nep-cna New Economics Papers
on China
Issue of 2021‒04‒26
ten papers chosen by
Zheng Fang
Ohio State University

  1. Evaluation of Chinese provincial ecological well-being performance based on the driving effect decomposition By Wang, Shengyun; Zhang, Jingjing; Chu, Meifen; Li, Jing
  2. The spatial dissemination of COVID-19 and associated socio-economic consequences By Yafei Zhang; Lin Wang; Jonathan J. H. Zhu; Xiaofan Wang
  3. Efficiency of Courts in China – Does Location Matter? By Dong, Xiaoge
  4. Migration Costs, Sorting, and the Agricultural Productivity Gap By Qingen Gai; Naijia Guo; Bingjing Li; Qinghua Shi; Xiaodong Zhu
  5. Curse of Democracy: Evidence from 2020 By Yusuke Narita; Ayumi Sudo
  6. What Do Parents Want? Parental Spousal Preferences in China By Eva Raiber; Weiwei Ren; Jeanne Bovet; Paul Seabright
  7. Trade, Labor Markets, and the China Shock: What Can Be Learned from the German Experience? By Christian Dustmann
  8. The Unintended Consequences of Relaxing Birth Quotas: Theory and Evidence By Jin, Zhangfeng; Pan, Shiyuan; Zheng, Zhijie
  9. Is the European Union’s investment agreement with China underrated? By Uri Dadush; André Sapir
  10. Occupational Dualism and Intergenerational Educational Mobility in the Rural Economy: Evidence from China and India By Emran, M. Shahe; Ferreira, Francisco H. G.; Jiang, Yajing; Sun, Yan

  1. By: Wang, Shengyun; Zhang, Jingjing; Chu, Meifen; Li, Jing
    Abstract: The focus of this paper is three-fold. First, it recalculates the HDI and EFI, use the ratio of HDI and EF to build the EWP, then evaluate and analyze the EWP of China's provinces. Second, it develops a unique ecological well-being performance (EWP) model, which is divided into two driving effects: the well-being effect of economic growth and the ecological efficiency of economic growth. Third, using the Human Development Index (HDI), it measures the well-being effect and ecological efficiency of economic growth in 31 Chinese provinces. Based on the EWP results, it divides the Chinese provinces into five types from economic leading and upgrading to overall descending. The research results show that China's HDI has greatly improved from 2006 to 2016, displaying a trend of "Beijing, Tianjin and Shanghai take the lead in upgrading, and then the uprising trend expands from east to west". However, during the same period from 2006 to 2016, the growth rate of China's people’s well-being was significantly lower than that of per capita ecological footprint (EF), and the overall EWP declined. China's growth in people’s well-being is decoupled from economic growth, which indicates that China’s rapid economic growth was not followed by a similar progress in China’s people’s well-being. The above results suggest that China's total factor productivity (TFP) and green total factor productivity (GTFP) were improving but in different degrees during the above period. Other results show that, the carbon footprint has always been the largest component of China's EF, and the GTFP has always been lower than the TFP. According to the technology progress index and scale efficiency driving of change index, China’s provinces mainly focus on provincial TFP rather than GTFP. This paper suggests that the different types of provinces should adopt different strategies to improve their EWP in order to promote high-quality economic development.
    Keywords: Ecological Well-being Performance (EWP), Human Development Index (HDI), Ecological Footprint (EF), Green Total Factor Productivity (GTFP), Driving Effect
    JEL: Q57
    Date: 2021–04–11
  2. By: Yafei Zhang; Lin Wang; Jonathan J. H. Zhu; Xiaofan Wang
    Abstract: The ongoing coronavirus disease 2019 (COVID-19) pandemic has wreaked havoc worldwide with millions of lives claimed, human travel restricted, and economic development halted. Leveraging city-level mobility and case data across mainland China, our analysis shows that the spatial dissemination of COVID-19 in mainland China can be well explained by the human migration from Wuhan and there will be very different outcomes if the COVID-19 outbreak occurred in other cities. For example, the outbreak in Beijing or Guangzhou would result in a $\sim$90% increase of COVID-19 cases at the end of the Chinese New Year holiday. After the implementation of a series of control measures, human mobility had experienced substantial changes toward containing the spread of COVID-19. Our results also suggest an inequality of economic deprivation as less developed areas generally suffered more severe economic recession during the COVID-19. Intuitively, it's anticipated that cities with more confirmed cases would suffer more economic losses. However, for cities outside of Hubei province, we don't observe such a phenomenon. Our work has important implications for the mitigation of disease and the reevaluation of the social and economic consequences of COVID-19 on our society.
