nep-cna New Economics Papers
on China
Issue of 2017‒09‒24
five papers chosen by
Zheng Fang
Ohio State University

  1. The effect of China’s One Child Policy on sex selection, family size, and the school enrolment of daughters By Nancy Qian
  2. Competition, Markups, and Gains from Trade: A Quantitative Analysis of China Between 1995 and 2004 By Hsu, Wen-Tai; Lu, Yi; Wu, Guiying Laura
  3. Where Are Migrants from? Inter- vs. Intra-Provincial Rural-Urban Migration in China By Su, Yaqin; Tesfazion, Petros; Zhao, Zhong
  4. Functional upgrading in China’s export processing sector By Ari Van Assche; Jo Van Biesebroeck
  5. The Impact of Marketization on Entrepreneurship in China: Recent Evidence By Yang Zhou; Joshua C. Hall

  1. By: Nancy Qian
    Abstract: I first document that the introduction of the One Child Policy dramatically increased sex selection in certain regions, and that the Chinese government responded to this by allowing parents who had a daughter as their first child to try for a second child. Next, I show that the increase in family size caused by this relaxation in the One Child Policy increased school enrolment of first-born daughters. The analysis provides suggestive evidence that economies of scale in childrearing and short-term income demands contribute to the main results.
    Date: 2017
  2. By: Hsu, Wen-Tai (School of Economics, Singapore Management University); Lu, Yi (School of Economics and Management, Tsinghua University); Wu, Guiying Laura (Division of Economics, Nanyang Technological University)
    Abstract: This paper provides a quantitative analysis of gains from trade in a model with head-to-head competition using Chinese firm-level data from Economic Censuses in 1995 and 2004. We find a significant reduction in trade cost during this period, and total gains from such improved openness during this period is 9:4%. The gains are decomposed into a Ricardian component and two pro-competitive ones. The procompetitive effects account for 25:4% of the total gains. Moreover, the total gains from trade are 17 􀀀 27% larger than what would result from the formula provided by ACR (Arkolakis, Costinot, and Rodriguez-Clare 2012), which nests a class of important trade models, but without pro-competitive effects. We find that head-to-head competition is the key reason behind the larger gains, as trade flows do not reflect all of the effects via markups in an event of trade liberalization. One methodological advantage of this paper’s quantitative framework is that its application is not constrained by industrial or product classifications; thus it can be applied to countries of any size.
    Date: 2017–08–02
  3. By: Su, Yaqin; Tesfazion, Petros; Zhao, Zhong
    Abstract: Using a representative sample of rural migrants in cities, this paper investigates where the migrants in urban China come from, paying close attention to intra-provincial vs. inter-provincial migrants, and examining the differences in their personal attributes. We find that migrants who have come within the province differ significantly from those who have come from outside of the province. Using a nested logit model, we find that overall, higher wage differentials, larger population size, higher GDP per capita, and faster employment growth rate are the attributes of a city that attract migrants from both within and outside province. In addition, moving beyond one’s home province has a strong deterrent effect on migration, analogous to the “border effect” identified in international migration studies. We also explore the role of culture, institutional barrier, and dialect in explaining such a pronounced “border effect”.
    Keywords: Rural-urban migration,Inter- vs. intra-provincial migration,Border effect,China
    JEL: J62 O15
    Date: 2017
  4. By: Ari Van Assche; Jo Van Biesebroeck
    Abstract: Functional upgrading occurs when a firm acquires more sophisticated functions within an existing value chain. In this paper, we analyze if there is evidence of this type of upgrading in China’s export processing regime by investigating dynamics in the relative prevalence of Import & Assembly (IA) versus Pure Assembly (PA) processing trade over the period 2000-2013. Firms in both regimes provide similar manufacturing services to foreign companies, but IA firms also conduct the sophisticated tasks of quality control, searching, financing and storing imported materials. Consistent with a trend of functional upgrading, we show that the share of IA trade in total processing trade has increased rapidly during the period 2000-2006, both overall and within product categories. Furthermore, we find that this trend has gone hand in hand with improvements in a sector’s labor productivity and unit values. Against expectations, we find that this process has slowed down notably during the period 2006-2013.
    Date: 2017–07
  5. By: Yang Zhou (West Virginia University, Department of Economics); Joshua C. Hall (West Virginia University, Department of Economics)
    Abstract: While marketization has been linked to provincial-level economic growth in China, how marketization leads to growth has not been explored. We hypothesize that marketization creates an environment that encourages entrepreneurship, which manifests itself in economic growth. While this argument is not new, it has not been explored in the Chinese context. We fill this gap by empirically testing the relationship between marketization and measures of entrepreneurship across Chinese provinces. Our primary measures of entrepreneurship are level changes in the number of "private enterprises" and "self-employed individuals". We find that higher levels of marketization are positively related to higher levels of entrepreneurship. These positive effects are largely driven by three areas of marketization. "Government and market" drives both measures of entrepreneurship, while "Legal frameworks" in uences only private enterprises and "ownership structure" in uences self-employment.
    Keywords: entrepreneurship, marketization, economic freedom, regional science, China
    JEL: L26 P25 P37
    Date: 2017–09

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