nep-cna New Economics Papers
on China
Issue of 2020‒08‒17
twelve papers chosen by
Zheng Fang
Ohio State University

  1. From workers to capitalists in less than two generations: A study of Chinese urban elite transformation between 1988 and 2013 By Li Yang; Filip Novokmet; Branko Milanovic
  2. Skill-Biased Imports, Human Capital Accumulation, and the Allocation of Talent By Lei Li
  3. Migrants and Firms : Evidence from China By Imbert, Clement; Seror, Marlon; Zhang, Yifan; Yanos Zylberberg
  4. Trade liberalization and the gender employment gap in China By Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
  5. How does the COVID-19 pandemic affect housing prices in China? By Chong, Terence Tai Leung; Liu, Hengliang
  6. A global decline in research productivity? Evidence from China and Germany By Böing, Philipp; Hünermund, Paul
  7. Trade and Political Fragmentation on the Silk Roads: The Economic Effects of Historical Exchange between China and the Muslim East By Christopher Paik; Lisa Blaydes
  8. The Economic Motives for Foot-binding By Xinyu Fan; Lingwei Wu
  9. An Economic Analysis of Political Meritocracy By Chu, Angus C.; Kou, Zonglai; Wang, Xilin
  10. What Do Voters Learn from Foreign News? Emulation, Backlash, and Public Support for Trade Agreements By Chun-Fang Chiang; Jason M. Kuo; Megumi Naoi; Jin-Tan Liu
  11. Compensating for Academic Loss: Online Learning and Student Performance during the COVID-19 Pandemic By Andrew E. Clark; Huifu Nong; Hongjia Zhu; Rong Zhu
  12. On Time Trend of COVID-19: A Panel Data Study By Dong, C.; Gao, J.; Linton, O.; Peng, B.

  1. By: Li Yang (PSE - Paris School of Economics, WIL - World Inequality Lab); Filip Novokmet (University of Bonn); Branko Milanovic (New York University - NYU - New York University [New York] - NYU - NYU System)
    Abstract: Economic and social transformation of China during the past 40 years is without precedent in human history. While the economic transformation was extensively studied, social transformation was not. In this paper, we use for the first time harmonized household surveys covering the period 1988-2013 to study the changes in the characteristics the richest 5 percent of China's urban population. We find that the elite changed from being composed of high government officials, clerical staff, and workers in 1988 to professionals and small and large business owners in 2013. The educational level of the elite increased substantially. Membership in CCP has a positive (albeit small) effect on one's income but is particularly valuable to large business owners.
    Keywords: China,elites,income share,class,top incomes
    Date: 2019
  2. By: Lei Li
    Abstract: This paper proposes that imported capital goods, which embody skill-complementary technologies, can lead to an increase in the supply of skill in developing countries like China. By exploiting the cross-prefecture variation in imported capital goods, I show that the surge in imported capital goods encourages human capital accumulation and migration in China. To tackle causality, I instrument a prefecture's import growth of capital goods with that in other regions. There are three main findings. Firstly, the regional difference in imported capital goods can explain 27 percent of the regional difference in college share between 2000 and 2010. A prefecture with a $100 increase in imported capital goods per capita had a 1.4 percentage points increase in college share. Secondly, this paper quantifies the importance of the three channels, namely skill acquisition of local stayers, immigration of skilled workers, and emigration of skilled workers, through which imported capital goods increase college share. I find that the first channel is the most important. Thirdly, I trace out the responses of skill supply to the demand shift. I find that imported capital goods increase college wage premium and the effect attenuates over time with the increase in skill supply. with model: it is fine to mention that K import first increase the demand for for skill by moving the demand curve, and then increase the supply by moving the supply curve?
