nep-cna New Economics Papers
on China
Issue of 2017‒10‒22
eleven papers chosen by
Zheng Fang
Ohio State University

  1. Where Are Migrants from? Inter- vs. Intra-Provincial Rural-Urban Migration in China By Su, Yaqin; Tesfazion, Petros; Zhao, Zhong
  2. Informal Search, Bad Search? The Effects of Job Search Method on Wages among Rural Migrants in Urban China By Chen, Yuanyuan; Wang, Le; Zhang, Min
  3. What Drives Spatial Clusters of Entrepreneurship in China? Evidence from Economic Census Data By Zheng, Liang; Zhao, Zhong
  4. Effects of Top Management Team Characteristics on Corporate Charitable Activities: Evidence from the Board for Small and Medium-sized Enterprises in China By Xin Huang; Koichi Nakagawa; Jie Li
  5. Do Migrant Students Affect Local Students' Academic Achievements in Urban China? By Wang, Haining; Cheng, Zhiming; Smyth, Russell
  6. Price Discovery in the Stock Index Futures Market: Evidence from the Chinese stock market crash By Hou, Yang; Nartea, Gilbert
  7. Internal Rebellions and External Threats: A Model of Government Organizational Forms in Ancient China By Zhou, Haiwen
  8. From Political Power to Personal Wealth: Privatization, Elite Opportunity, and Social Stratification in Post-Reform China By Duoduo Xu; Xiaogang Wu
  9. Signal and Political Accountability: Environmental Petitions in China By Jiankun LU; Pi-Han Tsai
  10. Product Churning, Reallocation, and Chinese Export Growth By Hu, Zhongzhong; Rodrigue, Joel; Tan, Yong; Yu, Chunhai
  11. Sizing up Market Failures in Export Pioneering Activities By Shang-Jin Wei; Ziru Wei; Jianhuan Xu

  1. By: Su, Yaqin (Hunan University); Tesfazion, Petros (Central College); Zhao, Zhong (Renmin University of China)
    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: 2017–09
  2. By: Chen, Yuanyuan (Shanghai University of Finance and Economics); Wang, Le (University of Oklahoma); Zhang, Min (East China Normal University)
    Abstract: The use of informal job search method is prevalent in many countries. There is, however, no consensus in the literature on whether it actually matters for wages, and if it does, what are the underlying mechanisms. We empirically examine these issues specifically for rural migrants in urban China, a country where one of the largest domestic migration in human history has occurred over the past decades. We find that there exists a significant wage penalty for those migrant workers who have conducted their search through informal channels, despite their popularity. Our further analysis suggests two potential reasons for the wage penalty: 1) the informal job search sends a negative signal (of workers' inability to successfully find a job in a competitive market) to potential employers, resulting in lower wages; and 2) there exists a trade-off between wages and search efficiency for quicker entry into local labor market. We also find some evidence that the informal job search may lead to low-skilled jobs with lower wages. We do not find strong evidence supporting alternative explanations.
    Keywords: social network, rural-urban migrants, wage, search friction, information asymmetry, chinese economy
    JEL: J31 J64 P2 P5
    Date: 2017–09
  3. By: Zheng, Liang; Zhao, Zhong
    Abstract: Since Chinese government initiated economic reform in the late 1970s, entrepreneurship and private sectors have emerged gradually and played an increasingly important role in promoting economic growth. However, entrepreneurship is distributed unevenly in China. Using micro data from 2008 economic census and 2005 population census, this paper explains spatial clusters of entrepreneurship for both manufacturing and services. For both sectors, entrepreneurship (measured by new private firms) tends to emerge in places with more relevant upstream and downstream firms. Moreover, Chinitz's (1961) theories are also supported for manufacturing: small upstream and downstream firms seem to be more important for manufacturing entrepreneurship. For both sectors, entrepreneurship is positively related to city size, the share of young adults and the elderly population, and foreign direct investment. More migrants are also found to promote service entrepreneurship. Our paper is the first to consider both manufacturing and service entrepreneurship in China and should be of interest to both local and national policymakers who plan to encourage entrepreneurship.
