale multivariate statistical tests of these two hypotheses using annual data on exports for all pairs of countries from 1951 through 2001 the tests provide strong support for our arguments ptas and the wto regime significantly reduce export volatility in so doing these institutions also increase export levels

the market transition debate toward a synthesis in his seminal 1989 article a theory of market transition victor nee offered a new theory of social inequality and applied it to the study of the problem of transition from state socialist redistributive economy to market capitalism nee claimed that the emergence of markets in state socialist redistributive economies had unexpected consequences the most privileged stratum or class of state socialism the redistributors lost some of their privilege while those at the bottom of the state socialist hierarchy the direct producers benefited for earlier formulations see szelenyi and konrad 1969 szelenyi 1978 and whyte 1984 as a result inequality as measured by income or access to scarce goods was reduced nee s theory identified the mechanisms by which markets generated equality under redistributive systems if wages are not administratively set but established by transactive relations then producers are likely to have more power market power if markets operate then human capital is likely to be rewarded more while political loyalty is likely to matter less market incentive if there are markets in a redistributive economy then entrepreneurship becomes an alternative avenue of socioeconomic mobility market opportunity nee 1989 data collected in 1985 in rural china offered support to the theory of market transition between 1977 and 1985 overall income inequalities in china declined the income gap between urban residents and farmers shrank the income gap in the countryside between peasants and cadres also narrowed the decline of inequality arguably was the result of deregulation of state policies in agriculture after 1977 chinese peasants received land their production targets were less strictly regulated by planners and they were allowed to bring their produce to urban markets as

economic origins of electoral support for authoritarian successors a cross national analysis of economic voting in new democracies this study explores how economic performance prior to democratic transitions affects the fate of successors to authoritarian rulers in new democracies it investigates 70 founding election outcomes finding that successful economic performance under an authoritarian regime increases the vote share of successors it also finds that the past economic performance of authoritarian rulers decreases the likelihood of government alternation to democratic oppositions interim governments that initiate democratic transition however are neither blamed nor rewarded for economic conditions during transition periods this study concludes that electorates are not myopic and that economic voting is not a knee jerk reaction to short term economic performance in new democracies

terrorism and the fate of dictators the authors study the influence of domestic political dissent and violence on incumbent dictators and their regimes they argue that elite with an interest in preserving the regime hold dictators accountable when there is a significant increase in terrorism to pinpoint the accountability of dictators to elite who are strongly invested in the current regime the authors make a novel theoretical distinction between reshuffling coups that change the leader but leave the regime intact and regime change coups that completely change the set of elites atop the regime using a new data set that distinguishes between these two coup types the authors provide robust evidence that terrorism is a consistent predictor of reshuffling coups whereas forms of dissent that require broader public participation and support such as protests and insurgencies are associated with regime change coup attempts this article is the first to show that incumbent dictators are held accountable for terrorist campaigns that occur on their watch

regional variation in earnings inequality in reform era urban china this article studies the regional variation in earnings inequality in contemporary urban china focusing on the relationship between the pace of economic reforms and earning determination through

the elite variable in democratic transitions and breakdowns stable democratic regimes depend heavily on the consensual unity of national elites so long as elites remain disunified political regimes are unstable a condition which makes democratic transitions and democratic breakdowns merely temporary oscillations in the forms unstable regimes take disunity appears to be the generic condition of national elites and disunity strongly tends to persist regardless of socioeconomic development and other changes in mass populations the consensually unified elites that are necessary to stable democracies are created in only a few ways two of the most important of which involve distinctive elite transformations after elaborating this argument we examine the relationship between elites and regimes in western nation states since they began to consolidate after 1500 we show that our approach makes good sense of the western political record that it does much to clarify prospects for stable democracies in developing societies today and that it makes the increasingly elite centered analysis of democratic transitions and breakdowns more systematic

chinese villages and townships as industrial corporations ownership governance and market discipline1 public firms in a reforming socialist economy face two problems the old soft budget constraint syndrome and new principal agent problems china s township village government owned enterprises tves outperform state owned enterprises soes in growth rate and productivity three explanations are proposed in the literature 1 tves represent informal or ambiguous private property rights which are most efficient in partial reform 2 the small size and scale of township village governments as industrial corporations allows officials to monitor tves directly and to limit their wherewithal for cross subsidizing 3 strict market disciplines facing tves render indirect market monitoring to mitigate agency problems effectively analyses of jiangyin data show that a while both superior to local soes village and township enterprises share similar productivity and b the scale of township village corporations slightly increases productivity i conclude that local state corporatism should be revised to inc

how do different designs of energy labels influence purchases of household appliances a field study in switzerland abstract energy labels are a key element of energy efficiency policies they provide information on appliances energy consumption and aim at increasing consumers attention to this characteristic a well known example is the eu energy label which is required by law to be displayed on most energy using durables in the eu as well as in switzerland in cooperation with a large online retailer in switzerland we assess the impact of the eu energy label and of a newly designed monetary lifetime oriented energy label in the field we analyze private purchases of household appliances especially freezers vacuum cleaners and tumble dryers we find that the display of any of the two energy labels increases the sales proportion of energy efficient appliances compared to the absence of any energy label at the same time we observe a volume effect for freezers the average size of purchased freezers is larger when any of the two energy labels is displayed compared to the absence of any energy label the influence of the two different energy labels is similar except for vacuum cleaners for which monetary information might have an adverse effect

politics and markets dual transformations the articles published in this issue of the journal help advance the debate on market reform in former socialist states in our comment besides dealing with data analysis issues we suggest several ways to improve the level of debate about substantive issues these suggestions include more attention to politics including path dependence and more attention to middle level generalizations from other developing market societies

the era of electoral authoritarianism in recent years scholarly attention has shifted from the study of democratization to the phenomenon of electoral authoritarianism in these regimes regular elections are held for national legislatures and chief executives yet they fail to live up to democratic standards of freedom and fairness a range of new research has investigated these regimes and especially the capacity of elections to either dislodge or reinvigorate authoritarian incumbents this article reviews some of the current work on electoral authoritarianism and attempts to find ways to achieve synthesis and better theoretical development it notes the need for greater conceptual consensus attention to context and better evaluation of what electoral competiveness means under authoritarian conditions it argues that the next stage for research should be smaller and contextual comparison that can allow for greater attention to concepts while allowing for strong midrange theory