    Date: 2021–04
  3. By: Dong, Xiaoge
    Abstract: In this paper, we focus on determinants of judicial efficiency in China, with efficiency estimates of district courts obtained from data envelopment analysis (DEA). Our dataset comprises 1584 local courts pooled from the year 2014 - 2017. Controlling for local economic development level as well as the financial status and staff quality of local courts, we find a significant and robust impact of the location of local courts. More specifically, the performance of a court will be better when it is located in/closer to a higher city tier, the city center, the city government, or the provincial government even if the economic development of such areas is no better than others. Such courts probably receive (in)-direct political support and favorable local policy. Our result thus also has implications for judicial independence in China. Although the Chinese Central Government has been trying to separate the local legal system from local politics, local courts are still being affected by geopolitical factors in reality.
    Keywords: Chinese Court system,Court efficiency,data envelopment analysis,geopolitics
    JEL: K1 K40 K30 N45 P21 P37
    Date: 2021
  4. By: Qingen Gai; Naijia Guo; Bingjing Li; Qinghua Shi; Xiaodong Zhu
    Abstract: We use a unique panel dataset and a policy experiment as an instrument to estimate the impact of policy-induced migration cost reductions on rural-to-urban migration and the associated increase in labor earnings for migrant workers in China. Our estimation shows that there exist both large migration costs and a large underlying productivity difference between rural agricultural and urban non-agricultural sectors in China. More than half of the observed labor earnings gap between the two sectors can be attributed to the underlying productivity difference, and less than half of the gap can be attributed to sorting of workers. We also structurally estimate a general equilibrium Roy model and use it to quantify the effects of reducing migration costs on the observed sectoral productivity difference, migration, and aggregate productivity. If we implement a hukou policy reform by setting the hukou liberalization index in all regions of China to the level of the most liberal region, the observed agricultural productivity gap would decrease by more than 30%, the migrant share would increase by about 9%, and the aggregate productivity would increase by 1.1%. In contrast, in a partial equilibrium in which the underlying productivity difference does not change with migration cost, the hukou policy reform would reduce the observed agricultural productivity gap by only 9%, the migrant share would increase by more than 50%, and the aggregate productivity would increase by 6.8%.
    Keywords: Migration cost; sorting; agricultural productivity gap; panel data; general equilibrium Roy model; China
    JEL: E24 J24 J61 O11 O15
    Date: 2021–04–17
  5. By: Yusuke Narita (Cowles Foundation, Yale University); Ayumi Sudo (Yale University)
    Abstract: Countries with more democratic political regimes experienced greater GDP loss and more deaths from Covid-19 in 2020. Using ï¬ ve different instrumental variable strategies, we find that democracy is a major cause of the wealth and health losses. This impact is global and is not driven by China and the US alone. A key channel for democracy’s negative impact is weaker and narrower containment policies at the beginning of the outbreak, not the speed of introducing policies.
    Keywords: Democracy, Economic Growth, Public Health, Pandemic, Instrumental Variables
    Date: 2021–04
  6. By: Eva Raiber (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Weiwei Ren (Yunnan Normal University, China); Jeanne Bovet (Northumbria University, Newcastle upon Tyne, UK); Paul Seabright (Toulouse School of Economics, University of Toulouse and Institute for Advanced Study in Toulouse, France,)
    Abstract: In many societies, parents are involved in selecting a spouse for their child, and integrate this with decisions about migration and educational investment. What type of spouse do parents want for their children? We estimate parents' spousal preferences based on survey choices between random profiles. Preference data are elicited from parents or other relatives who actively search for a spouse on behalf of their adult child in Kunming, China. Economic variables (income and real estate ownership) are important for the choice of sons-in-law, but not daughters-in-law. Education is valued on both sides. We simulate marriage outcomes based on preferences for age and education and compare them with marriage patterns in the general population. Homogamy by education can be explained by parental preferences, but not by age: parents prefer younger wives, yet most couples are the same age. Additionally collected preference data from students can explain age distributions. Survey data from parents suggest that while they prefer younger wives, they also accept wives of the same age. Overall, marriage markets have a likely positive influence on education investments for both boys and girls.