    Keywords: New Firm Formation,Entrepreneurship,Marshallian Effect,Chinitz Effect,China
    JEL: L26 L60 L80 R10 R12
    Date: 2017
  4. By: Xin Huang (Graduate School of Economics, Osaka University); Koichi Nakagawa (Graduate School of Economics, Osaka University); Jie Li (School of Management, Shanghai University)
    Abstract: Employing data from Chinese companies listed on the board for small and medium-sized enterprises (SMEs), the research examines the relationship between top management team (TMT) characteristics and corporate charitable activities in China. My findings confirm: 1) Firms less engaged in charitable activities are likely to have TMTs characterized by more educational specialty in science and engineering, and more functional background in output functions; 2) TMT age heterogeneity has a significant and positive effect on corporate charitable activities, while TMT educational specialty heterogeneity has a negative influence on corporate charitable activities; 3) TMT age, tenure, educational level and these heterogeneities of tenure, educational level and functional background have little or no influence on corporate charitable activities. Based on the upper echelons theory, the study can provide evidence for further research on top management teams and corporate social responsibility in an emerging economy.
    Keywords: top management team; charity; heterogeneity; corporate social responsibility; Chinese companies
    JEL: M54 M12 M14
    Date: 2017–10
  5. By: Wang, Haining; Cheng, Zhiming; Smyth, Russell
    Abstract: We examine the educational spillover effects of migrant students on local students’ academic achievement in public middle schools in urban China. The identification of peer effects relies on idiosyncratic variation in the proportion of migrant students across classes within schools. We find that the proportion of migrant students in each class has a small, and positive, effect on local students’ test scores in Chinese, but has no significant effect on math and English test scores. We also find considerable evidence of heterogeneity in the effects of the proportion of students in the class on local students’ test scores across subsamples. Local students toward the bottom of the achievement distribution, local students enrolled in small classes and local students enrolled in lower-ranked schools benefit most in terms of test scores from having a higher proportion of migrant students in their class. Our findings have important policy implications for the debate in China about the inclusion of migrant students in urban schools, and for the assignment of educational resources across schools.
    Keywords: migrant student,peer effects,academic achievement,China
    JEL: I21
    Date: 2017
  6. By: Hou, Yang; Nartea, Gilbert
    Abstract: This paper examines time-varying price discovery of the Chinese stock index futures market during a stock market crash in 2015. We find that the index futures market plays a long-run leading role in terms of its higher static and dynamic generalised information share (GIS) than both the Shanghai and Shenzhen A share markets during the market turbulence. The expected trading volume in each market improves GIS of that market. The importance of trading activities by the majority of investors in increasing market efficiency during a crash is underscored. Government intervention on futures trading impairs price discovery in the futures market.
    Keywords: Generalised Information Share, Price Discovery, GARCH model, Chinese stock market crash, Chinese stock index futures
    JEL: G13 G14 G15
    Date: 2017–10–17
  7. By: Zhou, Haiwen
    Abstract: In ancient China, a ruler needed to handle both internal rebellions and external threats. To decrease the possibility of internal rebellions, a ruler could organize the government to establish the balance of power among ministers. While effective in preventing internal rebellions, this approach could make the defense of the country against external threats less effective. The tradeoff between preventing internal rebellions and dealing with external threats in a ruler’s choice of government organizational form is affected by the size of the population, the level of coordination efficiency, and the degree of increasing returns in the military sector. If the magnitude of external threats increases, regardless of the type of equilibrium organizational form, the equilibrium level of the concentration of power among division heads increases.