economic transformation and income inequality in urban china evidence from panel data using panel data of 4 730 urban residents drawn from 20 cities in china this article examines changes in income determinants between the prereform and reform eras to guide this empirical study a conceptual model is developed that emphasizes the coevolution of politics and markets to synthesize theoretical ideas in the recent debate on the transformation of state socialist societies the findings show significant changes in returns to education and in the rise of private hybrid firms in the reform era there is also strong evidence of institutional persistence in returns to positional power and in the organizational hierarchy these findings reveal multifaceted processes of transformation that call for more sophisticated theoretical models and in depth institutional analyses

is there an energy efficiency gap many analysts have argued that energy efficiency investments offer an enormous win win opportunity to both reduce negative externalities and save money this overview paper presents a simple model of investment in energy using capital stock with two types of market failures first uninternalized externalities from energy consumption and second forces such as imperfect information that cause consumers and firms not to exploit privately profitable energy efficiency investments the model clarifies that only if the second type of market failure cannot be addressed directly through mechanisms such as information provision energy efficiency subsidies and standards may be merited this chapter therefore reviews the empirical work on the magnitude of profitable unexploited energy efficiency investments a literature which frequently does not meet modern standards for credibly estimating the net present value of energy cost savings and often leaves other benefits and costs unmeasured these problems notwithstanding recent empirical work in a variety of contexts implies that on average the magnitude of profitable unexploited investment opportunities is much smaller than engineering accounting studies suggest finally there is tremendous opportunity and need for policy relevant research that utilizes randomized controlled trials and quasi experimental techniques to estimate the returns to energy efficiency investments and the welfare effects of energy efficiency programs

geographic diffusion and the transformation of the postcommunist world since the collapse of communism the states of postcommunist europe and asia have defined for themselves and have had defined for them two primary tasks the construction of viable market economies and the establishment of working institutions of representative democracy the variation in political and economic outcomes in the postcommunist space makes it without question the most diverse region in the world what explains the variation all of the big winners of postcommunism share the trait of being geographically close to the former border of the noncommunist world even controlling for cultural differences historical legacies and paths of extrication the spatial effect remains consistent and strong across the universe of postcommunist cases this suggests the spatially dependent nature of the diffusion of norms resources and institutions that are necessary to the construction of political democracies and market economies in the postcommunist era the authors develop and adduce evidence for the spatial dependence hypothesis test it against rival hypotheses and illustrate the relationships at work through three theoretically important case studies

the misleading effect of energy efficiency information on perceived energy friendliness of electric goods the european union energy label informs consumers at the point of sale about the energy efficiency and electricity consumption of various electric goods the label should enable consumers to purchase energy friendly products i e products with low energy consumption thereby making a significant contribution to the reduction of overall energy consumption this paper offers a systematic analysis of consumers interpretation of the energy label the results of a set of experimental studies revealed that consumers tend to base their estimates of a product s energy consumption mainly on the energy efficiency class e g a communicated on the energy label and largely ignore information about annual electricity consumption e g 120 kwh year thereby consumers potentially overestimate the energy friendliness of a product assigned a high energy efficiency rating this also holds true when consumers directly compare two products in terms of energy friendliness thus participants chose a higher consuming product because it had a high energy efficiency rating high energy efficiency ratings e g a can distort consumers perceptions of product categories that consume excessively e g freezers participants were seduced into thinking that a high energy efficiency rating e g a means the energy consumption of energy hogs is no longer problematic this paper provides evidence that the energy label could have a contrary effect than the one intended due to people s susceptibility to an energy efficiency fallacy this misinterpretation of the energy label could further explain why overall energy demand is increasing despite enhanced energy efficiency finally implications for policy makers and further research for enhancement of the energy label are discussed

tightening up declining class mobility during russia s market transition this study analyzes intergenerational occupational mobility in late soviet and post soviet russia using data from six surveys belying claims that class differences did not matter in the soviet union the authors find that social origin did affect occupational opportunity during russia s soviet period but the transition from state socialism to a market economy tightened the link between origins and destinations men and women were equally constrained by their social origin even though they faced significantly different opportunity structures in both periods as the economic transformation took hold fewer russians experienced upward mobility and more were downwardly mobile political and economic transition not the demographic replacement of retiring cohorts by younger ones strengthened the association between origins and destinations career mobility during the 1990s took the form of a regression toward origins as workers who had the most upward mobility during the soviet era lost the most in the tr

an exclusive country club the effects of the gatt on trade 1950 94 using data on bilateral trade flows from both before and after world war ii this article examines the impact of the general agreement on tariffs and trade on trade between its members and on the system of interwar trade blocs it shows that the distribution of the benefits produced by the gatt was much more highly skewed than conventional wisdom assumes the article also shows that the gold commonwealth reichsmark and exchange control blocs exerted positive and significant effects on trade after 1945 the authors attribute these effects to the bargaining protocol that governed successive rounds of gatt negotiations the signature element of the postwar trade regime

the value of trade agreements in the presence of political pressures an argument often heard in favor of trade agreements is that by committing to free trade a government can credibly distance itself from domestic lobbies but several existing models of endogenous protection suggest that governments have no interest in foreclosing interest group pressures since governments derive rents from the political process we develop a small country model in which factors are sector specific in the short run but mobile in the long run we show that in this setting a government may be worse off in the political equilibrium than under commitment to free trade and hence it may value a trade agreement

between markets and politics organizational responses to reform in china in china s economic transition firms diversify assets through investments in the rapidly expanding service sector in response to organizational uncertainty using data from a random sample of firms in shanghai the author shows that there are two situations that cause this uncertainty economic instability where weak firms struggle to survive in the rapidly changing market system and administrative instability where large firms that were the most protected are now being forced to handle the responsibilities that were previously handled by the state the result is that both types of firm seek stability by spreading out risk through investment in low risk fast return markets revealing much about the economic reforms the overall strategy of a firm reflects at any given point in time important organizational facts any decision to fundamentally alter the deployment of internal resources represents a major structural change these kinds of changes do not occur often when they do they provide us wit

