nep-cna New Economics Papers
on China
Issue of 2015‒07‒25
nine papers chosen by
Zheng Fang
Ohio State University

  1. Migration Externalities in China By Pierre-Philippe Combes; Sylvie Démurger; Shi Li
  2. What Drives Productivity Volatility of Chinese Industrial Firms? By Xubei Luo; Nong Zhu
  3. Balancing water resources conservation and food security in China By Carole Dalin; Huanguang Qiu; Naota Hanasaki; Denise L. Mauzerall; Ignacio Rodriguez-Iturbe
  4. Fertility and Female Labour Force Participation: Causal Evidence from Urban China By He, Xiaobo; Zhu, Rong
  5. The Birth of Edge Cities in China: Measuring the Spillover Effects of Industrial Parks By Siqi Zheng; Weizeng Sun; Jianfeng Wu; Matthew E. Kahn
  6. Does Creative Destruction Work for Chinese Regions? An Empirical Study on the Articulation between Firm Exit and Entry By Yi Zhou; Canfei He; Shengjun Zhu
  7. Regional Industrial Evolution in China: Path Dependence or Path Creation? By Canfei He; Yan Yan; David Rigby
  8. Size and structure of disaster relief when state capacity is limited: ChinaÕs 1823 flood By Ni Yuping; Martin Uebele
  9. Evolution of Production Space and Regional Industrial Structures in China By Qi Guo; Canfei He

