nep-cna New Economics Papers
on China
Issue of 2016‒12‒18
eight papers chosen by
Zheng Fang
Ohio State University

  1. Improving or Disappearing: Firm-Level Adjustments to Minimum Wages in China By Florian Mayneris; Sandra Poncet; Tao Zhang
  2. Networked Leaders in the Shadow of the Market – A Chinese Experiment in Allocating Land Conversion Rights By Chau, Nancy H.; Qin, Yu; Zhang, Weiwen
  3. China building energy consumption: definitions and measures from an operational perspective By Ling-Yun He; Wei Wei
  4. Are Chinese transport policies effective? A new perspective from direct pollution rebound effect, and empirical evidence from road transport sector By Lu-Yi Qiu; Ling-Yun He
  5. Wage Structure and Gender Earnings Differentials in China and India By Dainn Wie; Jong-Wha Lee
  6. Judging a Book by Its Cover: Analysts and Attention-Driven Price Patterns in China’s IPO Market By Feng, Xunan; Johansson, Anders C.
  7. Reflections on the concept of representation and its application to China By Heberer, Thomas
  8. The demand for road transport in China: imposing theoretical regularity and flexible functional forms selection By Ling-yun He; Li Liu

  1. By: Florian Mayneris (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE)); Sandra Poncet (Paris School of Economics (University of Paris 1), CEPII and FERDI); Tao Zhang (Shanghai University of International Business and Economics)
    Abstract: We here consider how Chinese firms react to higher minimum wages, exploiting the 2004 minimum-wage Reform in China. After this reform, we find that the wage costs for surviving firms that were more exposed to minimum wage hikes rose, but their employment and profitability were not affected. This came about due to significant productivity gains among surviving exposed firms. Our results are robust to pre-trend analysis and an IV strategy. However, the survival probability of firms most exposed to minimum-wage hikes fell after the Reform. Firm-level productivity gains partly came from better inventory management and greater investment in capital, at the cost of a reduction in firm-level cash flow. We show that competing explanations are unlikely. In particular, there is no evidence of lower fringe benefits compensating for higher wages, the substitution of less-paid/less-protected migrants for incumbent workers, or firm-level adjustment through higher prices instead of higher productivity. This firm-level productivity adjustment to the minimum wage might be particularly relevant for developing countries where inefficiencies are still pervasive.
    Keywords: minimum wages, firm-level performance, productivity, China
    JEL: J38 O12 O14
    Date: 2016–11–30
  2. By: Chau, Nancy H.; Qin, Yu; Zhang, Weiwen
    Abstract: Concerns over the loss of cultivated land in China have motivated a system of centrally mandated annual land use quotas effective from provincial down to township levels. To facilitate efficient land allocation, a ground-breaking policy in the Zhejiang Province permitted sub-provincial units to trade land conversion quotas. We theoretically model and empirically estimate the drivers of local government participation in this program to shed light more broadly on the drivers of local government decision-making. We find robust support for three sets of factors at the sub-provincial level: market forces, administrative autonomy, and prior network connections of local government leaders.
    Keywords: land allocation and conservation, quota trading, administrative autonomy, market forces, government leader networks, Environmental Economics and Policy, Land Economics/Use, Marketing, H11, H77, P35, R52, D23,
    Date: 2015–11
  3. By: Ling-Yun He; Wei Wei
    Abstract: There is an increasing awareness of the significance of Chinese building energy consumption(BEC). However, something worth discussing is that estimate the building energy consumption adopting the definition of life cycle or operation. In the existing studies with various evaluation methods, the issue about the amount of energy consumed by China buildings has not been understood. In order to settle the disputes over the calculation of BEC, this paper establish an appropriate accounting method of building energy to present BEC situation in China and lay the foundation for building energy efficiency. Adopting the conception of building operational energy consumption, we find that the energy consumption of buildings just accounts for 15% - 16% of the final total energy consumption in China; by contrast, the previous calculations usually have double accounting through top-down approach if central heat-supply of buildings was given into additional consideration.
    Date: 2016–10
  4. By: Lu-Yi Qiu; Ling-Yun He
    Abstract: The air pollution has become a serious challenge in China. Emissions from motor vehicles have been found as one main source of air pollution. Although the Chinese government has taken numerous policies to mitigate the harmful emissions from road transport sector, it is still uncertain for both policy makers and researchers to know to what extent the policies are effective in the short and long terms. Inspired by the concept and empirical results from current literature on energy rebound effect (ERE), we first propose a new concept of pollution rebound effect (PRE). Then, we estimate direct air PRE as a measure for the effectiveness of the policies of reducing air pollution from transport sector based on time-series data from the period 1986-2014. We find that the short-term direct air PRE is -1.4105, and the corresponding long-run PRE is -1.246. The negative results indicate that the direct air PRE does not exist in road passenger transport sector in China, either in the short term or in the long term during the period 1986-2014. This implies that the Chinese transport policies are effective in terms of harmful emissions reduction in the transport sector. This research, to the best of our knowledge, is the first attempt to quantify the effectiveness of the transport policies in the transitional China.