regime cycles democracy autocracy and revolution in post soviet eurasia research on regime change has often wound up chasing events in the post soviet world because it has frequently assumed that regime change if not simple instability implies a trajectory toward a regime type endpoint like democracy or autocracy a supplemental approach recognizes that regime change can be cyclic not just progressive regressive or random in fact regime cycles are much of what we see in the postcommunist world where some states have oscillated from autocracy toward greater democracy then back toward more autocracy and with recent colored revolutions toward greater democracy again an institutional logic of elite collective action focusing on the effects of patronalpresidentialism is shown to be useful in understanding such cyclic dynamics explaining why revolutions occurred between 2003 and 2005 in ukraine georgia and kyrgyzstan but not in countries like russia azerbaijan and uzbekistan

cognitive reflection and the valuation of energy efficiency abstract based on a stated choice experiment among about 3 600 german households heads on the purchase of electricity using durables this paper explores how cognitive reflection influences consumers valuation of energy efficiency and investigates the interaction with consumers response to the eu energy label our results indicate that consumers with low cognitive reflection value energy efficiency less furthermore we demonstrate that consumers with a low level of cognitive reflection primarily choose appliances based on grade like energy efficiency classes rather than detailed information on annual energy use

institutional environment public private hybrid forms and entrepreneurial reinvestment in a transition economy abstract many less developed and especially transition economies have had high levels of entrepreneurial reinvestment for relatively long periods despite the absence of developed government institutions to resolve this puzzle this study proposes that many entrepreneurial firms in these economies have been actively engaged in political activities through which organizational arrangements are created to co opt government agencies into their organizational structures to manipulate and even control unfavorable institutional environments it empirically evaluates the role of one such organizational arrangement public private hybrid forms in china s gradual reform period it suggests that through protecting property rights and facilitating access to key resources and opportunities public private hybrid forms may act as a substitute for deficient market and legal institutions thus facilitating entrepreneurial reinvestment the findings from a national sample of chinese entrepreneurial firms support our propositions in general entrepreneurial firms adopting public private hybrid forms enjoy higher entrepreneurial reinvestment rates than pure private firms during gradual reform and this may be the case because such forms help to both protect private property rights and access key resources and opportunities in addition the association between the forms and reinvestment rate is found higher under less developed government institutions

ballot position choice fatigue and voter behaviour in this paper we examine the eect of choice fatigue on decision making we exploit a natural experiment in which voters face the same contest at dierent ballot positions due to dierences in the number of local issues on their ballot facing more decisions before a given contest signi cantly increases the tendency to abstain or rely on decision shortcuts such as voting for the status quo or the rst listed candidate we estimate that without choice fatigue abstentions would decrease by 8 and 6 of the propositions in our dataset would have passed rather than failed

market transition and the persistence of power the changing stratification system in urban china research on transitional socialist societies has explored trends in income inequality and issues concerning who gains and who loses during market reforms we find that income inequality in a major chinese city declined only slightly during the first decade of reform policies it then increased dramatically in the subsequent five years strategic position in the state bureaucracy continues to be an important determinant of income although connections to the market system are becoming alternate sources of advantage we interpret these findings in light of the historical and institutional context of urban china

authoritarian state building and the sources of regime competitiveness in the fourth wave the cases of belarus moldova russia and ukraine this article explores the sources of regime competitiveness in the post cold war era through a structured comparison of regime trajectories in belarus moldova russia and ukraine for the period 1992 2004 an examination of these cases suggests the need for a fundamental rethinking of the commonly held view of the transition process especially in countries that face relatively weak international democratizing pressures approaching these countries as unconsolidated autocracies rather than as simply emerging democracies draws attention to key sources of political competition that have largely been ignored in the literature on competitive regimes thus competitive politics in belarus moldova russia and ukraine were rooted less in robust civil societies strong democratic institutions or leadership than in the inability of incumbents to maintain power or concentrate political control by preserving elite unity controlling elections and or using force against opponents such pluralism by default has been the outgrowth of the strength of anti incumbent national identity and incumbent weakness as defined by a lack of know how ineffective incumbent organization and or the weakness of certain dimensions of state power

clientelism and polarized voting empirical evidence one must take country specific institutional features into account when analyzing former communist countries transformation process to new political institutions we do so for post communist albania where the regional and cultural polarization that has existed for centuries has evolved to clientelism in the new democracy we show how clientelistic parties give rise to very particular voting patterns these reveal major differences across regions not only in party choice but also in voters responses to government policies these responses depend on the party in government and on the region concerned this is in sharp contrast with results obtained when applying the same model to a large number of more advanced democracies with similar electoral institutions a proper evaluation of democratization in albania thus requires looking beyond the formal institutions governing elections and taking clientelism and its effect on voter behavior into account

markets and inequality in transitional economies toward testable theories nee s 1989 and in this issue market transition theory contested by xie and hannum in this issue claims that market mechanisms have predictable implications for inequality compared to nonmarket allocation market exchange enhances the bargaining power of producers nee p 910 the core argument is that cadre advantages shall decline to the extent that markets replace redistribution as the dominant mode of economic allocation while in successive publications nee has altered his judgment about how far the market transition has proceeded in rural china and whether his theory does predict a decline of cadre privilege he has not altered the core claim about market allocation market economies vary widely in their patterns of power and privilege in ways unrelated to the extent to which a market economy has been established the variability of market economies warns against attempts to predict changes in inequality without first specifying the kinds of enterprises and other institutions that characterize the emerging market economy or even the characteristics of markets themselves we have been tempted into these predictions by the memorable polanyian contrast between two ideal typical economies redistributive and market that has proven a rich source of hypotheses about stratification szelenyi 1978 1983 and the theory of the firm kornai 1992 under state socialism this contrast has crystallized a research agenda by posing an important historical question about the social impact of the rise of market allocation in planned economies especially as it concerns the fate of communist officials but many now find that these ideal types and the continuum that bridges them are a poor guide to the analysis of emerging market economies see bian and logan 1996 lin 1995 rona tas 1994 1995 walder 1992 1995 and stark and xie and hannum in this issue general claims about the impact of markets should be viewed skeptically for the impact of markets works through the allocation of assets the characteristics of emerging markets and the political processes by which market economies are established markets per se are not the issue

