nep-cna New Economics Papers
on China
Issue of 2022‒04‒11
eight papers chosen by
Zheng Fang
Ohio State University

  1. Technological solutions to guaranteed wage payments of construction workers in China By Huang, Kun.; Elder, Sara
  2. Serial Entrepreneurship in China By Loren Brandt; Ruochen Dai; Gueorgui Kambourov; Kjetil Storesletten; Xiaobo Zhang
  3. Age at marriage and marital stability: evidence from China By Jorge García-Hombrados; Berkay Ozcan
  4. China’s Demographic Transition: A Quantitative Analysis By Yongkun Yin
  5. Hidden defaults By Horn, Sebastian; Reinhart, Carmen M.; Trebesch, Christoph
  6. Fertility and Savings: The Effect of China’s Two-Child Policy on Household Savings By Scott R. Baker; Efraim Benmelech; Zhishu Yang; Qi Zhang
  7. Is the Age Structure of the Population One of the Determinants of the Household Saving Rate in China? A Spatial Panel Analysis of Provincial Data By Jingwen Yin; Charles Yuji Horioka
  8. Taxless fiscal states: Lessons from 19th-century America and 21st-century China By Yuen Yuen Ang

  1. By: Huang, Kun.; Elder, Sara
    Abstract: For many years, wage arrears have been a prevalent problem facing rural migrant workers in the construction sector in China. The difficulties of addressing wage arrears are multifaceted, but are clearly exacerbated by the complex layering of subcontracting that occurs in construction sector. In recent years, China adopted a series of policies and laws to facilitate the timely and full wage payment to migrant workers.With the legal framework in place, central and local governments of China have implemented solutions to improve the efficiency of labour inspection system in addressing wage arrears, thanks to the application of digital technologies. This paper examines how technology was put to use in the design and implementation of an online information platform—National Construction Workers Management and Service Information System — that registers rural migrant workers and ultimately brings them under the realm of public policy to protect them against abuses. The paper examines in detail the Enterprise Wage Payment Online Supervision System (EWPOSS) of Zhejiang Province and analyses how the IT-enabled system has contributed to improving the efficiency of the local labour inspectorates in addressing wage arrears. The paper concludes that digital solutions offer great potential to tackle negative aspects associated to informality if accompanied by adequate policy and legal frameworks, sound digital infrastructure and effective and robust labour inspection systems.
    Date: 2022
  2. By: Loren Brandt; Ruochen Dai; Gueorgui Kambourov; Kjetil Storesletten; Xiaobo Zhang
    Abstract: This paper studies entrepreneurship and the creation of new firms in China through the lens of serial entrepreneurs, i.e. entrepreneurs who establish more than one firm, and their differences with non-serial entrepreneurs. Drawing on data on the universe of all firms in China, we document key facts about serial entrepreneurship in China since the early 1990s and develop a theoretical framework to rationalize the role of endowments, ability, and capital market frictions in their behavior. We also examine the key determinants of the sectoral choice for serial entrepreneurs' second firms. Quantitatively, serial entrepreneurs are more productive, raise more capital, and operate larger firms than non-serial entrepreneurs. Moreover, serial entrepreneurs with greater liquidity and whose firms have relatively similar productivity are more likely to operate these firms concurrently rather than sequentially. We also find that less productive serial entrepreneurs are more likely to switch sectors when establishing new firms, with the choice of sector influenced by considerations of risk diversification, upstream and downstream linkages, and sectoral complementarities.
    Keywords: Serial Entrepreneurship; Entrepreneurship; Capital Distortions; Sector Choice
    JEL: D22 D24 E22 E44 L25 L26 O11 O14 O16 O40 O53 P25 R12 D21
    Date: 2022–03–23
  3. By: Jorge García-Hombrados; Berkay Ozcan
    Abstract: Many studies showed that marrying younger is associated with a higher risk of divorce. We investigate the causal effect of marrying at an earlier age on women’s divorce risk. We exploit the introduction of the 1981 reform in China, which facilitated legal marriage for urban women younger than 25 years old, using the Chinese Census data. We show that the reform generated a kink in the mean age at marriage for women, which we use in a fuzzy regression kink design (RKD) to assess the causal effect of marrying younger on the probability of divorce. First, we confirm in our data the existence of a negative (in fact, a U-shaped) association between age at marriage and divorce, as commonly observed in previous studies from the USA. Then, we show that this association disappears in our analyses based on RKD. This finding suggests that the well-documented association between early marriage and divorce is in fact attributable to unobservable factors driving both marriage timing and the likelihood of divorce. We discuss the implications. Keywords: Age at marriage, divorce, legal age of marriage, China. JEL codes: J12.
    Keywords: China, age at marriage
    JEL: J1 Z0
    Date: 2022