    Keywords: Imported Capital Goods, Demand for Skill, Supply of Skill, Human Capital Accumulation, Migration
    JEL: F14 F16 F66 J24 J61
    Date: 2020–06
  3. By: Imbert, Clement (University of Warwick and JPAL); Seror, Marlon (University of Bristol, DIAL, Institut Convergences Migrations); Zhang, Yifan (Chinese University of Hong Kong); Yanos Zylberberg (University of Bristol, CESifo, the Alan Turing Institute)
    Abstract: How does rural-urban migration shape urban production in developing countries? We use longitudinal data on Chinese manufacturing firms between 2001 and 2006, and exploit exogenous variation in rural-urban migration induced by agricultural price shocks for identification. We find that, when immigration increases, manufacturing production becomes more labor-intensive in the short run. In the longer run, firms innovate less, move away from capital-intensive technologies, and adopt final products that use low-skilled labor more intensively. We develop a model with endogenous technological choice, which rationalizes these findings, and we estimate the effect of migration on factor productivity and factor allocation across firms JEL codes: D24 ; J23 ; J61 ; O15
    Date: 2020
  4. By: Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
    Abstract: This paper investigates the impact of import liberalization induced labor demand shocks on male and female employment in China. Combining data from population and firm census waves over the period of 1990 to 2005, we relate prefecture-level employment by gender to the exposure to tariff reductions on locally imported products. Our empirical results show that increasing import competition has kept more females in the workforce, reducing an otherwise growing gender employment gap. These dynamics were present both in the local economies as a whole and among formal private industrial firms. Examining channels through which tariff reductions differentially affected males and females, we find that trade induced competitive pressures contributed to a general expansion of female intensive industries, shifts in sectoral gender segregation, reductions in gender discrimination in the labor market, technological upgrading through computerization and general income growth.
    Keywords: Trade liberalization,Import competition,Gender employment gap,China
    JEL: F13 F14 F16 F66 J16
    Date: 2020
  5. By: Chong, Terence Tai Leung; Liu, Hengliang
    Abstract: COVID-19 was first reported in Wuhan in late December 2019, and then spread throughout China, which has had great influence on many aspects of the economy. This paper uses the two-way fixed effects model to investigate the non-linear relationship between the death toll of COVID-19 and the changes in housing prices using monthly panel data from November 2019 to May 2020. The results suggest that there is a U-shaped relationship between monthly death toll of COVID-19 and the percentage changes of housing prices in cities. In addition, the housing markets of New First-tier cities are more sensitive to the COVID-19 pandemic than Second and Third-tier cities, which the pandemic has had little effect on. Similarly, monthly confirmed cases of COVID-19 come to the same conclusions.
    Keywords: COVID-19; Housing prices; Non-linear relationship; New First-tier cities
    JEL: R31
    Date: 2020–07–28
  6. By: Böing, Philipp; Hünermund, Paul
    Abstract: In a recent paper, Bloom et al. (2020) find evidence for a substantial decline in research productivity in the U.S. economy during the last 40 years. In this paper, we replicate their findings for China and Germany, using detailed firm-level data spanning three decades. Our results indicate that diminishing returns in idea production are a global phenomenon, not just confined to the U.S.
    Keywords: Productivity,Growth,Innovation,R&D,Technological Change
    JEL: D24 E23 O31 O47
    Date: 2020
  7. By: Christopher Paik; Lisa Blaydes (Division of Social Science)
    Abstract: The Silk Roads stretched across Eurasia, connecting East and West for centuries. At its height, the network of trade routes enabled merchants to travel from China to the Mediterranean Sea, carrying with them high-value commercial goods, the exchange of which encouraged urban growth and prosperity. We examine the extent to which urban centers thrived or withered as a function of shocks to trade routes, particularly political fragmentation along natural travel paths. We find that political fragmentation along the roads to Aleppo and historic Chang'an - major terminus locations for cross-regional trade - damaged city growth. These conclusions contribute to our understanding of how a pre-modern international system operated through an examination of exchange between the two most developed world regions of the medieval and early modern periods, China and the Muslim East.
    Date: 2019–12
  8. By: Xinyu Fan; Lingwei Wu
    Abstract: We study foot-binding – a practice that reshaped millions of women’s feet in historical China, yet in lack of a consistent explanation of its temporal, regional, class, and size variation. We present a model of foot-binding, where it serves as a premarital investment tool in response to a male-specific social mobility shock, and women trade off labor distortions for marriage prospects. Furthermore, the regional shifts on both sides of the trade-off explained its observed variation. Using county-level archival data on foot-binding, we corroborate the theory with empirical evidence.