the soviet transition from socialism to capitalism worker control and economic bargaining in the wood industry analyses oftlze transition from state socialisnz to capitalism pically focus on political impedimerlrs and underesritnate tlle economic obsracles to economic rransformatior1 based or1 a c ase srudy c f the soviet o o d indusrr y we argue tlzur there hill he no economic tr ansition so long as enterprises rerain two hisroric features nanzely anarchy in pr oduction and barqainit g in exrernal r elarions far jtom consrituting a re olution tlze witllerirlg away of the party srate has esaggerared rlle parhologies of rhe old econotnic order barrer has hecome nzo1 e inzpor tant conglonzerates ha1 e strengrhened their monopoly and wrkers 1la1 e greater conrr ol of tlze shop floor if there is a nzolbemenr to sar d a nzar ket economy at all it is to sar da jb1 m ofmerchant capitalisnz rlzut deepens economic under de elol nzet t and lz arts tlze rise of nzodern bourgeois capiralism

recombinant property in east european capitalism recombinant property is a form of organizational hedging in which actors respond to uncertainty by deversifying assets redefining and recombining resources it is an attempt to hold resources that can be justified by more than one legitimating principle property tansformation in postsocialist hungary involves the decentralized reorganization of assets and the centralized management of liabilities together they blur the boundaries of public and private the boundaries of enterprises and the boundedness of justificatory principles enterprise level field research data on the ownership structure of hungary s 220 largest enterprises and banks and an examination of the government s recent debt consolidation programs suggest the emergence of a distinctively east european capitalism that will differ as much from west european capitalism as do contemporary east asian variants

a theory of market transition from redistribution to markets in state socialism state socialist redistributive economies are characterized by the allocation and distribution of goods through central planning this paper develops a theory of market transition which argues that in reforming socialist economies the transition from redistributive to market coordination shifts sources of power and privilege to favor direct producers relative to redistributors the shit improves incentives for direct producers stimulates the growth of private markets and provides to entrepreneurs an alternative path for socioeconomic mobility a set of hypotheses test the market transition theory with householdand village level data

markets and income inequality in rural china political advantage in an expanding economy when market reform generates rapid growth in an agrarian subsistence economy changes in inequality may be due to economic growth and structural change rather than to the intrinsic features of markets the case of post mao china is examined using nationally representative survey data gathered in 1996 to address unresolved questions about findings from 1980s surveys well into reform s second decade political officeholding has a large net impact on household income comparable to that of operating a private enterprise contrary to findings based on earlier surveys and expectations about the impact of growth cadre household advantages are stable across levels and forms of economic expansion returns to entrepreneurship however decline sharply with the spread of wage employment future declines in relative returns to political position are therefore unlikely to occur due to the further spread of private household entrepreneurship and theories of change based on this mechanism appear untenable

behavioral economics and energy conservation a systematic review of non price interventions and their causal effects abstract research from economics and psychology suggests that behavioral interventions can be a powerful climate policy instrument this paper provides a systematic review of the existing empirical evidence on non price interventions targeting energy conservation behavior of private households specifically we analyze four nudge like interventions referred to as social comparison commitment devices goal setting and labeling in 44 international studies comprising 105 treatments this paper differs from previous systematic reviews by solely focusing on studies that permit the identification of causal effects we find that all four interventions have the potential to significantly reduce energy consumption of private households yet effect sizes vary immensely we conclude by emphasizing the importance of impact evaluations before rolling out behavioral policy interventions at scale

getting ahead in urban china this article argues that structural segmentation is a universal phenomenon in all complex societies and across political economies each political economy uses specific criteria in delineating segments of its economic and work organizations furthermore it is argued that segmentation identification constitutes a critical destination status for individuals engaged in the status attainment process a representative sample of the working population in tianjin china is analyzed to show that entrance into the core sectors state agencies and enterprises rather that the job per se constitutes the primary goal of status attainment entering into a more desirable work unit sector in china takes on differential significance and process for males and females formales the direct effect of intergenerational factors i e the effect of father s work unit sector is evident for females such an effect is only indirect instead to a great extent their status attainment also upward occupational mobility acr

the emergence of a market society changing mechanisms of stratification in china this article examines the effect of institutional change the shift from redistribution to markets in altering the mechanisms of stratification new institutionalists maintain that interests are emb

are risk aversion and impatience related to cognitive ability is the way that people make risky choices or tradeoffs over time related to cognitive ability this paper investigates whether there is a link between cognitive ability risk aversion and impatience using a representative sample of the population and incentive compatible measures we conduct choice experiments measuring risk aversion and impatience over an annual time horizon for a randomly drawn sample of roughly 1 000 german adults subjects also take part in two different tests of cognitive ability which correspond to sub modules of one of the most widely used iq tests interviews are conducted in subjects own homes we find that lower cognitive ability is associated with greater risk aversion and more pronounced impatience these relationships are significant and robust to controlling for personal characteristics educational attainment income and measures of credit constraints we perform a series of additional robustness checks which help rule out other possible confounds

a sparsity based model of bounded rationality this article defines and analyzes a sparse max operator which is a less than fully attentive and rational version of the traditional max operator the agent builds as economists do a simplified model of the world which is sparse considering only the variables of first order importance his stylized model and his resulting choices both derive from constrained optimization still the sparse max remains tractable to compute moreover the induced outcomes reflect basic psychological forces governing limited attention the sparse max yields a behavioral version of basic chapters of the microeconomics textbook consumer demand and competitive equilibrium i obtain a behavioral version of marshallian and hicksian demand arrow debreu competitive equilibrium the slutsky matrix the edgeworth box roy s identity and so on the slutsky matrix is no longer symmetric nonsalient prices are associated with anomalously small demand elasticities because the consumer exhibits nominal illusion in the edgeworth box the offer curve is a two dimensional surface rather than a one dimensional curve as a result different aggregate price levels correspond to materially distinct competitive equilibria in a similar spirit to a phillips curve the arrow debreu welfare theorems typically do not hold this framework provides a way to assess which parts of basic microeconomics are robust and which are not to the assumption of perfect maximization jel codes d01 d03 d11 d51

