nep-cna New Economics Papers
on China
Issue of 2021‒06‒28
five papers chosen by
Zheng Fang
Ohio State University

  1. Does Vocational Education Pay Better, or Worse, Than Academic Education? By Chen, Jie; Pastore, Francesco
  2. What Happened to the U.S. Deficit with China during the U.S.-China Trade Conflict? By Hunter L. Clark; Anna Wong
  3. Early-life Famine Exposure, Hunger Recall and Later-life Health By Zichen Deng; Maarten Lindeboom
  4. Entrepreneurial Reluctance: Talent and Firm Creation in China By Chong-En Bai; Ruixue Jia; Hongbin Li; Xin Wang
  5. Labour Laws, Informality, and Development: Comparing India and China By Simon Deakin; Shelley Marshall; Sanjay Pinto

  1. By: Chen, Jie (UNSW Sydney); Pastore, Francesco (Università della Campania Luigi Vanvitelli)
    Abstract: In this paper, we use the Chinese General Social Survey data to analyse the returns to upper secondary vocational education in China. To address possible endogeneity of vocational training due to omitted heterogeneity, we construct a novel instrumental variable using the proportion of tertiary education graduates relative to the entire population by year. Our main finding is that, although returns to vocational upper secondary education appear higher than returns to academic upper secondary education according to the Mincerian equation, the results from the instrumental variable method tell the opposite story: vocational upper secondary graduates face a wage penalty compared to academic upper secondary graduates. The wage penalty is confirmed by an alternative and more recent IV method - the Lewbel method (Lewbel, 2012). Our findings highlight the importance of properly accounting for endogeneity when estimating the returns to vocational education.
    Keywords: vocational education, academic education, upper secondary, China, Lewbel
    JEL: I26 I25 J24 J31 C36
    Date: 2021–06
  2. By: Hunter L. Clark; Anna Wong
    Abstract: The United States’ trade deficit with China narrowed significantly following the imposition of additional tariffs on imports from China in multiple waves beginning in 2018—or at least it did based on U.S. trade data. Chinese data tell a much different story, with the bilateral deficit rising nearly to historical highs at the end of 2020. What’s going on here? We find that (as also discussed in a related note) much of the decline in the deficit recorded in U.S. data was driven by successful efforts to evade U.S. tariffs, with an estimated $10 billion loss in tariff revenues in 2020.
    Keywords: China; tariff; trade
    JEL: F0
    Date: 2021–06–21
  3. By: Zichen Deng (Norwegian School of Economics); Maarten Lindeboom (Vrije Universiteit Amsterdam)
    Abstract: We use newly collected individual-level hunger recall information from the China Family Panel Survey to estimate the causal effect of undernourishment on later-life health. We develop a Two-Sample Instrumental Variable (TSIV) estimator that can deal with heterogeneous samples. We find a non-linear relationship between the Great Chinese Famine and hunger recall. The non-linearity in famine exposure may explain the variation in the famine’s effect on later life health found in previous studies. We also find that exposure to famine-induced hunger early in life leads to worse health among females fifty years later. This effect is larger than the reduced-form effect found in previous studies. For males, we find no impact.
    Keywords: famine, hunger, developmental origins, two-sample instrumental variable
    JEL: I12 J11 C21 C26
    Date: 2021–06–19
  4. By: Chong-En Bai; Ruixue Jia; Hongbin Li; Xin Wang
    Abstract: The theoretical literature has long noted that talent can be used in both the entrepreneurial and non-entrepreneurial sectors, and its allocation depends on the reward structure. We test these hypotheses by linking administrative college admissions data for 1.8 million individuals with the universe of firm registration records in China. Within a college, we find that individuals with higher college entrance exam scores – the most important measure of talent in this context – are less likely to create firms, but, when they do, their firms are more successful than those of their lower-score counterparts. Additional survey data suggest that higher-score individuals enjoy higher wages and are more likely to join the state sector. Moreover, the score-to-firm creation relationship varies greatly across industry, according to the size of the state sector. These findings suggest that the score is positively associated with both entrepreneurial ability and wage-job ability but higher-score individuals are attracted away by wage jobs, particularly those of the state sector.
    JEL: H11 J24 O12 O15
    Date: 2021–05
  5. By: Simon Deakin; Shelley Marshall; Sanjay Pinto
    Abstract: This paper explores trends in the formalisation and informalisation of work, focusing on the world’s two largest labour markets, India and China. A first task in is to define what is meant by informal work. The definitions used by international agencies are not uniform and different countries have distinct approaches. There are numerous dimensions to informality that are not fully captured in statistical data. There is a trend towards formal employment and away from own-account work and self-employment in many regions of the world, particularly in East Asia where the proportion of the labour force in waged employment has doubled over the past three decades. The paper will look more closely at the contrasting cases of India (where formal work has increased recently, but to a very small extent) and China (where a variant of the standard employment contract may be emerging), discuss reasons for the divergence between them, and consider the relationship between formality and developmental outcomes in the two countries.
    Keywords: Informality, labour laws, employment contract, India, China
    JEL: J46 J68 K31
    Date: 2020–03

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