  4. By: Yongkun Yin (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: China’s fertility decline was very fast. But the drivers of this decline are not well understood. The common wisdom attributes it to the strict population control policies, particularly the One-Child Policy. Yet, fertility decline might also be due to the spectacular economic transformation and substantial mortality decline. To quantify the effects of different factors on China’s demographic and economic transition, I develop a two-sector overlapping-generation model with workers’ movement from rural to urban areas and endogenous fertility and education choices. Quantitative analysis shows that even without any population policy, the total fertility rate (TFR) would decline from 6.40 children around 1950 to 2.85 children around 2010. However, the population policies were critical for TFR to fall below the replacement level and do so very quickly after the 1980s. By around 2010, the cumulative effect of population policies reduced fertility from 2.85 to 1.34 children. The baseline model is also extended to incorporate the hukou system, considering that different hukou types are linked to different child quotas under the One-Child Policy and government transfers. The extended model suggests that the impact of the hukou system on fertility decisions was minor.
    Keywords: Demographic transition, structural transformation, population policies, productivity growth, mortality, China.
    JEL: D1 J13 O41
    Date: 2022–02
  5. By: Horn, Sebastian; Reinhart, Carmen M.; Trebesch, Christoph
    Abstract: China's lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China's loans, also the associated defaults remain 'hidden', as missed payments and restructuring details are not disclosed. We construct an encompassing dataset of sovereign debt restructurings with Chinese lenders and find that these credit events are surprisingly frequent, exceeding the number of sovereign bond or Paris Club restructurings. Chinese lenders follow a resolution approach reminiscent of 1980s Western lenders; they seldom provide deep debt relief with face value reduction. If history is any guide, multi-year debt workouts with serial restructurings lie in store.
    Keywords: China,external debt,default,crisis resolution,official lending,hidden debts,sovereign risk,Belt and Road initiative
    JEL: F21 F34 F42 F6 G15 H63 N25
    Date: 2022
  6. By: Scott R. Baker; Efraim Benmelech; Zhishu Yang; Qi Zhang
    Abstract: China’s high household savings rate has attracted great academic interest but remains a puzzle. Potential explanations include demographic, policy, and financial causes. Yet a lack of reliable microlevel data on household finances makes it difficult to assess the relative importance of each factor. This paper uses individual income and spending transactions linked to demographic characteristics and financial information on loan applications and credit availability from a large Chinese bank in Inner Mongolia. We match a large subset of bank customers to administrative records covering marriage and births and obtain a unique view into consumption and saving patterns around important life events. Our results point toward identifying income growth, financial instability, and credit access, rather than such directives as the one-child policy, as the primary causes of high levels of savings among Chinese households.
    JEL: D14 D31 E21 G51
    Date: 2022–03
  7. By: Jingwen Yin (Graduate School of Economics, Kobe University, JAPAN); Charles Yuji Horioka (Research Institute for Economics and Business Administration, Kobe University, Asian Growth Research Institute, Institute of Social and Economic Research, Osaka University, Institute of Economic Research, Kyoto University, National Bureau of Economic Research, JAPAN)
    Abstract: In this paper, we use provincial panel data on China for the 2002-19 period to conduct a spatial autocorrelation analysis of household saving rates as well as a dynamic panel analysis of the determinants of household saving rates using a spatial Durbin model. To summarize our main findings, we find that, in China, the household saving rate shows significant positive spatial autocorrelation with an overall "high-high" and "low-low" clustering pattern, that, as predicted by the life-cycle hypothesis, the youth dependency ratio and the old-age dependency ratio have a negative and significant impact on the household saving rate, and that the logarithm of per capita household disposable income, the regional economic growth rate, the share of the urban population, the industrialization rate, and the income disparity between urban and rural areas also have a significant impact on the household saving rate.
    Keywords: Age structure of the population; China; Dependency ratio; Household saving rate; Life-cycle hypothesis or model; Old-age dependency ratio; Spatial autocorrelation; Spatial Durbin model; Youth dependency ratio
    JEL: D14 D15 E21 G51 J11 O16 R20
    Date: 2022–03
  8. By: Yuen Yuen Ang
    Abstract: How do modern fiscal states arise? Perhaps the most dominant explanation, based on the European experience, is that democratic institutions that limited the extractive power of states—exemplified by the 1688 Glorious Revolution in England—paved the way for the rise of fiscal capacity and subsequent prosperity. Revisionist accounts, however, reveal that this dominant narrative is flawed. In fact, numerous factors converged to enable the rise of European fiscal states, and in England, debt and land were particularly salient factors.
    Keywords: Public finance, Fiscal capacity, Land, United States, China
    Date: 2022

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