    Keywords: Gender Norm, Marriage Market, Labor, Foot-binding
    JEL: N35 J16 O15 Z10
    Date: 2020–06
  9. By: Chu, Angus C.; Kou, Zonglai; Wang, Xilin
    Abstract: The political system in China is often referred to as political meritocracy. This study develops a simple model of political economy to explore the strengths and weaknesses of a meritocratic system (in which political meritocrats design economic policies) relative to a democratic system (dominated by the median voter). We find that political meritocrats would choose economic policies that are more conducive to economic activities and lead to higher income but less public goods. Whether the meritocratic or democratic equilibrium achieves a higher level of social welfare depends on the distribution of individuals' abilities. If the ability of the median voter is lower than the mean of the population, then the meritocratic equilibrium may achieve a higher level of social welfare than the democratic equilibrium. In this case, there is a threshold degree of political inclusiveness in the meritocratic system above which political meritocracy dominates democracy in terms of social welfare, and this threshold degree of political inclusiveness is increasing in the ability of the median voter.
    Keywords: political meritocracy; democracy; median voter; utilitarianism
    JEL: D72 P16 P26
    Date: 2020–07
  10. By: Chun-Fang Chiang; Jason M. Kuo; Megumi Naoi; Jin-Tan Liu
    Abstract: The paper demonstrates voter-based mechanisms underlying policy emulation across countries. We argue that exposure to news about foreign government policies and their effect can change policy preferences of citizens through emulation and backlash against it. These heterogeneous responses arise due to citizens’ divergent predispositions about a foreign country being their peer. We test this argument with coordinated survey experiments in Japan and Taiwan, which randomly assigned news reporting on the South Korea-China trade agreement and solicited support for their government signing an agreement with China. The results suggest that exposure to the news decreases opposition to a trade agreement with China by 6 percentage points in Taiwan (“emulation”) and increases opposition around 8 percentage points in Japan (“backlash”). The results further suggest respondents’ predispositions about peer countries account for the heterogeneity. Our findings caution the optimism about policy convergence across countries as technology lowers the cost of acquiring information.
    JEL: D7 F13 L82
    Date: 2020–07
  11. By: Andrew E. Clark (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Huifu Nong (SunYat-sen University); Hongjia Zhu (Jinan University [Guangzhou]); Rong Zhu (Flinders University [Adelaide, Australia])
    Abstract: The outbreak of the COVID-19 pandemic has led to widespread school shutdowns, and many schools have opted for education using online learning platforms. Using administrative data from three middle schools in China, this paper estimates the causal effects of online learning on student performance. Using the difference-in-differences approach, we show that online education improves students' academic achievement by 0.22 of a standard deviation, relative to those who stopped receiving learning support from their school during the COVID-19 lockdown. All else equal, students from a school having access to recorded online lessons delivered by external higher-quality teachers have achieved more progress in academic outcomes than those accessing lessons recorded by teachers in their own school. We find no evidence that the educational benefits of distance learning differ for rural and urban students. However, there is more progress in the academic achievement of students using a computer for online education than that of those using a smartphone. Last, low achievers benefit the most from online learning while there is no significant impact for top students. Our findings have important policy implications for educational practices when lockdown measures are implemented during a pandemic.
    Keywords: academic achievement,COVID-19 pandemic,online learning
    Date: 2020–07
  12. By: Dong, C.; Gao, J.; Linton, O.; Peng, B.
    Abstract: In this paper, we study the trending behaviour of COVID-19 data at country level, and draw attention to some existing econometric tools which are potentially helpful to understand the trend better in future studies. In our empirical study, we find that European countries overall flatten the curves more effectively compared to the other regions, while Asia & Oceania also achieve some success, but the situations are not as optimistic as in Europe. Africa and America are still facing serious challenges in terms of managing the spread of the virus and reducing the death rate. In Africa, the rate of the spread of the virus is slower and the death rate is also lower than those of the other regions. By comparing the performances of different countries, our results on the performance of different countries in managing the speed of the virus agree with Gu et al. (2020). For example, both studies agree that countries such as USA, UK and Italy perform relatively poorly; on the other hand, Australia, China, Japan, Korea, and Singapore perform relatively better.
    Keywords: COVID-19, Deterministic time trend, Panel data, Varying-coefficient
    JEL: C23 C54
    Date: 2020–06–23

This nep-cna issue is ©2020 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.