nep-cna New Economics Papers
on China
Issue of 2010‒12‒11
three papers chosen by
Zheng Fang
Ohio State University

  1. Income Uncertainty and Household Savings in China By Chamon, Marcos; Liu, Kai; Prasad, Eswar
  2. The Regional Distribution of Skill Premia in Urban China By John Whalley; Chunbing Xing
  3. Stunting and Selection Effects of Famine: A Case Study of the Great Chinese Famine By Gørgens, Tue; Meng, Xin; Vaithianathan, Rhema

  1. By: Chamon, Marcos (International Monetary Fund); Liu, Kai (Johns Hopkins University); Prasad, Eswar (Cornell University)
    Abstract: China's household saving rate has increased markedly since the mid-1990s and the age-saving profile has become U-shaped. Using a panel of urban Chinese households covering 1989-2006, we document a sharp increase in income uncertainty. While the permanent variance of household income was stable, the transitory variance rose sharply. Based on these estimates, we calibrate a buffer-stock savings model and show that rising income uncertainty and pension reforms lead younger and older households, respectively, to raise their saving rates. These two factors account for over half of the increase in China's urban household savings rate and the U-shaped age-profile of savings.
    Keywords: China, household savings, income uncertainty, pension reforms, buffer-stock savings
    JEL: D91 J3 E21
    Date: 2010–11
  2. By: John Whalley; Chunbing Xing
    Abstract: We document and discuss the implications of a sharp increase in the regional dispersion of skill premia in China in recent years. This has previously been little noted or discussed. We use three urban household surveys for 1995, 2002, and 2007 and estimate skill premia at provincial and city levels. Results show an increase in the skill premium across all regions between 1995 and 2002, but only coastal regions show significant increases in skill premia between 2002 and 2007. For 2007, coastal regions also have much higher within region wage inequality and this contributes more to overall urban wage inequality than within region inequality of non-coastal regions. Using a fixed effects model at city level, we find that ownership restructuring is a significant factor in driving up skill premia during the first period, and that the ongoing process of China’s integration into the global economy plays a significant and regionally concentrated role in the second period.
    JEL: J00 J01 J30 J31
    Date: 2010–12
  3. By: Gørgens, Tue; Meng, Xin; Vaithianathan, Rhema
    Abstract: Many developing countries experience famine. If survival is related to height, the increasingly common practice of using height as a measure of well-being may be misleading. We devise a novel method for disentangling the stunting from the selection effects of famine. Using data from the 1959-1961 Great Chinese Famine, we find that taller children were more likely to survive the famine. Controlling for selection, we estimate that children under the age of five who survived the famine grew up to be 1 to 2 cm shorter. Our results suggest that average height is potentially a biased measure of economic conditions during childhood.
    Keywords: Famine, height, China, panel data
    JEL: C33 I12 N95 O15
    Date: 2010–10

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