nep-cna New Economics Papers
on China
Issue of 2023‒10‒23
eleven papers chosen by
Zheng Fang, Ohio State University

  1. Distortions and industrial upgrading in China By Zhang, Xiaoyue
  2. Exporting the Surveillance State via Trade in AI By Martin Beraja; Andrew Kao; David Y. Yang; Noam Yuchtman
  3. Intergenerational Mobility of Daughters and Marital Sorting: New Evidence from Imperial China By Wolfgang Keller; Carol H. Shiue
  4. Essays on equity incentive and share pledging in China By Su, Zili
  5. Regional Heterogeneity and the Provinicial Phillips Curve in China By Makram El-Shagi; Kiril Tochkov
  6. When firms may benefit from sticking with an old technology By Li, Xu
  7. Reluctant Entrepreneurs: Evidence from China’s SOE Reform By Hanming Fang; Ming Li; Zenan Wu; Yapei Zhang
  8. Management Practices and Climate Policy in China By Soo Keong Young; Ulrich J. Wagner; Peiyao Shen; Laure de Preux; Mirabelle Muȗls; Ralf Martin; Jing Cao
  9. Stay-at-Home Peer Mothers and Gender Norms: Short-run Effects on Educational Outcomes By Liwen Chen; Bobby W. Chung; Guanghua Wang
  10. The Birth Order Effect: A Modern Phenomenon? By Nuevo-Chiquero, Ana; Vidal-Fernandez, Marian; Lehmann, Jee-Yeon K.
  11. The Labor Market Consequences of Heat Exposure During Pregnancy By Xuwen Gao; Ran Song; Christopher Timmins; Fang Xia