    Date: 2016–10
  5. By: Dainn Wie (National Graduate Institute for Policy Studies); Jong-Wha Lee (Korea University)
    Abstract: This study analyzes how changes in overall wage inequality and gender-specific factors affected the gender wage gap in Chinese and Indian urban labor markets in the 1990s and 2000s. Analysis of micro data present that contrasting evolutionary patterns in gender wage gap emerged over the period, showing a widened wage gap in China but a dramatically reduced gap in India. In both countries, female workers f increased skill levels contributed to reducing the gender wage gap. However, increases in observed prices of education and experience worked unfavorably for high-skilled women, counterbalancing their improvement in labor market qualifications. Decomposition analyses show that China fs widened gap was attributable to gender-specific factors such as deteriorated observable and unobservable labor market qualifications and increased discrimination, especially against low- and middle-skilled female workers. For India, gender-specific factors and relatively high wage gains of low- and middle-skilled workers reduced the male-female wage gap.
    Date: 2016–12
  6. By: Feng, Xunan (Southwestern University of Finance and Economics); Johansson, Anders C. (Stockholm China Economic Research Institute)
    Abstract: We hypothesize that investors in China’s market for initial public offerings (IPOs) are influenced by the level of attention given to upcoming offerings. Using a novel data set on analyst coverage, we find that investor attention as proxied by the number of analysts covering a firm drives IPO underpricing. We also show that analyst coverage is positively related with small trading activities during the first trading day. Our results suggest that analysts attract the attention of individual investors, who then drive IPO initial returns and cause related long-term price reversals in the post-IPO market. These findings contradict the argument that a primary role of analysts is to reduce information asymmetry and instead support the attention hypothesis.
    Keywords: Attention; Investor behavior; Behavioral biases; Analyst coverage; Initial public offerings; China
    JEL: G11 G14 G15 G24
    Date: 2016–12–12
  7. By: Heberer, Thomas
    Abstract: This paper presents both a literature review on the issue of political representation and the preliminary framework of a sub-project on new political claims of representation in China. It is primarily concerned with portraying and typing diverse schools of thought in both a "Western" and a Chinese context, while the sub-project is part of the French-German Joint Cooperation Project "New Political Representative Claims: A Global View: France, Germany, Brazil, China, India". The paper is organized as follows: (1) The concept of representation is examined by a brief review of the history of this concept, including the existence of two diverging strands of representation in "Western" discourses. (2) We then examine the meanings of representation, its definitions, and its peculiarities. Points (1) and (2) in particular are based on a literature review. (3) We discuss the issue of representation in a non-democratic, authoritarian setting in general and in China specifically in light of the fact that almost no literature on representation in authoritarian polities exists. (4) We outline the Chinese domestic discourse on political representation. (5) Finally, we clarify the distinction between political representation and participation on the one hand and elections as a specific feature of representation on the other. We then conclude with a summary of our preliminary findings.
    Keywords: representation,representation in an authoritarian context,representation in China,Chinese discourses on representation,participation,elections
    Date: 2016
  8. By: Ling-yun He; Li Liu
    Abstract: Road transport sector is found to be one of the major emitters, and responsible for serious air pollution and huge pubic health losses. One important parameter for determining the consequences of transport demand shocks for the macroeconomy, air pollution and public health is the elasticity of the demand for transport. Most published studies that use flexible functional forms have ignored the theoretical regularity conditions implied by microeconomic theories. Moreover, even a few studies have checked and/or imposed regularity conditions, most of them equate curvature alone with regularity, thus ignoring or minimizing the importance of other regularities. And then, the results appear biased and may in fact be biased. Therefore, we select three of the most widely used flexible functional forms, the Rotterdam model, the Almost Ideal Demand System (AIDS), and the quadratic AIDS (QUAIDS) to investigate the demand for road transport in China using recent annual expenditure data, over a 13 year period from 2002 to 2014, on three expenditure categories in the transportation sector: private transportation, local transportation and intercity transportation. Estimation shows that the AIDS model is the only model that is able to provide theoretically consistent estimates of the residents demand for road transport in China. Our estimates show that the private transportation is a luxury among the transportation goods, and is elastic in price changes relatively. The empirical results imply that the private and the local transportation, the local and intercity transportation are gross complements. And, the private transportation is a substitute for the inter-city transportation, while the intercity transportation is a complement of the private transportation.
    Date: 2016–10

This nep-cna issue is ©2016 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.