Four Essays on Interhousehold Transfers and Institutions in Post-Communist Romania

Abstract

Four Essays on Interhousehold Transfers and Institutionsin Post-Communist RomaniaavAndreea MitrutAKADEMISK AVHANDLINGsom med vederbörligt tillstånd för vinnande avfilosofie doktorsexamen vidHandelshögskolans fakultet, Göteborgs universitet,framlägges till offentlig granskningonsdagen den 11 juni 2008, kl 10, i sal E-44,Institutionen för nationalekonomi med statistik, Vasagatan 1Göteborg 2008Four Essays on Interhousehold Transfers and Institutions in Post-Communist RomaniaAbstractThis thesis consists of four essays related to different social and economic aspects in postcommunistRomania:Paper 1: In many developing and transitional countries, inter-household transfers in generaland gifts in particular are sizable and very important. We use unique Romanian data thatenables us to isolate pure gifts from other kinds of private transfers. We find that socialnorms are important for explaining the occurrence of gifts. However, we find differentmotives for gifts to the rich and the poor. Middle- and high-income households are part ofreciprocal networks and receive more the higher their incomes and the more they give toothers. The poor may be excluded from reciprocal networks, but they still receive, since thereis a social duty to give.Paper 2: This paper investigates the determinants of formal group membership and informalnetwork participation. We are particularly interested in the effect of heterogeneity, be it interms of inequality or ethnicity. We find that inequality has a negative effect on formal groupmembership. Also, we find that inequality acts differently on poor and rich people: wheninequality increases, it is the relatively poor persons who do not participate in groups andinformal networks. Finally, we explore separately the determinants in different types offormal groups, and we find that in ethnically fragmented communities there is a lowerparticipation in groups that involve close social interactions.Paper 3: Using Romanian survey data we investigate the determinants of individual lifesatisfaction, with an emphasis on the role of public and private transfers received. A possibleconcern is that these transfers are unlikely to be exogenous to life satisfaction. We use arecursive simultaneous equations model to account both for this potential problem and for thefact that public transfers are themselves endogenous in the private transfer equation. We findthat public and private transfers received do not matter for overall life satisfaction, whereaswe find a crowding out effect of private transfers by the public ones. However, we find thatpeople are happier when giving private transfers.Paper 4: Tragic images of Romanian institutionalized children shocked Western audienceswhen broadcasted for the first time in the early 1990s, immediately after the fall ofCeausescu. We use a unique census that covers all institutionalized children in 1997, and findthat institutionalized children are significantly less likely to be enrolled in school comparedto their non-institutionalized same-age peers. We identify a special group of institutionalizedchildren: the social orphans, i.e., children who have living parents but have no contact withthem. We find that among healthy children, those in permanent institutional care, i.e. socialorphans and orphans, are significantly less likely to be enrolled in school than noninstitutionalizedchildren, while if we only look at children who suffer from a severe medicalproblem, we do not find significant differences between the two groups. That is probablybecause both groups are at high risk of poor education.Keywords: Romania, gifts, reciprocity, social norms, groups, informal networks, inequality,heterogeneity, happiness, private transfers, public transfers, crowding-out, institutionalizedchildren, child welfare, education, health.JEL codes: D10, D12, D31, D64, D71, G19, I20, I30, I31, I38, J13, R20, Z13.ISBN: 978-91-85169-35-1Contact information: Andreea Mitrut, Department of Economics, School of Business,Economics and Law, University of Gothenburg, Box 640, SE- 40530, Sweden, Phone:+46(0)317861256, Fax: +46(0)317861326, Email: Andreea.Mitrut@economics.gu.se