nep-cna New Economics Papers
on China
Issue of 2007‒11‒24
six papers chosen by
Zheng Fang
Ohio State University

  1. The Growth of Poor Children in China 1991-2000: Why Food Subsidies May Matter By Lars Osberg; Jiaping Shao; Kuan Xu
  2. Global growth and distribution : are China and India reshaping the world? By van der Mensbrugghe, Dominique; Medvedev, Denis; E. De Hoyos, Rafael; Bussolo, Maurizio
  3. Why Are Saving Rates of Urban Households in China Rising? By Marcos Chamon; Eswar Prasad
  4. How relevant is targeting to the success of an antipoverty program ? By Ravallion, Martin
  5. Ideas and innovation in East Asia By Hu, Albert; Brahmbhatt, Milan
  6. Earnings-Tenure Profiles: Tests of Agency and Human Capital Theories Using Individual Performance Data By Xiao-Yuan Dong; Derek C. Jones; Takao Kato

  1. By: Lars Osberg; Jiaping Shao; Kuan Xu (Department of Economics, Dalhousie University; Department of Economics, Dalhousie University; Department of Economics, Dalhousie University)
    Keywords: height-for-age; child heath; growth; inequality; poverty; food subsidies; China
    Date: 2007–11–19
  2. By: van der Mensbrugghe, Dominique; Medvedev, Denis; E. De Hoyos, Rafael; Bussolo, Maurizio
    Abstract: Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank ' s LINKAGE global general equilibrium model and the newly developed Global Income Distribution Dynamics (GIDD) tool, this paper assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per-capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class-a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in widening of income distribution within countries. These opposing distributional effects highlight the importance of analyzing global disparities by taking into account - as the GIDD does - income dynamics between and within countries.
    Keywords: Inequality,Economic Theory & Research,,Emerging Markets,Achieving Shared Growth
    Date: 2007–11–01
  3. By: Marcos Chamon (International Monetary Fund); Eswar Prasad (Cornell University and IZA)
    Abstract: From 1995 to 2005, the average urban household saving rate in China rose by 8 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. The age profile of savings has an unusual U-shaped pattern, with saving rates being the highest among the youngest and oldest households. We find that financial underdevelopment, as reflected in constraints on borrowing and low returns on financial assets, partially accounts for this pattern. Moreover, overall saving rates have increased across all demographic groups. We argue that this can be explained by the rising private burden of expenditures on housing, education, and health care.
    Keywords: household savings, age and cohort profiles of savings, borrowing constraints, precautionary savings, financial development, demographics
    JEL: D12 E21 O16
    Date: 2007–11
  4. By: Ravallion, Martin
    Abstract: Policy-oriented discussions often assume that " better targeting " implies larger impacts on poverty or more cost-effective interventions. The literature on the economics of targeting warns against that assumption, but evidence has been scarce. The paper begins with a critical review of the strengths and weaknesses of the targeting measures found in practice. It then exploits an unusually large micro data set for China to estimate aggregate and local-level poverty impacts of the country ' s main urban antipoverty program. Standard measures of targeting are found to be uninformative, or even deceptive, about impacts on poverty and cost-effectiveness in reducing poverty. In program design and evaluation, it would be better to focus directly on the program ' s outcomes for poor people than to rely on prevailing measures of targeting.
    Keywords: Services & Transfers to Poor,Poverty Monitoring & Analysis,Population Policies,Poverty Impact Evaluation,Poverty Reduction Strategies
    Date: 2007–11–01
  5. By: Hu, Albert; Brahmbhatt, Milan
    Abstract: The generation, diffusion, absorption and application of new technology, knowledge or ideas are crucial drivers of development. This paper surveys the diverse approaches to innovation adopted by East Asian economies, the problems faced and outcomes achieved, as well as possible policy lessons. Knowledge flows from advanced countries remain the primary source of new ideas in developing economies. The authors evaluate the role of three main channels for knowledge flows to East Asia - international trade, acquisition of disembodied knowledge and foreign direct investment. The paper then looks at the exceptionally fast growth in domestic innovation efforts in Korea, Taiwan (China), Singapore and China, drawing on information about R & D as well as original analysis of patent and patent citation data. Citation analysis shows that while East Asian innovations continue to draw heavily on knowledge flows from the US and Japan, citations to the same or to other East Asian economies are quickly rising, indicating the emergence of national and regional knowledge stocks as a foundation for innovation. A last section pulls together findings about policies and institutions to foster innovation, under three heads: the overall business environment for innovation (macroeconomic stability, financial development, openness, competition, intellectual property rights and the quality of communications infrastructure), human capital development, and government fiscal support for innovation.
    Keywords: E-Business,Knowledge Economy,Economic Theory & Research,Technology Industry,Agricultural Knowledge & Information Systems
    Date: 2007–11–01
  6. By: Xiao-Yuan Dong (University of Winnipeg); Derek C. Jones (Hamilton College, Mondragon University and University of Michigan); Takao Kato (Colgate University, Columbia Business School, University of Tokyo, Aarhus School of Business and IZA)
    Abstract: By using a large new panel of individual data, including objective measures of worker performance, we provide some of the most rigorous evidence to date on several related dimensions of enduring debates surrounding upward-sloping earnings-tenure profiles. Most importantly we provide the first direct test of the relative validity of human capital and agency explanations in accounting for upward-sloping earnings-tenure profiles; our findings strongly support the agency view. Our second area of interest concerns employee ownership (many workers at our case are employee owners). Consistent with agency theory we find that earnings-tenure profiles for employee owners are not upward-sloping but horizontal. In addition we find that pay-performance sensitivities are substantially weaker for employee owners than for other workers. Finally we investigate the impact of residential policies in China. We find that again consistent with the agency view, earnings-tenure profiles are considerably steeper for urban workers than for migrant workers with far more limited alternative employment opportunities.
    Keywords: earnings, tenure, seniority, performance, human capital, agency, employee ownership
    JEL: J3 M5 L6
    Date: 2007–10

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