    Keywords: marriage, preference estimation, China, parental matchmaking, matching
    JEL: J12 I26 D10
    Date: 2021–04
  7. By: Christian Dustmann (Department of Economics and Centre for Research and Analysis of Migration (CReAM))
    Abstract: A number of recent works have shown that the substantial increase in imports to the United States from China over recent decades led to large but highly concentrated negative labor market outcomes for those workers most exposed to these imports. On the other hand, such substantially negative effects were largely absent in Germany, the world’s fourth-largest economy. This paper discusses aspects that likely contribute to explaining these differences: the German industry structure, its nature of industrial relations, as well as the ability to and willingness of workers to retrain. Moreover, with the China shock being in large part over, any future shocks will most likely look quite different. It is unlikely that the economic shocks of the future will affect the same workers, in the same ways, as the China shock did. Therefore, by focusing the policy discussion on trade policy exclusively, we may overlook other looming challenges. Instead, it may be more fruitful to discuss how to design industrial policies, labor market policies, and education and training policies so that modern economies can adapt flexibly to a range of possible shocks.
    Keywords: Trade, Inequality, Germany, Industrial Relations, Vocational Training
    JEL: F14 F16 F66
    Date: 2021–04
  8. By: Jin, Zhangfeng; Pan, Shiyuan; Zheng, Zhijie
    Abstract: This study examines the consequences of relaxing birth quotas by exploiting an exogenous two-child policy adopted by local Chinese governments on different dates. Using China's 2015 population census combined with a difference-in-differences framework, we find that the adoption of a two-child policy substantially increases the number of second-child births. The impact of the policy is more pronounced among couples who have higher fertility preferences and who are less sensitive to child-rearing costs. At the same time, this policy substantially decreases the number of first-child births. Child-rearing costs are a likely underlying mechanism for this decrease. All of these findings are in line with an extended Barro-Becker model.
    Keywords: two-child policy,fertility preferences,child-rearing cost,childbearing decision,China
    JEL: J13 J18 H23
    Date: 2021
  9. By: Uri Dadush; André Sapir
    Abstract: The authors are grateful to Bruegel colleagues and to Petros Mavroidis for helpful comments, and to Mia Hoffmann for superb research assistance. The European Union is very open to foreign direct investment. By comparison, despite considerable liberalisation in the past two decades, foreign investors in China’s markets still face significant restrictions, especially in services sectors. Given this imbalance, the EU has long sought to improve the situation for its companies...
    Date: 2021–04
  10. By: Emran, M. Shahe; Ferreira, Francisco H. G.; Jiang, Yajing; Sun, Yan
    Abstract: This paper extends the Becker-Tomes model of intergenerational educational mobility to a rural economy characterized by farm-nonfarm occupational dualism and provides a comparative analysis of rural China and rural India. The model builds a micro-foundation for the widely used linear-in-levels estimating equation. Returns to education for parents and productivity of financial investment in children’s education determine relative mobility, as measured by the slope, while the intercept depends, among other factors, on the degree of persistence in nonfarm occupations. Unlike many existing studies based on coresident samples, our estimates of intergenerational mobility do not suffer from truncation bias. The sons in rural India faced lower educational mobility compared with the sons in rural China in the 1970s to 1990s. To understand the role of genetic inheritance, Altonji et al. (2005) biprobit sensitivity analysis is combined with the evidence on intergenerational correlation in cognitive ability in economics and behavioral genetics literature. The observed persistence can be due solely to genetic correlations in China, but not in India. Father’s nonfarm occupation was complementary to his education in determining a sons’ schooling in India, but separable in China. There is evidence of emerging complementarity for the younger cohorts in rural China. Structural change in favor of the nonfarm sector contributed to educational inequality in rural India. Evidence from supplementary data on economic mechanisms suggests that the model provides plausible explanations for the contrasting roles of occupational dualism in intergenerational educational mobility in rural India and rural China. (Stone Center on Socio-Economic Inequality Working Paper Series)
    Date: 2021–04–13

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