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on China |
| By: | Russell Cooper; Guozhong Zhu |
| Abstract: | This paper studies household finance in China, focusing on the high savings rate, the low participation rate in the stock market, and the low stock share in household portfolios. These salient features are studied in a lifecycle model in which households receive both income and medical expense shocks and decide on stock market participation and portfolio adjustment. The structural estimation explicitly takes into account important regime changes in China, such as the re-opening of the stock market, the privatization of the housing market and the labor market reforms that changed household income processes. The paper also compares household finance patterns in China to those in the US, and shows that between-country differences in financial choices are driven by both institutional factors (e.g. higher costs associated with stock market participation and a lower consumption floor in China) and preferences (e.g. higher discount factors of Chinese households). |
| JEL: | E21 G11 P2 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23741&r=cna |
| By: | Yun Liang (University of Waikato); John Gibson (University of Waikato) |
| Abstract: | China is rapidly aging and the social security system provides insufficient pension coverage. Consequently, almost 80 percent of elderly people depend on their children or other relatives for financial support. We use China Health and Nutrition Survey data to test if more grandchildren adversely affects elder health. This could occur because grandparents and grandchildren compete for financial support from the working adults in a family and because grandparents often have to care for young grandchildren and may neglect their own health. Since the number of grandchildren is a choice variable, we use exogenous variation in fertility for two generations under local implementation of the one child policy. We also take advantage of the panel data to deal with unobservable factors. The health of the elderly appears to be adversely affected by the number of grandchildren, especially for grandmothers and especially in urban areas. |
| Keywords: | elderly; grandchildren; health; one-child policy; China |
| JEL: | I12 J14 |
| Date: | 2017–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:17/18&r=cna |
| By: | Nie, Peng (University of Hohenheim); Sousa-Poza, Alfonso (University of Hohenheim) |
| Abstract: | This study uses data from the 2012 China Labor Force Dynamics Survey and 2010–2012 China Family Panel Studies to investigate job satisfaction and job expectations, as well as the association between job satisfaction and job turnover by gender among employees aged 16–65. We find not only that job satisfaction levels are relatively low, with only 46% of workers explicitly satisfied, but also that worker expectations differ significantly from what their jobs actually provide. In particular, many jobs are less interesting than expected, which prevents workers from realizing their perceived potential. This expectation gap is thus a strong determinant of job satisfaction. Men and women have similar levels of job satisfaction, yet based on observables, one would expect women's job satisfaction to be lower than it actually is, thereby lending support to the gender-job-satisfaction paradox encountered in Western studies. In contrast to Western research, we find no link between job satisfaction and job change, an observation we attribute to China's unique Confucian-based work ethic. |
| Keywords: | ob satisfaction, gender, labor turnover, China |
| JEL: | J16 J17 J28 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10963&r=cna |
| By: | Thomas Stoerk |
| Abstract: | This research evaluates China's main air pollution control policy. In 2005, China decided on a 10% SO2 emissions reduction goal as part of the 11th Five-Year Plan (2006-2010). I study the effect of this policy on pollution outcomes, using both the offcial, misreporting-prone indicator and independent NASA SO2 satellite data in a differences-in-differences strategy that exploits variation in target stringency at the province level. I find that results from the offcial and the satellite data differ initially when the Chinese government lacked the ability to effectively monitor SO2 pollution. Ultimately, however, the policy worked and reduced air pollution by 11%. The regulated provincial governments react through rhetorical compliance, measured by a unique dataset of quantified political statements, and by shutting down small, ineffcient thermal units. Rhetorical compliance increases, especially before the government gained the ability to monitor SO2 in 2008. Real compliance sets in through the shutdown of small, ineffcient thermal units. Next, I compute detailed marginal abatement cost curves for SO2 for each province in China, thus illustrating the large heterogeneity in abatement cost across provinces. I use those curves to construct the counterfactual cost-effcient allocation of SO2 reduction targets across provinces. Using this benchmark, I find that the cost-effcient allocation would increase effciency by 49% at the margin, by lowering marginal abatement cost from 658e/tSO2 to 338e/tSO2. This finding is robust to inclusion of a back-of-the-envelope measure for the marginal benefits of abatement. I conclude that a market-based allocation of SO2 reduction targets would have doubled the effciency of China's main air pollution control policy. Contrary to the US experience, I find that a mandate on scrubbers would reap most of those effciency gains. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp273&r=cna |
