nep-cna New Economics Papers
on China
Issue of 2020‒01‒06
five papers chosen by
Zheng Fang
Ohio State University

  1. Social Security Expansion and Neighborhood Cohesion: Evidence from Community-Living Older Adults in China By Bradley, Elizabeth; Chen, Xi; Tang, Gaojie
  2. Going Green in China: Firms’ Responses to Stricter Environmental Regulations By Haichao Fan; Joshua S. Graff Zivin; Zonglai Kou; Xueyue Liu; Huanhuan Wang
  3. From Fog to Smog: the Value of Pollution Information By Panle Jia Barwick; Shanjun Li; Liguo Lin; Eric Zou
  4. The China shock, employment protection, and European jobs By Aghelmaleki, Hedieh; Bachmann, Ronald; Stiebale, Joel
  5. China's Unconventional Nationwide CO 2 Emissions Trading System: The Wide-Ranging Impacts of an Implicit Output Subsidy By Lawrence H. Goulder; Xianling Long; Jieyi Lu; Richard D. Morgenstern

  1. By: Bradley, Elizabeth (Vassar College); Chen, Xi (Yale University); Tang, Gaojie (Jinan University)
    Abstract: Grants and services provided by the government may crowd out informal arrangements, thus weakening informal caring relations and networks. In this paper, we examine the impact of social security expansion on neighborhood cohesion of elders using China's New Rural Pension Scheme (NRPS), one of the largest existing pension program in the world. Since its launch in 2009, more than 400 million Chinese have enrolled in NRPS. We use two waves of China Health and Retirement Longitudinal Study (CHARLS) to examine the effect of pension receipt on two dimensions of neighborhood cohesion among older adults, i.e. participation in collective recreational activities (e.g., socializing and organizational activities) and altruistic activities (e.g., helping those in need in the community), and the frequencies of these activities. Employing an instrumental variable approach, our empirical strategy addresses the endogeneity of pension receipt via exploiting geographic variation in pension program roll-out. We find evidence that receiving pension only slightly reduces collective recreational activities while significantly crowding out altruistic activities in the communities.
    Keywords: neighborhood cohesion, pension, crowd out, diversity
    JEL: H55 I38 O22
    Date: 2019–12
  2. By: Haichao Fan; Joshua S. Graff Zivin; Zonglai Kou; Xueyue Liu; Huanhuan Wang
    Abstract: This paper examines the effect of stringent environmental regulations on firms' environmental practices, economic performance, and environmental innovation. Reducing COD levels by 10% relative to 2005 levels is an aim of the Chinese 11th Five-Year Plan. Using a difference-in-differences framework based on a comprehensive firm-level dataset, we find that more stringent environmental regulations faced by firms are positively associated with a greater probability of reducing COD emissions; also, there exists an evident heterogeneous effect across industries with different pollution intensities. Stricter environmental regulations also account for the sharp decline in firms' profits, capital, and labor. After executing a complete chain of tests of the underlying mechanisms, we find that firms rely more on recycling and abatement investment than on innovations when meeting environmental requirements.
    JEL: D22 K32 O31 Q53
    Date: 2019–12
  3. By: Panle Jia Barwick; Shanjun Li; Liguo Lin; Eric Zou
    Abstract: During 2013-2014, China launched a nation-wide real-time air quality monitoring and disclosure program, a watershed moment in the history of its environmental regulations. We present the first empirical analysis of this natural experiment by exploiting its staggered introduction across cities. The program has transformed the landscape of China's environmental protection, substantially expanded public access to pollution information, and dramatically increased households' awareness about pollution issues. These transformations, in turn, triggered a cascade of behavioral changes in household activities such as online searches, day-to-day shopping, and housing demand when pollution was elevated. As a result, air pollution's mortality cost was reduced by nearly 7% post the program. A conservative estimate of the annual benefit is RMB 130 billion, which is at least one order of magnitude larger than the cost of the program and the associated avoidance behavior. Our findings highlight considerable benefits from improving access to pollution information in developing countries, many of which are experiencing the world's worst air pollution but do not systematically collect or disseminate pollution information.
    JEL: D80 I10 Q53 Q58
    Date: 2019–12
  4. By: Aghelmaleki, Hedieh; Bachmann, Ronald; Stiebale, Joel
    Abstract: We investigate the effects of Chinese import competition on transitions into and out of employment using comparable worker-level data for 14 European countries. Our results indicate that, on average, Chinese imports are associated with an increased probability that employed workers become unemployed and with a reduction in worker flows from unemployment to employment. In countries with high levels of employment protection, incumbent workers are shielded against the risk of job loss due to Chinese competition, but unemployed workers' prospects seem to be particularly negatively affected in these countries. We also provide evidence that the effects of increased Chinese imports differ by worker groups and the tasks performed on the job.
    Keywords: trade adjustments,China,import competition,worker flows,employment transitions,employment protection
    JEL: F14 F16 J23 J63 J64
    Date: 2019
  5. By: Lawrence H. Goulder; Xianling Long; Jieyi Lu; Richard D. Morgenstern
    Abstract: China is planning to implement the largest CO 2 emissions trading system in the world. To reduce emissions, the system will be a tradable performance standard (TPS), an emissions pricing mechanism that differs significantly from the emissions pricing instruments used in other countries, such as cap and trade (C&T) and a carbon tax. We employ matching analytically and numerically solved models to assess the cost-effectiveness and distributional impacts of China’s forthcoming TPS for achieving CO 2 emissions reductions from the power sector. We find that the TPS’s implicit subsidy to electricity output has wide-ranging consequences for both cost-effectiveness and distribution. In terms of cost-effectiveness, the subsidy disadvantages the TPS relative to C&T by causing power plants to make less efficient use of output-reduction as a way of reducing emissions (indeed, it induces some generators to increase output) and by limiting the cost-reducing potential of allowance trading. In our central case simulations, TPS’s overall costs are about 47 percent higher than under C&T. At the same time, the TPS has distribution-related attractions. Through the use of multiple benchmarks (maximal emission-output ratios consistent with compliance), it can serve distributional objectives. And because it yields smaller increases in electricity prices than a comparable C&T system, it implies less international emissions leakage.
    JEL: H23 Q43 Q48 Q5 Q54
    Date: 2019–12

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