  1. By: Pierre-Philippe Combes (Departement d'Economie de Sciences Po); Sylvie Démurger (CNRS); Shi Li
    Abstract: We analyse the impact of internal migration in China on natives׳ labour market outcomes. We find evidence of a large positive correlation of the city share of migrants with natives׳ wages. Using different sets of control variables and instruments suggests that the effect is causal. The large total migrant impact (+10% when one moves from the first to the third quartile of the migrant variable distribution) arises from gains due to complementarity with natives in the production function (+6.4%), and from gains due to agglomeration economies (+3.3%). Finally, we find some evidence of a stronger effect for skilled natives than for unskilled, as expected from theory. Overall, our findings support large nominal wage gains that can be expected from further migration and urbanisation in China.
    Keywords: Migration; Urban Development; Agglomeration Economies; Wage Disparities; China
    JEL: O18 J61 R23 J31 O53
    Date: 2015–05
  2. By: Xubei Luo; Nong Zhu
    Abstract: The Chinese economy has witnessed impressive development since the enterprise reforms in the 1990s.  With the restructuring of the private sector and the development of market economy, the level and volatility of firm level productivity have become increasingly important aspects of the micro performance of the economy.   This paper examines the role of different firm characteristics - such as size, age, ownership, and geographic location - in productivity volatility using a firm-level dataset collected annually by China’s National Bureau of Statistics in 1998-2007. It follows the methodology developed in Comin and Philippon (2005; 2007) to measure firm productivity volatility as the standard deviation of the annual growth rate of output per worker. Its objectives are to investigate the drivers of productivity volatility of Chinese industrial firms, and to shed light on the sources of output volatility and its evolution over time.   The results suggest that in general, firm productivity volatility declined over time. Among firms of different characteristics, larger firms, older firms, foreign firms, and firms located in the coastal provinces are less volatile. Firm size and location are the two major factors that drive changes in productivity volatility – one positively and one negatively. While the gaps of volatility between smaller firms and larger firms declined, the gaps between firms located in the coastal provinces and inland provinces increased.
    Keywords: Enterprise reform, productivity, volatility, China,
    JEL: C21 D21 E23
    Date: 2015–07–13
  3. By: Carole Dalin; Huanguang Qiu; Naota Hanasaki; Denise L. Mauzerall; Ignacio Rodriguez-Iturbe
    Abstract: China’s economic growth is expected to continue into the next decades, accompanied by sustained urbanization and industrialization. The associated increase in demand for land, water resources, and rich foods will deepen the challenge of sustainably feeding the population and balancing agricultural and environmental policies. We combine a hydrologic model with an economic model to project China’s future food trade patterns and embedded water resources by 2030 and to analyze the effects of targeted irrigation reductions on this system, notably on national agricultural water consumption and food self-sufficiency. We simulate interprovincial and international food trade with a general equilibrium welfare model and a linear programming optimization, and we obtain province-level estimates of commodities’ virtual water content with a hydrologic model. We find that reducing irrigated land in regions highly dependent on scarce river flow and nonrenewable groundwater resources, such as Inner Mongolia and the greater Beijing area, can improve the efficiency of agriculture and trade regarding water resources. It can also avoid significant consumption of irrigation water across China (up to 14.8 km3/y, reduction by 14%), while incurring relatively small decreases in national food self-sufficiency (e.g., by 3% for wheat). Other researchers found that a national, rather than local, water policy would have similar effects on food production but would only reduce irrigation water consumption by 5%.
    Keywords: virtual water; food trade; trade policy; sustainable agriculture; water saving
    JEL: R14 J01
    Date: 2014
  4. By: He, Xiaobo; Zhu, Rong
    Abstract: Using population census data, this paper examines the causal effect of a second child on married women's labour force participation in urban China. To ameliorate the endogeneity of fertility, we exploit twin births as the source of variation in fertility. While the ordinary least squares estimates indicate that having one more child significantly reduces female labour force participation by around 6 and 9 percentage points in 1990 and 2000 respectively, our causal analyses suggest very small negative effect in 1990 (around 2 percentage points) and insignificant effect in 2000.
    Keywords: Female labour force participation, Fertility, One-Child Policy
    JEL: J13 J21
    Date: 2015–07
  5. By: Siqi Zheng; Weizeng Sun; Jianfeng Wu; Matthew E. Kahn
    Abstract: Several Chinese cities have invested billions of dollars to construct new industrial parks. These place based investments solve the land assembly problem which allows many productive firms to co-locate close to each other. The resulting local economic growth creates new opportunities for real estate developers and retailers that develop properties and stores close to the new park. The city mayor has the political clout and the personal promotion incentives to anticipate these effects as he chooses whether and where within the city to build the park. Using several geo-coded data sets, we measure the localized spillover effects of the new parks on local incumbent firm productivity, the growth of retail activity close to the park and local real estate pricing and construction. We document the heterogeneous effects of investment in parks. Those parks featuring a higher level of human capital, a greater level of co-agglomeration among firms within the park, and a smaller share of State Owned Enterprises offer greater spillover effects.
    JEL: H42 H72
    Date: 2015–07
  6. By: Yi Zhou; Canfei He; Shengjun Zhu
    Abstract: Creative destruction is a key driving force behind industrial development. The continuing process of creative destruction provides an impetus to regional industrial renewal. Our analytical framework that emphasizes the ways in which firm exit creates a stimulus for firm entry, resulting in incremental innovation and productivity increase is complementary to the process of technological change and industrial renewal articulated by Schumpeter who pays attention to how new entrants bring in radical innovation and new products, making incumbents’ products and technologies obsolete and force them to exit or catch up. Using firm-level data of China’s industries during 1998-2008, this paper seeks to argue that the articulation between firm exit and entry has been constantly shaped by an assemblage of various factors, including firm characteristics, industrial linkages, regional institutions and geographical proximity.
    Keywords: Creative destruction, Firm Exit, Firm Entry, Industrial Dynamics, China
    Date: 2015–07
  7. By: Canfei He; Yan Yan; David Rigby
    Abstract: The evolutionary economic geography indicates that regional industrial development is path dependent. The path dependence approach however ignores the external factors, which may create new paths of regional development. Moreover, it does not pay much attention to the role of institutions. Both external factors and institutions are crucial to understand the regional industrial evolution in China. Based on firm level data of Chinese manufacturing industries during 1998-2008, this study examined the industrial evolution through the lens of entry and exit of four digit industries at the Chinese prefectures. Using a measure of co-occurrence based technological relatedness, we apply a logit model to link industry entry and exit to technological relatedness. We find significant evidence that regions branch into new industries which are technologically related to the existing industries and related industries are less likely to exit. Related globalization also encourages the entry of new related industries and discourages the exit of related industries. Further analysis reveals that economic transition has created favorable conditions to allow a larger role of technological relatedness. New industries are more likely to enter regions which are globalized, liberalized and fiscally independent, indicating that economic transition has also generated opportunities for Chinese regions to create new paths of industrial development.
    Keywords: Technological Relatedness, Economic Transition, Industrial Evolution, Path Dependence, Path Creation
    Date: 2015–07
  8. By: Ni Yuping (History Department, Tsinghua University); Martin Uebele (Faculty of Arts, University of Groningen)
    Abstract: This paper presents new archival evidence about amount and structure of central government disaster relief during ChinaÕs devastating flood of 1823. While the flood affected 20 percent of ChinaÕs counties, spending per capita was sizable and distributed between provinces depending on the intensity of flooding. However, because of its small relative size and thus limited state capacity the Chinese government had to spend about half of annual tax income on relief during 1823. We thus conclude that short-term disaster relief was prioritized by the Qing administration over long-term investments, which may have contributed to its secular economic stagnation.
    Keywords: Daoguang Depression, disaster relief, China, 19th century, state capacity
    Date: 2015–07
  9. By: Qi Guo; Canfei He
    Abstract: A growing literature on evolutionary economic geography concludes that regional industrial evolution is path-dependent and is determined by the pre-existing industries. This study applies the co-occurrence approach to calculate the production relatedness and portrays the production space and then examines the impact of production relatedness on regional industrial evolution. The findings report that production relatedness does underscore the regional structure change in China but shows significant regional differences in the evolution path. The coastal region has strong tendency of path dependence in its industrial evolution, while North West and South West break the path-dependent trajectory and transition into high productive sectors distant from their own production network. The results suggest that national policies can play its crucial role in creating new paths in China's regional development. Institutions matter to allow the significant role of industry relatedness in driving regional industrial evolution.
    Keywords: Production space, Industry relatedness, Regional Industrial Evolution, China
    Date: 2015–07

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