commercial policy variability bindings and market access abstract protection unconstrained by rules often varies substantially over time rules based disciplines such as wto tariff bindings and bindings on market access in services constrain this variability we examine the theoretical effects of such constraints on the expected cost of protection and offer a formalization of the concept of market access emphasizing both the first and second moments of the distribution of protection as an illustration we provide a stylized examination of uruguay round bindings on wheat

social inequalities in reforming state socialism between redistribution and markets in china this article extends market transition theory to an analysis of inequality under the conditions of partial reform in china logit regression analysis indicates cadres officials have no greater odds than other households of being among the privileged or avoiding poverty entrepreneurs andformer team cadres however are advantaged despite the rise of a hybrid elite of entrepreneurs who are currently cadres that capitalizes on redistributive power to gain competitive advantage in the marketplace increases in income inequality are modest when market reform stimulates improved economic performance the poor appear to benefit and experience comparable improvements in household income as a result there is only a slight increase in inequality at least in the early stages of market reform the empirical analysis is based on survey data collected in rural china in 1985

ownership organization and income inequality market transition in rural vietnam in transitional economies the scale of economic enterprise and the allocation of property rights shape social structures and influence income distribution in agrarian economies where labor intensive family enterprises dominate political officials income advantages decline rapidly relative to those of private entrepreneurs larger enterprises however provide greater income opportunities for officials especially when a government retains an ownership stake in the initial phases of reform this article replicates the findings from an earlier study of rural china using comparable survey data from vietnam we find that during the first two decades of rural market reform in vietnam and china the scale and ownership of firms differed radically small family enterprises dominated rural development in vietnam whereas china s development was dominated by larger firms initially established by rural governments consequently while cadre income advantages have kept pace with those of private entrepreneurs

democratization and economic liberalization in the postcommunist world how does economic liberalization affect political regime economic liberalization is widely regarded as inimical to democratization the washington consensus which generally endorses shock therapy and envisions a basic compatibility between economic liberalization and democratization is widely disdained in social science many scholars hold that neoliberal economics depresses popular living standards and exacerbates socioeconomic inequalities thereby compromising democratization focusing on the postcommunist region this article tests this hypothesis it examines the data that have been used to assess the relationship between economic liberalization and political democratization and presents analyses using more appropriate and differentiated techniques the authors find that economic liberalization advances rather than undermines democratization using engle granger analysis they find that although economic liberalization has no discernible impact on democratization in the short term democratiza

why do some countries get better wto accession terms than others the process by which countries accede to the world trade organization wto has become the subject of considerable debate this article takes a closer look at what determines the concessions the institution requires of an entrant in other words who gets a good deal and who does not i argue that given the institutional design of accession proceedings and the resulting suspension of reciprocity accession terms are driven by the domestic export interests of existing members as a result relatively greater liberalization will be imposed on those entrants that have more valuable market access to offer upon accession something that appears to be in opposition to expectations during multilateral trade rounds where market access functions as a bargaining chit the empirical evidence supports these assertions looking at eighteen recent entrants at the six digit product level i find that controlling for a host of country specific variables as well as the applied protection rates on a given product prior to accession the more a country has to offer the more it is required to give moreover i show how more democratic countries in spite of their greater overall depth of integration exhibit greater resistance to adjustment in key industries than do nondemocracies finally i demonstrate that wealth exhibits a curvilinear effect on the one hand institutionalized norms lead members to exercise observable restraint vis a vis the poorest countries on the other hand the richest countries have the greatest bargaining expertise and thus obtain better terms the outcome as i show using a semi parametric analysis is that middle income countries end up with the most stringent terms and have to make the greatest relative adjustments to their trade regimes

getting paid wage arrears and stratification in russia1 wage arrears have played an important yet unappreciated role in the stratification of contemporary russian society delays in wage payments became rampant and persistent during the 1990s because of the particular structural institutional and policy context that accompanied russia s market reforms recent improvements in russia s economy have reduced but not eliminated wage arrears an innovative practice that has become institutionalized in some but not all postsocialist societies analyses of survey data collected in early 1998 confirm the independent stratifying role of arrears inequality in getting paid is socially structured in a different manner than inequality in contracted wages and the former proves equally or more decisive in shaping inequality in actual wages arrears occur with some regularity in other national and historical contexts this study of russia shows that where arrears are rampant researchers should incorporate them into conceptual and empirical models of earnings inequalit

the perversity of preferences gsp and developing country trade policies 1976 2000 industrial countries maintain special tariff preferences namely the generalized system of preferences gsp for imports from developing countries critics have highlighted the underachieving nature of such preferences but developing countries continue to place the gsp at the heart of their agenda in multilateral negotiations what effect do such preferences have on a recipient s own trade policies the authors develop and test a simple theoretical model of a small country s trade policy choice using a dataset of 154 developing countries from 1976 through 2000 they find that countries removed from the gsp adopt more liberal trade policies than those remaining eligible the results corrected for endogeneity and robust to numerous alternative measures of trade policy suggest that developing countries may be best served by full integration into the reciprocity based world trade regime rather than continued gsp style special preferences