| By: | Guojun He (Division of Social Sciencee, Division of Environment, and Department of Economics, The Hong Kong University of Science and Technology); Yang Xie (Department of Economic, University of California, Riverside); Bing Zhang (Center for Environmental Management and Policy Analysis, School of Environment, Nanjing University) |
| Abstract: | When productivity changes, how would an economy rebalance economic production and environmental preservation? We develop a conceptual framework to analyze the question, and predict that a productivity shock can have heterogeneous impacts on environmental quality and income. Exploiting a quasi-experiment provided by the dramatic expansion of China’s national expressway system, we find empirical evidence that is consistent with the model’s predictions: expressway access increases both pollution and GDP in initially poor counties, decreases pollution and GDP in initially rich counties, and decreases pollution while increasing GDP in counties with moderate levels of initial income. These findings cannot be fully explained by alternative theories such as the pollution haven hypothesis and home market effect. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201743&r=cna |
| By: | Ayşe İmrohoroğlu (University of Southern California); Kai Zhao (University of Connecticut) |
| Abstract: | In this paper, we show that a general equilibrium model that properly captures the risks in old age, the role of family insurance, changes in demographics, and the productivity growth rate is capable of generating changes in the national saving rate in China that mimic the data well. Our findings suggest that the combination of the risks faced by the elderly and the deterioration of family insurance due to the one-child policy may account for approximately half of the increase in the saving rate between 1980 and 2010. Changes in the productivity growth rate account for the fluctuations in the saving rate during this period. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2017-17&r=cna |
| By: | Tao Zha (Federal Reserve Bank of Atlanta); Kaiji Chen (Emory University) |
| Abstract: | China monetary policy, as well as its transmission into the economy, is yet to be understood by researchers and policymakers. We propose a new estimation method and use it to quantify the monetary transmission of China's monetary policy within the endogenous-switching nonlinear SVAR framework. We find strong evidence that contributions of monetary policy shocks to the GDP fluctuation are asymmetric across different states of the economy. The effect of monetary policy on output is supported more by medium and long term bank loans than by short term bank loans. This is especially true for the shortfall state, in which an increase of M2 is channeled disproportionally into MLT loans. These findings highlight the role of M2 growth as a primary instrument and the bank lending channel to investment as a key transmission mechanism for monetary policy. Our analysis shows that China monetary policy has unbalanced effects on consumption and investment. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:516&r=cna |
| By: | Ayşe İmrohoroğlu (University of Southern California); Kai Zhao (University of Connecticut) |
| Abstract: | Most of the studies examining the implications of social security reforms in China use overlapping generations models and abstract from the role of family support. How-ever, in China, family support plays a prominent role in the well-being of the elderly and often substitutes for the lack of government-provided old-age support systems. In this paper, we investigate the impact of social security reform in China in a model with two-sided altruism as well as a pure life-cycle model. We show that the quantitative implications of social security reform are very different across the two models. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2017-18&r=cna |
| By: | Simon Galle; Andrés Rodríguez-Clare; Moises Yi |
| Abstract: | We develop a multi-sector gravity model with heterogeneous workers to quantify the aggregate and group-level welfare effects of trade. We estimate the model using the structural relationship between China-shock driven changes in manufacturing employment and average earnings across US groups defined by commuting zone and education. We find that the China shock increases average welfare but some groups experience losses as high as five times the average gain. Adjusted for plausible measures of inequality aversion, gains in social welfare are positive and only slightly lower than with the standard aggregation. |
| JEL: | F1 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23737&r=cna |
| By: | Alexander F. McQuoid (United States Naval Academy); Yi Ding (Tianjin Precious Metal Exchange); Cem Karayalcin (Florida International University) |
