nep-cna New Economics Papers
on China
Issue of 2007‒07‒07
four papers chosen by
Zheng Fang
Ohio State University

  1. Subjective Well-being and its Determinants in Rural China By John Knight; Lina Song; Ramani Gunatilaka
  2. Access to Higher Education and Inequality: The Chinese Experiment By Xiaojun Wang; Belton M. Fleisher; Haizheng Li; Shi Li
  3. Decomposition of Changes in Earnings Inequality in China: A Distributional Approach By Chi, Wei; Li, Bo; Yu, Qiumei
  4. R&D offshoring and technology learning in emerging economies: Firm-level evidence from the ICT industry By Huang, Can; Qu, Zhe; Zhang, Mingqian; Zhao, Yanyun

  1. By: John Knight; Lina Song; Ramani Gunatilaka
    Abstract: A national household survey for 2002, containing a specially designed module on subjective well-being, is used to estimate pioneering happiness functions in rural China. The variables predicted by economic theory to be important for happiness are relatively unimportant. The analysis suggests that we need to draw on psychology and sociology if we are to understand. Rural China is not a hotbed of dissatisfaction with life, possibly because most people are found to confine their reference groups to the village. Relative income within the village and relative income over time, both in the past and expected in the future, are shown to influence happiness. `Subjective well-being poverty` functions are estimated, in which income and various proxies for `capabilities` and `functionings` appear as arguments. Even amidst the poverty of rural China, social functionings, attitudes and expectations are important to subjective well-being.
    Keywords: Happiness, Subjective Well-being, Aspirations, Relative Deprivation, Reference Groups, Poverty, China
    JEL: I31
    Date: 2007
  2. By: Xiaojun Wang (University of Hawaii at Manoa); Belton M. Fleisher (Ohio State University and IZA); Haizheng Li (Georgia Tech); Shi Li (Chinese Academy of Social Sciences and IZA)
    Abstract: We apply a semi-parametric latent variable model to estimate selection and sorting effects on the evolution of private returns to schooling for college graduates during China’s reform between 1988 and 2002. We find that there were substantial sorting gains under the traditional system, but they have decreased drastically and become negligible in the most recent data. We take this as evidence of growing influence of private financial constraints on decisions to attend college as tuition costs have risen and the relative importance of government subsidies has declined. The main policy implication of our results is that labor and education reform without concomitant capital market reform and government support for the financially disadvantaged exacerbates increases in inequality inherent in elimination of the traditional "wage-grid".
    Keywords: return to schooling, selection bias, sorting gains, heterogeneity, financial constraints, comparative advantage, China
    JEL: J31 J24 O15
    Date: 2007–06
  3. By: Chi, Wei; Li, Bo; Yu, Qiumei
    Abstract: Using the nationwide household data, this study examines the changes in the Chinese urban income distributions from 1987 to 1996 and from 1996 to 2004, and investigates the causes of these changes. The Oaxaca-Blinder decomposition method is applied to decomposing the mean earnings increases, and the Firpo-Fortin-Lemieux method based upon a recentered influence function is used to decompose the changes in the income distribution and the inequality measures such as the variance and the 10-90 ratio. The decomposition results show that the wage structure effects such as the widened gender pay gap, the increasing return to college education, and the widened gap in the return to different industries, ownership, and regions, have contributed to most of the overall increases in income inequality. During the different time periods, 1987-1996 and 1996-2004, the impacts of these factors vary at the different points (e.g. the lower half or upper half) of distribution.
    Keywords: Earnings inequality; Unconditional Quantile Regressions; Earnings distribution; Decomposition
    JEL: J3
    Date: 2007–07
  4. By: Huang, Can (UNU-MERIT); Qu, Zhe (College of Management, Georgia Institute of Technology); Zhang, Mingqian (School of Economics, Hebei University of China); Zhao, Yanyun (Center for Applied Statistic and School of Statistics, Renmin University of China)
    Abstract: This paper studies the impact of the R&D offshoring of multinational enterprises on the firms in host emerging economies. We develop a two-stage non-cooperative game to analyze the strategic interaction between multinational and host country enterprises engaged in R&D investment. An empirical analysis of 12,309 manufacturing firms in the ICT industry in China shows that R&D offshoring has a positive effect on the intensity of the R&D of host country firms. However, the magnitude of the impact depends on both the technological and geographical distance between the multinational and host country firms. The policy implications of these findings are that the governments of host country should be cautious about allowing advanced multinational R&D investment in under-developed sectors, but they should encourage such investment in developed sectors; and that local governments should be involved in R&D policy making because the positive impact of multinational R&D offshoring diminishes as the geographical distance between the multinational and host country firms increases.
    Keywords: Research and Development, Offshoring, Spillovers, Emerging Economies
    JEL: F23 L23 O32 O33
    Date: 2007

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