nep-cna New Economics Papers
on China
Issue of 2007‒10‒27
three papers chosen by
Zheng Fang
Ohio State University

  1. Dual Track Reforms: With and Without Losers By Jiahua Che; Giovanni Facchini
  2. Group Size and Incentive to Contribute: A Natural Experiment at Chinese Wikipedia By Xiaoquan (Michael) Zhang; Feng Zhu;
  3. Measuring Ancient Inequality By Milanovic, Branko; Lindert, Peter; Williamson, Jeffrey

  1. By: Jiahua Che; Giovanni Facchini
    Abstract: The dual track approach to market liberalization has been widely recognized as the key to the success of the Chinese economic reform. In this paper we study the effectiveness of this strategy in economic environments where the status quo government control is incomplete. We show that in a dynamic context contractual arbitrage will emerge, potentially resulting in efficiency losses and/or adverse distributional effects. By establishing a necessary and su±cient condition for the dual{track approach to retain its appeal in a dynamic context, our analysis provides a clear guideline to the broader applicability of this reform mechanism.
    Date: 2007–10–15
  2. By: Xiaoquan (Michael) Zhang (Hong Kong University of Science and Technology); Feng Zhu (Havard Business School);
    Abstract: The literature of private provision of public goods suggests that incentive to contribute is inversely related to group size. This paper empirically tests this relationship using field data from Chinese Wikipedia, an online encyclopedia. We exploit an exogenous reduction in group size as a result of the blocking of Wikipedia in mainland China and examine whether individual contributions increase after the block as predicted in the literature. Our result indicates the opposite: individual contribution of unaffected contributors decreases by 42% on average as a result of the block. We attribute the cause to social effects: contributors care about the number of beneficiaries of their contributions. We build a simple model to illustrate how social effects and group size affect individual incentive to contribute. Consistent with our model prediction, we find that the more a contributor values social recognition, the greater the reduction in her contributions after the block. A series of robustness checks appear to support our explanation.
    Keywords: incentive to contribute; group size; public goods; social effects
    JEL: D85 H44 L14 L31 L86
    Date: 2007–09
  3. By: Milanovic, Branko; Lindert, Peter; Williamson, Jeffrey
    Abstract: Is inequality largely the result of the Industrial Revolution? Or, were pre-industrial incomes and life expectancies as unequal as they are today? For want of sufficient data, these questions have not yet been answered. This paper infers inequality for 14 ancient, pre-industrial societies using what are known as social tables, stretching from the Roman Empire 14 AD, to Byzantium in 1000, to England in 1688, to Nueva España around 1790, to China in 1880 and to British India in 1947. It applies two new concepts in making those assessments – what we call the inequality possibility frontier and the inequality extraction ratio. Rather than simply offering measures of actual inequality, we compare the latter with the maximum feasible inequality (or surplus) that could have been extracted by the elite. The results, especially when compared with modern poor countries, give new insights in to the connection between inequality and economic development in the very long run.
    Keywords: Inequality possibility frontier; pre-industrial inequality; history.
    JEL: N3 D3 O1
    Date: 2007–10

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