nep-cna New Economics Papers
on China
Issue of 2022‒01‒10
eight papers chosen by
Zheng Fang
Ohio State University

  1. Housing Market Regulations and Strategic Divorce Propensity in China By James Alm; Weizheng Lai; Xun Li
  2. Birth Order Effects, Parenting Style, and Son Preference By Kim, Jun Hyung; Wang, Shaoda
  3. Role of Professionalism in Response to the COVID-19 Pandemic: Does a Public Health or Medical Background Help? By Li, Xun; Lai, Weizheng; Wan, Qianqian; Chen, Xi
  4. Cash on the Table? Imperfect Take-up of Tax Incentives and Firm Investment Behavior By Wei Cui; Jeffrey Hicks; Jing Xing
  5. Convergence in Labor Productivity across Provinces and Production Sectors in China By Qin, Weiguang; Bhattarai, Keshab
  6. Near-term trends in China's coal consumption By Lin, J; Fridley, D; Lu, H; Price, L; Zhou, N
  7. Developing Hydrogen Infrastructure and Demand: An Evolutionary Game and the Case of China By Zhao, Tian; Liu, Zhixin; Jamasb, Tooraj
  8. Can today's and tomorrow's world uniformly gain from carbon taxation? By Laurence J. Kotlikoff; Felix Kubler; Andrey Polbin; Simon Scheidegger