  1. By: Zhang, Xiaoyue (Tilburg University, School of Economics and Management)
    Date: 2023
  2. By: Martin Beraja; Andrew Kao; David Y. Yang; Noam Yuchtman
    Abstract: We document three facts about the global diffusion of surveillance AI technology, and in particular, the role played by China. First, China has a comparative advantage in this technology. It is substantially more likely to export surveillance AI than other countries, and particularly so as compared to other frontier technologies. Second, autocracies and weak democracies are more likely to import surveillance AI from China. This bias is not observed in AI imports from the US or in imports of other frontier technologies from China. Third, autocracies and weak democracies are especially more likely to import China’s surveillance AI in years of domestic unrest. Such imports coincide with declines in domestic institutional quality more broadly. To the extent that China may be exporting its surveillance state via trade in AI, this can enhance and beget more autocracies abroad. This possibility challenges the view that economic integration is necessarily associated with the diffusion of liberal institutions.
    JEL: E0 L5 L81 O30 P0
    Date: 2023–09
  3. By: Wolfgang Keller; Carol H. Shiue
    Abstract: We study the role of marriage for women's intergenerational mobility during the Ming-Qing (1368-1911) period. Using status information based on the timing of marriage from family histories in Central China, already in the early 1500s it is the case that daughters from rich families attain higher status over their lifetime than daughters from poorer families. This intergenerational status persistence is partly due to marital sorting because daughters from high-status families tend to become the wives of sons who themselves come from rich families. Quantitatively, the correlation of 0.6 between the status of biological and in-law families means that marriage accounts for more than one third of total intergenerational status transmission, while not accounting for marriage overestimates mobility by more than 20 percent. Further underscoring the importance of marriage, typically the status of the in-law family plays a larger role for intergenerational status transmission than the child's biological grandparents. Over the period 1500 to 1900, the degree of marital sorting falls, as does intergenerational persistence. Lower investments in the marriage market to find a good match for a daughter go hand in hand with the fall in the returns to son education due to the decline of China's civil service examination.
    JEL: J62 N3
    Date: 2023–09
  4. By: Su, Zili (Tilburg University, School of Economics and Management)
    Date: 2023
  5. By: Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Kiril Tochkov (Texas Christian University, Fort Worth, TX, US)
    Abstract: This paper explores the presence of regional heterogeneity in the response of inflation to changes in the output gap in China. We estimate the slope of the provincial Phillips curve for five different price indices using quarterly data over the period 2000-2022. The presence of regional heterogeneity is tested by comparing a fixed effects and a mean group specification. Our results indicate that the slope of the provincial Phillips curve in China is positive and significant for property prices and the producer price index (PPI), which is explained by their focus on non-tradables and goods specific to the local economy, respectively. Other price indices centered on tradables do not show significant sensitivity to provincial output shocks. Regional heterogeneity in the provincial slope is confirmed only in the case of the PPI with around 60% of provinces, including most coastal provinces, exhibiting a positive coefficient. Our findings point to the share of industry and the market power of industrial enterprises as significant contributors to the sensitivity of inflation to provincial demand shocks. Moreover, we show that a stronger market-orientation and a smaller role of the state in a given province are also positively associated with the slope of the Phillips curve.
    Keywords: Phillips curve, inflation, China, regional heterogeneity
    JEL: E31
    Date: 2023–08
  6. By: Li, Xu
    Abstract: Research Summary How should firms respond to technological discontinuities in order to achieve greater performance? In contrast to most studies that advocate a timely transition from the old to the new technology, this paper posits that in markets where a discontinuous technology exposes customers' latent preference heterogeneity for certain old technology attributes, firms may ultimately experience a performance surge by adhering to the old technology during technological change. Explicitly, I theorize a U-shaped relationship within such a market between competitors' increasing adoption of the new technology and the performance of firms that stick with the old technology. This prediction is thoroughly examined using comprehensive data from the traditional Chinese medicine industry in China during the 1990s and receives robust empirical support. Managerial Summary In some markets, the rise of a discontinuous technology, besides posing a substitute threat to the old technology, further exposes niche segments where customers continue to favor the old technology. This paper predicts that within such a market, as competitors increasingly adopt the new technology for varied motives, firms sticking with the old technology may see their performance declining before rebounding and potentially reaching new heights. Analyses using archival data from the traditional Chinese medicine industry in China during the 1990s provide robust support for this prediction. The arguments and findings of this paper offer an “existence proof” that when confronted with a technological discontinuity, adhering to the old technology may also represent an effective strategy that ultimately improves firm performance.
    Keywords: demand heterogeneity; firm performance; old technology; technological discontinuity; Wiley deal
    JEL: J50
    Date: 2023–09–21
  7. By: Hanming Fang; Ming Li; Zenan Wu; Yapei Zhang
    Abstract: We study the impact of state-owned enterprises (SOEs) on the quality of entrepreneurship in China. Using long series of firm registration and performance data, we document that the massive SOE downsizing in the late 1990s significantly improved the quality of entrepreneur- ship. Compared with entrepreneurs in other time periods, firms founded by the reluctant entrepreneurs induced by the SOE layoffs have better performances. To explain these results, we present a simple model of occupational choices where high-skilled individuals obtain a higher value than low-skilled individuals from the benefits offered by SOE jobs, leading them to select into the SOE sector in the pre SOE reform era. When the SOE sector was downsized, some high-skilled SOE employees were reluctantly unleashed into entrepreneurship. We also provide corroborating evidence for other implications of the model.
    JEL: J08 J28 J68 L26
    Date: 2023–09
  8. By: Soo Keong Young; Ulrich J. Wagner; Peiyao Shen; Laure de Preux; Mirabelle Muȗls; Ralf Martin; Jing Cao
    Abstract: We investigate how management quality moderates the impact of carbon pricing on Chinese firms. Based on interviews with managers and lead engineers at manufacturing firms in Hubei and Beijing, we construct a novel index on climate-change related management practices and link it to firm data from various sources. We document higher average productivity and more green innovation among firms that are well managed according to this index. In an event study of the introduction of regional cap-and-trade schemes for CO2, we analyze how these management practices interact with treatment. While treated firms reduced coal consumption more than control firms, this effect is statistically significant only for well-managed firms. The reduction could have been 25% greater if badly managed firms had been well managed. Our study highlights that good management practices, in particular energy monitoring, enhance the effectiveness of market-based climate policies by enabling firm to rationally comply with them.
    Keywords: climate policy; firm behavior; management practices; emissions trading scheme; policy evaluation
    JEL: D22 O31 Q48 Q54
    Date: 2023–09
  9. By: Liwen Chen (East China Normal University); Bobby W. Chung (University of South Florida); Guanghua Wang (Nanjing Audit University)
    Abstract: Increased exposure to gender-role information affects a girl's educational performance. Utilizing the classroom randomization in Chinese middle schools, we find that the increased presence of stay-at-home peer mothers significantly reduces a girl's performance in mathematics. This exposure also cultivates gendered attitudes towards mathematics and STEM professions. Long exposure, dense network, and distant parent-daughter relationship enhance peer mothers' influences. As falsification tests against unobserved confounding factors, we find that the exposure to stay-at-home peer mothers does not affect boys' performance, nor do we find that stay-at-home peer fathers affect girls' outcomes.
    Keywords: Cultural transmission, Gender identity, Gender norms, Role models
    JEL: I24 J16 Z13
    Date: 2023–10
  10. By: Nuevo-Chiquero, Ana (Universidad Autónoma de Madrid); Vidal-Fernandez, Marian (University of Sydney); Lehmann, Jee-Yeon K. (University of Houston)
    Abstract: We provide a historical perspective on the birth order effect by examining differences in adult occupational rank among brothers in 19th and early 20th century Netherlands. Using a rich historical dataset compiling administrative birth and marriage registry records linking family members, we further analyze the role of family composition and socio-economic status in modulating the birth order effect. While consistent with findings in modern developed countries, we find that later-born males hold lower-ranked occupations than their older male siblings, we also find that consistent with modern evidence from emerging economies like India and China, this negative birth order effect is primarily driven by differences between the first- and the last-born and their siblings, and by the number of brothers in the family. Birth order differences – particularly the first-born advantage – are larger among socio-economically advantaged families and in more urbanised areas, while the opposite is true for the last-born effect. Surprisingly, the first-born advantage or son-preference is not driven by inheritance rules or transmission of occupations to children born earlier in the family. Taken together, our findings suggest that birth order effects and quantity-quality tradeoffs in families, are not merely modern phenomena but have been a source of context-dependent intrahousehold inequality throughout the centuries.
    Keywords: birth order, first-born, the Netherlands, historical data
    JEL: J01 N14
    Date: 2023–09
  11. By: Xuwen Gao; Ran Song; Christopher Timmins; Fang Xia
    Abstract: We provide the first estimates of the negative impact of exposure to extremely high temperatures during pregnancy on mothers’ labor market outcomes. We employ individual-level survey data from China and leverage plausibly exogenous fluctuations in heat exposure within cities. The results demonstrate that exposure to extremely hot weather during pregnancy reduces women’s wages and labor supply later in life and increases the likelihood that they will work in an unskilled sector. The effects are stronger for heat exposure during the third gestational trimester. The mechanism for these results is that extreme temperature exposure during pregnancy undermines maternal health. Our analysis proposes a new channel through which extreme weather generates health and economic costs.
    JEL: I10 J22 J31 Q54
    Date: 2023–09

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