managing the evolution of multilateralism author s downs george w rocke david barsoom peter n abstract in the past five years a relatively extensive literature has emerged that explores the demand for multilateral cooperation that is those factors that motivate states to develop or resist developing formal institutions that operate to increase interstate economic military or environmental cooperation 1 these factors include the transaction costs associated with ad hoc and multiple bilateral arrangements increased interstate trade the diffusion of liberal trade theory information about the costs of environmental degradation and trends in elite ideology to date however our understanding of the supply side of multilateralism the standards that are set for admission the order and speed with which candidate states are admitted and the impact of expansion on cooperation and future evolution has been relatively undeveloped 2 partly as a result theorists have had little to say about how multilateral institutions are likely to evolve or what the policy consequences of their expansion will be 3 supply side issues are important because multilateral organizations usually do not spring forth full blown they grow instead of forming an inclusive agreement that is one that covers nearly all of the states that its designers eventually hope to include many multilateral organizations start out with substantially smaller memberships and generally expand over time we argue that among the many possible explanations for the choice of this design strategy there is a rational choice argument

in the shadow of law or power consensus based bargaining and outcomes in the gatt wto this article explains how consensus decision making has operated in practice in the general agreement on tariffs and trade world trade organization gatt wto when gatt wto bargaining is law based consensus outcomes are pareto improving and roughly symmetrical when bargaining is power based states bring to bear instruments of power that are extrinsic to rules invisibly weighting the process and generating consensus outcomes that are asymmetrical and may not be pareto improving empirical analysis shows that although trade rounds have been launched through law based bargaining hard law is generated when a round is closed and rounds have been closed through power based bargaining agenda setting has taken place in the shadow of that power and has been dominated by the european community and the united states the decision making rules have been maintained because they help generate information used by powerful states in the agenda setting process consensus decision making at the gatt wto is organized hypocrisy allowing adherence to the instrumental reality of asymmetrical power and the sovereign equality principle upon which consensus decision making is purportedly based

geography international trade and political mobilization in u s industries posed industries geographic concentration strongly increases a the formation of common trade policy preferences among workers b employees contributions to political campaigns and c voter turnout this activism traces not to the behavior of political elites but rather to the increased possibility for collective action that spatial proximity affords individuals in trade exposed industries es eography is everywhere in vogue from studies of silicon valley effects and industrial agglomeration audretsch 1998 dyer 1994 to the pricing practices of monopolies from corporate alliances to regional economic development porter 1998 the spatial proximity of firms is shedding new light on some of the most enduring puzzles in business and economics yet despite this interest in industrial clusters few studies have asked and fewer still have empirically assessed how spatial proximity conditions an industry s political behavior this link is particularly important for sectors exposed to international trade given the longstanding debate over how geographic concentration affects an industry s ability to secure import relief recent studies busch and reinhardt 1999 mcgiliivray 1997 find that spatially proximate industries are indeed more successful in gaining protection although the mechanisms by which they exert greater political influence remain little understood we seek to explain how geographic concentration facilitates political mobilization on the part of trade exposed industries geographic concentration bolsters an industry s capacity for collective action in particular as a wide variety of literatures insists spatial proximity facilitates greater face to face communication aids in the diffusion of specialized political knowledge provides the basis for denser social networks and enables more effective monitoring and sanctioning of those who might free ride on the political contributions of others in short individuals in geographically concentrated groups are more likely to recognize and act upon their collective interests yet spatial proximity alone is not sufficient to motivate political mobilization underlying common interests must exist as well looking at manufacturing industries we hypothesize

cross national variation in occupational sex segregation i examine the relationship between the occupational distributions of men and women in 25 industrial countries and selected social economic and cultural factors recent research suggests counterintuitive international patterns of occupational sex segregation low levels of segregation in some traditional countries like japan and italy and high levels in the progressive countries of scandinavia i argue that the same economic structures that are associated with women s greater integration into the formal labor force also contributes to a deepening institutionalization of gender within the occupational structure this may occur through the incorporation of women s traditional tasks into the formal economy and or through the hierarchical andfunctional differentiation of economic activity in highly industrial societies results indicate that some primary structural characteristics of modern economies a relatively large service sector and a large employee class are associated with greater female concentration in clerical sales and service occupations however other social and cultural characteristics of these countries low rates offertility and more favorable ideological environments partially offset these segregative forces furthermore the actual penetration of egalitarian principles into the labor market appears to be mediated by the structure of interest articulation with corporatist systems showing greater propensity toward segregation

property rights and stratification in socialist redistributive economies in socialist economies work organizations differ widely in the compensation they provide employees despite the absence of key product and labor market processes thought to ex plain such inequalities in market economies existing theories of stratification in socialist economies focus on the power and privilege of elites but inequalities among organizations are not created by political particularism or elite power in this paper i sketch elements of an institutional theory of stratification anchored in a conception of property rights the right to derive income from productive assets two aspects of property rights guide the analysis 1 the dispersion of property rights across a hierarchy of governmentjurisdictions and 2 the exercise of these rights by government jurisdictions as they extract revenues primarily through taxation extraction of revenues from a work organization varies with the budgetary resources of a government jurisdiction and the dependence of that jurisdiction on the out puts of the organization variation in revenue extraction in turn creates inequalities among work organizations in their abilities to provide benefits to employees an analysis of survey data on the provision of housing and benefits by work organizations in the large industrial city of tianjin china provides provisional support for these ideas s tudents of communist states have had little reason to dispute lenski s 1966 claim that the distribution of rewards in a society is a func tion of the distribution of power p 63 as ex emplified in szelenyi s wedding of elite theory to institutional economics this idea has been de veloped primarily in terms of the power of class es or occupational groups szelenyi 1978 be gan with the observation that planned economies operate according to redistributive rather than market principles however the process of re

institutions in international relations understanding the effects of the gatt and the wto on world trade the general agreement on tariffs and trade gatt and the world trade organization wto have been touted as premier examples of international institutions but few studies have offered empirical proof this article comprehensively evaluates the effects of the gatt wto and other trade agreements since world war ii our analysis is organized around two factors institutional standing and institutional embeddedness we show that many countries had rights and obligations or institutional standing in the gatt wto even though they were not formal members of the agreement we also expand the analysis to include a range of other commercial agreements that were embedded with the gatt wto using data on dyadic trade since 1946 we demonstrate that the gatt wto substantially increased trade for countries with institutional standing and that other embedded agreements had similarly positive effects moreover our evidence suggests that international trade agreements have complemented rather than undercut each other an earlier version of this article was presented at the 99th annual meeting of the american political science association philadelphia august 28 31 2003 we thank tim buthe joanne gowa miles kahler andrew rose arthur stein richard steinberg and seminar participants at stanford university the university of chicago pipes the university of california los angeles the university of california san diego and the university of virginia for many helpful comments we especially thank claire adida ashley conner moonhawk kim erin krampetz james morrison mike nardis natan sachs rachel rubinfeld and jessica weeks for excellent research assistance we are grateful for financial support from the national science foundation career grant ses 0548285 to tomz the stanford center for international development and the vice provost for undergraduate education at stanford