    Keywords: Government organizational form, feudalism, county system, Chinese history, balance of power
    JEL: N15 N45 P40
    Date: 2017–10–13
  8. By: Duoduo Xu (Division of Social Science, The Hong Kong University of Science and Technology; Institute for Advanced Study, The Hong Kong University of Science and Technology); Xiaogang Wu (Division of Social Science, The Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology)
    Abstract: The impact of market transition on the changing order of social stratification in post-socialist regimes has been a highly prominent topic in sociology in recent decades. However, the debate has yielded no concrete conclusions, due in part to the lack of substantive institutional analysis. In this article, we aim to provide new answers to this age-old question by specifically examining how the economic opportunities available to former political elites have been shaped by the process of privatization. Based on firm-level data from a national representative survey on Chinese private enterprises, we show that nomenclatures in some regions successfully converted their political power into personal wealth by acquiring privatized firms, and the extent to which they could exploit the opportunities available to them was contingent upon how the privatization process was structured and regulated in a local context. Further analysis reveals important institutionalized inequality among private entrepreneurs, with former nomenclatures at the top of the social hierarchy in post-reform China.
    Date: 2017–08
  9. By: Jiankun LU (Zhejiang University of Finance and Economics. Address: Xueyuan Street No. 18, Xiasha Higher Education Park, Hangzhou, China, 310018); Pi-Han Tsai (Zhejiang University. Address: 38 Zheda Rd, Xihu, Hangzhou, Zhejiang, China, 310027)
    Abstract: Vertical accountability in China has long been considered as essentially indirect or informal. This paper provides evidence that direct local accountability may exist to a greater or lesser degree in China under current political institutions. By using provincial environmental petition data, this paper finds that the number of environmental petitions is positively associated with provincial governments' investments in pollution mitigation. The increased petitions serve as a signal to provincial leaders of the possibility of potential social instability. However, since "local" provincial party secretaries are better informed, the signaling effect of the petitions is lessened in these cases.
    Keywords: political signal; political accountability; environmental expenditure
    JEL: H11 H70 P26 Q58
    Date: 2017–06
  10. By: Hu, Zhongzhong; Rodrigue, Joel; Tan, Yong; Yu, Chunhai
    Abstract: This paper quantifies the separate contribution of idiosyncratic productivity and demand growth on aggregate Chinese exports. We develop firm, product, market and year specific measures of productivity and demand. We use these measures to document a number of novel findings that distinguish the growth of Chinese exports. First, we document that changes in demand explain nearly 78–89% of aggregate export growth, while only 11–22%of export growth is determined by productivity growth. Second, our results highlight two mechanisms which contribute significantly to aggregate export growth: the rapid reallocation of market shares towards products with growing demand, and high rates of product exit among low demand products. Investigating the mechanisms underlying these results we find that new exporters suffer demand shocks which are 66% smaller than those observed for incumbent producers in the same product market. By comparison, we find that there is only an 8% difference on average between the productivity of new and incumbent exporters.Repeating our exercise with revenue productivity reveals much smaller differences. This is largely attributed to differential movements in prices and marginal costs.
    Keywords: Exports, China, Productivity, Demand
    JEL: D24 F12 L11 L25
    Date: 2017–10–07
  11. By: Shang-Jin Wei; Ziru Wei; Jianhuan Xu
    Abstract: We argue that existence of public good does not necessarily imply market failure, and illustrate this point in the context of international trade. An influential hypothesis states that export pioneers are too few relative to social optimum because the first exporter's action creates an informational public good for all subsequent exporters. The hypothesis has been invoked to justify certain types of government interventions. We note, however, that such market failure requires two inequalities to hold simultaneously: the discovery cost is neither too low nor too high. Neither has to hold in the data. We propose a structural estimation framework to evaluate the hypothesis, and estimate the parameters based on the customs data of Chinese electronics exports. Our key finding is that "missing pioneers" are a low-probability event for large countries, but can be a serious problem for small economies.
    JEL: F1
    Date: 2017–10

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