  1. By: James Alm (Tulane University); Weizheng Lai (University of Maryland); Xun Li (Wuhan University)
    Abstract: In China’s regulated housing markets, a married couple may choose strategically to divorce in order to purchase more houses and/or purchase with more favorable financial conditions. Our study examines the propensity of strategic divorce induced by housing market regulations in China. To overcome the difficulty of using conventional divorce data to disentangle a “true” divorce and a strategic (or a “fake”) divorce, we design an identification strategy using data on internet searches for divorce- and marriage-related keywords in 32 Chinese major cities from 2009 through 2016. Our difference-in-differences estimates provide robust evidence that housing market regulations significantly increase the propensity of strategic divorce. Our results also show that the increase in the propensity of strategic divorce is weaker in the cities with higher male-female ratios and with stronger Confucian ideologies. These findings point to the role that housing market regulations play in distorting a family’s choices, as well as to the importance for policymakers to consider unintended impacts of regulations.
    Keywords: Housing market regulations; Strategic divorce; Baidu Index
    JEL: D78 J12 J18 L50 R21
    Date: 2021–12
  2. By: Kim, Jun Hyung; Wang, Shaoda
    Abstract: While it is well known that there are systematic birth order effects on life cycle outcomes, there is less consensus about underlying channels and mechanisms of birth order effects. We find negative birth order effects among Chinese adolescents, favoring earlier-born children within household in academic achievement and cognitive skill measures. We highlight harsh parenting as a novel channel of birth order effects, in which earlier-born children are less likely to be physically punished by their parents. Focusing on son preference as a potential mechanism generating birth order effects, our tests show limited support for the existence of son preference among Chinese siblings. These findings are in contrast to positive birth order effects and strong evidence of son preference among earlier generations of Chinese siblings reported in the literature, suggesting weakened role of son preference within families in contemporary China.
    Keywords: birth order effect,parenting style,academic achievement,cognitive skill,son preference
    JEL: I20 J10 J13
    Date: 2021
  3. By: Li, Xun; Lai, Weizheng; Wan, Qianqian; Chen, Xi
    Abstract: In response to the outbreak of coronavirus disease 2019 (COVID-19), there have been substantial variations in policy response and performance for disease control and prevention within and across nations. It remains unclear to what extent these variations may be explained by bureaucrats' professionalism, as measured by their educational background or work experience in public health or medicine. To investigate the effects of officials' professionalism on their response to and performance in fighting the COVID-19 pandemic, we collect information from the résumés of government and Party officials in 294 Chinese cities, and integrate this information with other data sources, including weather conditions, city characteristics, COVID-19-related policy measures, and health outcomes. We show that, on average, cities whose top officials had public health or medical backgrounds (PHMBG) had significantly lower infection rates than cities whose top officials lacked such backgrounds. We test the mechanisms of these effects and find that cities whose officials had PHMBG implemented community closure more rapidly than those lacked such backgrounds. Our findings highlight the importance of professionalism in combating the pandemic
    Keywords: COVID-19,Professionalism,Public Health Background,Medical Background,Policy Response
    JEL: I18 H12 H75 P41
    Date: 2021
  4. By: Wei Cui; Jeffrey Hicks; Jing Xing
    Abstract: We investigate whether investment incentives work in less developed countries by exploiting the introduction of accelerated depreciation (AD) for fixed asset investment in China as a natural experiment. In contrast to the large positive impact of similar tax incentives in the U.S. and U.K. found in recent studies, we document that AD was ineffective in stimulating Chinese firms' investment. Further, using confidential corporate tax returns from a large province, we find that firms fail to claim the AD benefit on over 80% of eligible investments. Firms’ take-up is significantly influenced by their taxable positions and tax sophistication. Moreover, resources of local tax authorities help improve awareness of the policy. Our study contributes to the understanding of conditions under which tax incentives for investment can be effective.
    Keywords: tax incentives, investment, take-up, tax administration
    JEL: H20 H30
    Date: 2021
  5. By: Qin, Weiguang; Bhattarai, Keshab
    Abstract: The panel data analysis for labour productivity convergence across provinces and sectors in China shows existence of unconditional and conditional convergence among them. While the human capital is found to have positive and significant effects on growth rates of sector-wise productivities, the FDI had positive and significant effects on growth rates of productivity across provinces. According to quantile regression, the convergence are asymmetric among provinces and sectors. The policy implications of this analysis is that low productivity sectors should improve human capital and reduce concentration for growing faster. Similarly provinces with low productivity could encourage more FDI to complement domestic investment for achieving higher rates of growth in labour productivity. This study also finds that greater inequality lowers the rate of labour productivity and hence causes more divergence across provinces. Effects income inequality on productivity are asymmetric and heterogeneous by quantiles and hence demand for an egalitarian redistribution system.
    Keywords: productivity convergence, labor, FDI, human capital, China
    JEL: O47
    Date: 2021–12–15
  6. By: Lin, J; Fridley, D; Lu, H; Price, L; Zhou, N
    Abstract: Coal combustion to power China’s factories, generate electricity, and heat buildings has increased continually since energy use statistics were first published in 1981. From 2013 until 2015, however, this trend reversed and coal use continued to decline from 2,810 million metric tons of coal equivalent (Mtce) to 2,752 Mtce, leading to a levelling off of China’s overall CO2 emissions. Some analysts have declared that China’s coal consumption may have peaked, but preliminary data indicate that coal consumption increased in 2017. This recent growth, combined with our analysis of projected increases in electricity demand that cannot be met by other fossil-fuel or non-fossil-fuel electricity sources, along with projected increases in coal use in light manufacturing, other non-industrial sectors, as well as in coal use for transformation, indicates potential future growth of China’s coal use to levels of 2,908 Mtce to 3,060 Mtce in 2020, with associated increases in energy-related CO2 emissions.
    Date: 2022–01–05
  7. By: Zhao, Tian (School of Economics and Management, Beihang University); Liu, Zhixin (School of Economics and Management, Beihang University); Jamasb, Tooraj (Department of Economics, Copenhagen Business School)
    Abstract: Diffusion of hydrogen refueling stations (HRS) is key to promotion of hydrogen vehicles. In this paper, we explore the nexus between critical stakeholders in the hydrogen industry from a game perspective. We investigate the proposed policy for promotion of hydrogen vehicles in China. We model the three main actors in hydrogen infrastructure development, i.e. public sectors, private investors, and consumers. The tripartite evolutionary game analyzes the interactive policy process of subsidy provision, infrastructure investment, and fuel consumption. We then examine the evolutionary stable strategy (ESS) of the system. We propose a policy mechanism for how to set values of key parameters to promote active cooperation of the three actors in HRS diffusion. A numerical simulation validates the solution of the game and sensitivity analyses of initial probabilities and key parameters. We find that boosting initial willingness of actors to choose cooperative hydrogen strategies is beneficial to lead the game system to the ideal consequence. We offer some recommendations including establishing regulation standards for the construction of HRS, increasing financial incentives to each actor and decreasing the cost of HRS and retail price of hydrogen.
    Keywords: Hydrogen infrastructure; Evolutionary game; Numerical simulation; China
    JEL: C73 Q42 Q48 R42
    Date: 2021–11–21
  8. By: Laurence J. Kotlikoff; Felix Kubler; Andrey Polbin; Simon Scheidegger
    Abstract: Climate change will impact current and future generations in different regions very differently. This paper develops a large-scale, annually calibrated, multi-region, overlapping generations model of climate change to study its heterogeneous effects across space and time. We model the relationship between carbon emissions and the global average temperature based on the latest climate science. Predicated average global temperature is used to determine, via pattern-scaling, region-specific temperatures and damages. Our main focus is determining the carbon policy that delivers present and future mankind the highest uniform percentage welfare gains – arguably the policy with the highest chance of global adoption. Damages from climate change are positive for all regions apart from Russia and Canada, with India and South Asia Pacific suffering the most. The optimal policy is implemented via a time-varying global carbon tax plus region-and generation-specific net transfers. Uniform welfare improving carbon policy can materially limit global emissions, dramatically shorten the use of fossil fuels, and raise the welfare of all current and future agents by over four percent. Unfortunately, the pursuit of carbon policy by individual regions, even large ones, makes only a limited difference. However, coalitions of regions, particularly ones including China, can materially limit carbon emissions.
    Keywords: none
    JEL: H23 O44
    Date: 2021–09

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