the first shall be last entrepreneurship and communist cadres in the transition from socialism this article reviews the sociological literature on the transition from socialism to capitalism it distinguishes between the erosion and transition phases and between traditional and corporate segments in the emerging private sector panel survey data from hungary show that during the transition ex communist cadres maintain their advantageous position and do especially well in the more dynamic corporate segment they are successful because human capital is important in both capitalism and socialism and because the cadres are able to convert past political power to economic advantage contrary to the findings of studies based only on agriculture the transition increases income inequalities

does the market pay off earnings returns to education in urban china previous work on the market transition in reform era china has missed the direct link between individuals labour market history and individuals labour market outcome a typology of workers is developed based on individuals labour market histories and a model of selective mobility of workers from the state sector to the market sector is offered as an explanation for higher earnings returns to education in the market sector analysis of data from an urban survey in china reveals that commonly observed higher earnings returns to education in the market sector are limited only to recent market entrants and that early market entrants resemble state workers in both their level of earnings and returns to education these results challenge the prevailing wisdom that education is necessarily more highly rewarded in the market sector thus it is concluded that higher returns to education in the market sector should not be construed as being caused by marketization per se and instead that the sorting process of workers in labour markets helps explain the sectoral differentials

market and institutional determinants of wage differentiation in russia using a range of official and survey data the author evaluates the relative success of two approaches competitive labor market theory and industrial relations theory institutional economics in explaining wage determination in russia following a review of the analysis of wage determination by an influential team of world bank economists the author shows that increased wage inequality in russia is dominated by inequality within occupational categories within local labor markets such inequality he suggests is primarily associated with inter firm differences in wage levels rather than barriers to labor mobility or differences in human capital such a pattern of differentiation entirely accords with the analyses of those institutional economists and industrial relations theorists who stress the role of the wage in regulating and motivating the labor force above its role in securing labor market equilibrium the paper concludes by outlining the institutional framework of wage determination that underli

effects of wto accession on policy making in sovereign states preliminary lessons from the recent experience of transition countries one of the most remarkable success es of the world trade organization in recent years has been the expansion of wto membership and the continued stream of applications of countries to accede to the wto of the 43 countries that have applied to accede the wto under article xii since january i 1995 approximately one half are countries in the process of trans ition from a planned to a market economy ten of the 14 countries that have already completed their accession process and between 9 and 13 countries depending on whether east asian countries are included or not of the 28 countries negotiating their accession are trans ition countries clearly the wto represents a powerful attraction for countries in transition cit which treat their wto membership as a stamp of approval of their policies and the admission into the international community a feat quite important for crt that have been isolated from world markets for more 50 years

how states ration flexibility tariffs remedies and exchange rates as policy substitutes a close look at the commitments of world trade organization wto members presents a striking paradox most states could raise their duties significantly before falling afoul of their wto obligations moreover such binding overhang varies between countries some could more than double the amount of trade protection they offer overnight whereas others are tightly constrained what accounts for this variation the author argues that more flexibility is not always better obtaining it and subsequently using it are both costly rather than maximize flexibility states thus seek an optimal amount if they have access to policy space through other means such as currency devaluations and trade remedies they will exercise restraint in seeking binding overhang the same supply side logic holds at the domestic level governments strategically withhold binding overhang from industries that are able to rely on trade remedies despite the fact that these tend to have the greatest political clout

the divergent effects of joining international organizations trade gains and the rigors of wto accession governments have joined the world trade organization wto in vastly different ways some have taken mere days to join without undertaking any trade liberalization while others have taken more than a decade and been forced to undergo significant liberalization we argue that the more rigorous a state s accession to an international organization io and thus the greater policy change required to join the greater the benefits it will receive from membership in the organization in the trade context states facing greater scrutiny from the wto and thus engaging in greater trade liberalization as part of the wto accession process should experience greater trade on joining compared to those who face little scrutiny and engage in little if any liberalization we develop a three part classification of wto members based on type of accession early automatic and rigorous and then compile detailed original data on the accession experiences of each relevant state including length of time number of veto players rounds of questions and tariff and nontariff commitments results of exhaustive quantitative tests on all countries from 1950 to 2006 which are robust to estimator sample period and model specification choices consistently demonstrate that those who engage in the greatest amount of accession driven liberalization experience the greatest trade increases from wto membership particularly in the years right after joining in contrast those who do little or nothing to join do not see any trade gains from being a wto member these findings reconcile previous findings on the effects of wto membership on trade highlight the causal importance of io accession and illuminate the conditions under which ios will have beneficial effects for member states

the fourth wave of democracy and dictatorship noncooperative transitions in the postcommunist world the transition from communism in europe and the former soviet union has only sometimes produced a transition to democracy since the crumbling of the berlin wall in 1989 and the collapse of the soviet union in 1991 most of the twenty eight new states have abandoned communism but only nine of these have entered the ranks of liberal democracies the remaining majority of new postcommunist states are various shades of dictatorships or unconsolidated transitional regimes this article seeks to explain why some states abandoned communism for democracy while others turned to authoritarian rule in endorsing actorcentric approaches that have dominated analyses of the third wave of democratization this argument nonetheless offers an alternative set of causal paths from ancien regime to new regime that can account for both democracy and dictatorship as outcomes situations of unequal distributions of power produced the quickest and most stable transitions from communist rule in countries with asymmetrical balances of power the regime to emerge depends almost entirely on the ideological orientation of the most powerful in countries where democrats enjoyed a decisive power advantage democracy emerged conversely in countries in which dictators maintained a decisive power advantage dictatorship emerged in between these two extremes were countries in which the distribution of power between the old regime and its challengers was relatively equal rather than producing stalemate compromise and parted transitions to democracy however such situations in the postcommunist world resulted in protracted confrontation between relatively balanced powers the regimes that emerged from these modes of transitions are not the most successful democracies but rather are unconsolidated unstable partial democracies