| Abstract: | Though it has been recognized that political institutions and state capacity play an important role in determining economic outcomes, for most non-Western economies we still do not have granular enough historical knowledge as to how. Here we study a particular historical episode in the case of China, which, after a period of fiscal decentralization that has been credited with leading to historically unprecedented growth rates but significant fiscal decline, recentralized the collection of tax revenues. The economic and political consequences of this new Tax Sharing System (TSS) have been debated extensively given the interest on fiscal decentralization and its interaction with political institutions and economic outcomes. The central question in this debate has been whether the TSS constitutes a significant departure from decentralization with adverse effects on fiscal federalism or whether the recentralization under the TSS corrects for the overshooting in decentralization with beneficial economic outcomes. Our approach exploits the staggered introduction of the TSS across regions and over time to causally identify the policy impact on economic outcomes. After showing traditional proxies of fiscal federalism provide unstable estimates and contradictory conclusions, we utilize a difference-in-difference approach, and find that the TSS increased per capita GDP growth rates by 17%. |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:usn:usnawp:57&r=cna |
| By: | Hsu, Wen-Tai (School of Economics, Singapore Management University); Li, Xiaolu (Division of Economics, Nanyang Technological University); Tang, Yang (Division of Economics, Nanyang Technological University); Wu, Jing (Hang Lung Center for Real Estate and Department of Construction Management, Tsinghua University) |
| Abstract: | This paper explores two political factors for their potential effects on urban land supply in China: corruption, and competition for promotion. We find that standard urban-economic predictions hold in the sense that both population and income increases are strongly significant determinants for the increase in urban land supply. Conditional on these demand-side factors, we find that the usage of two-stage auctions (as a proxy for corruption) is highly correlated with the increase in land supply. The corruption effects are strongest for commercial land, followed by residential land and then industrial land. To shed light on the competition motives among prefectural leaders, we examine how the number of years in office affects land supply, and distinguish among different hypotheses. Our empirical results show robust rising trends in land sales (both in quantity and revenue). These results are consistent with the hypothesis that the impatience and anxiety in later years from not being promoted may contribute to the increase in land sales revenue in later years; they are inconsistent with the hypothesis that prefectural leaders may give up and become more corrupt in later years. We also find that prefectural leaders may aim for larger land sales revenue overall in the first few (around 5) years in office instead of larger revenue in the first couple years. |
| Keywords: | Land supply; China; Political factors; institution; Monocentric-city model |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2017_007&r=cna |
| By: | Hu, Cui; Lin, Faqin; Tan, Yong; Tang, Yihong |
| Abstract: | This paper investigates how Technical Barriers to Trade (TBT) affect firm export performance. The implementation of the “Children-Resistance” act (CR act) in the EU offers an ideal quasi-natural experiment to identify the causal effect of TBTs on firm performance. Using data on Chinese firms that export cigarette lighters between 2004 and 2008, empirical results show that firms that export to the EU not only adjust their product quality to meet the requirements in the CR act, but also upgrade their product quality in other dimensions. However, both the export value and export volume to the EU decline. At the same time, less productive exporters are forced to exit from the EU market. In addition, while the effect of the CR act on export quality is significant only in the implementation year, its impact on firm-level export scale last longer even after its implementation, which is referred to as a dynamic impact. Lastly, Heterogeneous effect of TBT is also documented. |
| Keywords: | Technical barriers to trade; Children-Resistant Act; Difference in differences |
| JEL: | D21 F13 F14 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80946&r=cna |
| By: | L Rachel Ngai (Reader in Economics, London School of Economics and Political Science; Institute for Advanced Study, The Hong Kong University of Science and Technology; HKUST Institute for Emerging Market Studies (IEMS)); Christopher A Pissarides (London School of Economics; Institute for Advanced Study, The Hong Kong University of Science and Technology; HKUST Institute for Emerging Market Studies (IEMS)); Jin Wang (Division of Social Science, The Hong Kong University of Science and Technology; HKUST Institute for Emerging Market Studies (IEMS)) |
| Abstract: | China’s hukou system imposes two main barriers to population movements. Agricultural workers get land to cultivate but run the risk of losing it if they migrate. Social transfers (education, health, etc.) are conditional on holding a local hukou. We show that the land policy is a more important barrier on industrialization. This distortion can be corrected by giving property rights to farmers. Social transfers dampen mainly urbanization. We calculate that the two policies together lead to overemployment in agriculture of 6.7 points, under-employment in the urban sector of 6.3 points and have practically no impact on the rural non-agricultural sector. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201744&r=cna |