revolution reform and status inheritance urban china 1949 1996 do regime change and market reform disrupt patterns of intergenerational mobility china s political trajectory is distinctive from that of other communist regimes in two ways during its first three decades the regime enforced unusually restrictive barriers to elite status inheritance and during the subsequent market transition unlike most of its counterparts the communist party survived intact data from a multigeneration survey suggest that despite their obvious exclusion from the party and related administrative careers in the mao era certain prerevolution elites transmitted one type of elite status to their offspring to a surprising degree party elites in contrast were hit hard by radical maoism but recovered quickly afterward and their offspring inherited elite status at much higher rates

perspectives on positive political economy this volume serves as an introduction to the field of positive political economy and the economic and political processes with which it is concerned this new research tradition is distinct from both normative and historical approaches to political economy grounded in the rational actor methodology of microeconomics positive political economy is the study of rational decisions in a context of political and economic institutions more analytical than traditional approaches it is concerned with the derivation of principles and propositions against which real world experience may be compared its focus is on empirical regularities and its goal is theoretical explanation the field has focused on three main areas of research models of collective action constraints on competitive market processes and the analysis of transaction costs developments in all of these areas are covered in the book the first part of the volume surveys the field while the second part displays positive political economy at work examining a variety of subjects the final part contains essays by leading political economists on the theoretical foundations of the field

local governments as industrial firms an organizational analysis of china s transitional economy despite widespread skepticism about government ownership in transitional economies china s rapid industrial growth has been led by public enterprises kornai s theory of soft budbet constraints born of the failure of earlier hungarian reforms fosters such skepticism but it assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions local governments with smaller industrial bases have clearer financial incentives and constraints fewer nonfinancial interests in enterprises and a greater capacity to monitor them in china s vast public sector the fastest growth in output and productivity has occurred where government ownership rights are clearest and most easily enforced which enables officials to manage public industry as a diversified market oriented firm

returns to education in china we were fortunate in having access to a survey of 800 adults in nanjing that was conducted by the international wool secretariate in 1986 the survey was intended for market research e g brand recognition but questions were asked about the respondent s age occupation income and education level these questions though not ideally worded were sufficient for the undertaking of a returns to education study we believe the data to be unique and of course the issue of interest is whether a member of the workforce in china faces investment decisions on education similar to those faced elsewhere the influence of sex and marital status on the level of income achieved by an individual was also examined the basic equation modeled personal income as a nonlinear function of schooling and experience but multicollinearity problems were encountered as a result a production function approach was successfully adapted to the returns toeducation model the collinearity problem was overcome and this approach allowed the ease of substitution of education for experience in income generation to be examined more formally an additional problem of errors in variables arose from a failing in questionnaire design and was handled statistically

structural change and post socialist stratification labor market transitions in contemporary russia in russia market transition has led to sweeping structural changes a long recession growth of the private sector expansion of certain branches of the economy and contraction of others a decrease in average firm size and regional differentiation in economic performance these structural changes had important consequences for stratification through their effects on individual labor market outcomes analyses of nine types of individual labor market transitions in russia using 1991 1997 work history data show that structural location has strong effects human capital and membership in the communist party of the soviet union also influence labor market prospects but not in ways consistent with general theories about how market transition affects stratification processes structural change plays a key role in determining the impact of market reforms on stratification but market transition produces variable patterns of structural change in different countries and in different regions within a single country the structural perspective demonstrates why market transition has variable consequences for stratification different prior conditions and reform policies produce different patterns of structural change

the energy efficiency gap what does it mean abstract as renewed attention has been given by policy makers to energy conservation issues it has frequently been asserted that an energy efficiency gap exists between actual and optimal energy use the critical questions is how to define the optimal level of energy efficiency this paper seeks to disentangle some confusing strands of argument that are frequently brought to bear on this question by identifying the major conceptual issues that determine the set of feasible answers we identify five separate and distinct notions of optimality the economists economic potential the technologists economic potential hypothetical potential the narrow social optimum and the true social optimum each of these has associated with it a corresponding definition of the energy efficiency gap our analysis demonstrates that necessary preconditions for identifying the right measure of the energy efficiency gap include understanding and disentangling market failure and non market failure explanations for the gradual diffusion of energy efficient technologies

elite opportunity in transitional economies command economies gave communist era elites administrative control and material privilege but severely restricted money income and private wealth markets and privatization have injected new value into public assets and create unprecedented opportunities for elite insiders these opportunities depend on the extent of regime change and barriers to asset appropriation regime change varies from the survival of the entire party hierarchy to its rapid collapse and defeat in competitive elections barriers to asset appropriation vary with the extent pace and form of privatization and the concentration and liquidity of assets different combinations of such circumstances jointly affect the extent to which prior elites obtain ownership or control of privatized assets use political office to extract larger incomes move into salaried elite occupations or fall out of the elite altogether regime change and barriers to asset appropriation affect change at the national level but outcomes vary across economic sectors because of characteristics of organizations elite positions and assets this elementary theory serves to integrate varied findings from recent research on central europe china and russia and yields predictions for other regions

global communications and national power life on the pareto frontier regime analysis has focused on issues of market failure the resolution of which depends upon knowledge and institution building global communications regimes however have been concerned either with issues of pure coordination or with coordination problems with distributional consequences outcomes have been decided by the underlying distribution of national power in those areas where power was asymmetrically distributed and there was no agreement on basic principles and norms radio broadcasting and remote sensing no regime was formed in those areas where distributional issues could not be unilaterally resolved allocation of the radio spectrum and telecommunications regimes were created although both principles and rules changed with alterations in national power capabilities