nep-sea New Economics Papers
on South East Asia
Issue of 2015‒08‒13
23 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Asia Bond Monitor - March 2015 By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  2. Realizing an ASEAN Economic Community: Progress and Remaining Challenges By Menon , Jayant; Melendez, Anna Cassandra
  3. [WTO Case Review Series No. 14] Thailand—Customs and Fiscal Measures on Cigarettes from the Philippines (DS371): More stringent discipline of GATT on internal regulation restricting competitive opportunities for imports (Japanese) By OBASE Takuma
  4. The Recent Convergence of Financial Development in Asia By Dekle, Robert; Pundit, Madhavi
  5. Indonesian Macro Policy through Two Crises By Prayudhi Azwar; Rod Tyers
  6. Promoting Women's Economic Empowerment in Cambodia By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  7. Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa By Nora Lustig
  8. State-owned Enterprise Reforms in the TPP Negotiation: Is it a win-win for Vietnam? By LE Thi Anh Nguyet
  9. Office of Anticorruption and Integrity: 2014 Annual Report By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  10. Industry Perspective:The Challenge of Managing Huanglongbing (HLB) and its Vector, the Asian Citrus Psyllid (ACP) By Polek, MaryLou
  11. Biological Well-Being in Late 19th Century Philippines By Jean-Pascal Bassino; Marion Dovis; John Komlos
  12. Public Service Spending: Efficiency and Distributional Impact—Lessons from Asia By Lavado, Rouselle; Domingo, Gabriel Angelo
  13. Global labour recruitment in a supply chain context By Gordon, Jennifer
  14. Financing Asia’s Growth By Estrada, Gemma; Noland, Marcus; Park, Donghyun; Ramayandi, Arief
  15. Emerging Issues in Finance Sector Inclusion, Deepening, and Development in the People’s Republic of China By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  16. Myanmar: Long-Term Scenarios for Sustained Macroeconomic Growth By Roland-Holst, David; Park, Cyn-Young
  17. Diversification, growth, and volatility in Asia By Papageorgiou,Chris; Spatafora,Nikola L.; Wang,Ke
  18. Myanmar: Unlocking the Potential - A Strategy for High, Sustained, and Inclusive Growth By Findlay, Ronald; Park, Cyn-Young; Verbiest, Jean-Pierre
  19. Revealed time-preference By Pawel Dziewulski
  20. Home appliances and gender gap of time spent on unpaid housework: evidence using household data from Vietnam By Tien Manh Vu
  21. Monetary Policy and Foreign Exchange Management: Reforming Central Bank Functions in Myanmar By Nijathaworn, Bandid; Chaikhor, Suwatchai; Chotika-arpa, Suppakorn; Sakkankosone, Suchart
  22. Strategy Change and Wealth Accumulation: An Analysis of S&P 500 Data By Weihong HUANG; Yu ZHANG
  23. The Competitive Earning Incentive for Sons: Evidence from Migration in China By Li, Wenchao; Yi, Junjian

  1. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Economic Research and Regional Cooperation Department, ADB); Asian Development Bank (ADB) (Economic Research and Regional Cooperation Department, ADB); Asian Development Bank (ADB)
    Abstract: This publication reviews recent developments in East Asian local currency bond markets along with the outlook, risks, and policy options. It covers the 10 members of the Association of Southeast Asian Nations plus the People’s Republic of China; Hong Kong, China; and the Republic of Korea.
    Keywords: bonds, local currency, foreign currency, bond yields, emerging East Asia, bonds outstanding, bond issuance, bond market foreign investor holdings, People’s Republic of China, Hong Kong, China, Indonesia, Republic of Korea, Malaysia,, Philippines, Singapore, Thailand, Viet Nam, credit spreads, government bonds, corporate bonds, treasury bonds, central bank, bills, maturity, oil and gas, Kazakhstan, India, Taipei,China, corporate debt
    Date: 2015–03
  2. By: Menon , Jayant (Asian Development Bank); Melendez, Anna Cassandra (Asian Development Bank)
    Abstract: Launched as a political bloc and security pact in the aftermath of the Viet Nam War, the Association of Southeast Asian Nations (ASEAN) has evolved to embrace an ambitious economic agenda. Its latest project is to establish the ASEAN Economic Community (AEC) by 31 December 2015. Fulfilling these commitments would promote predictability in ASEAN, as well as strengthen its credibility. But is ASEAN likely to meet this deadline? The blueprint for achieving the goal envisages the AEC standing on four pillars and meeting the deadline depends on progress on each of them. Each pillar presents a demanding set of challenges to be met before the AEC can be fully realized. We find that although ASEAN has come a long way toward realizing its goal, the challenges that remain suggest that the AEC will miss its approaching deadline. Accommodating AEC accords will not be easy when they require changes to domestic laws or even the national constitution. The flexibility that characterizes ASEAN cooperation, the celebrated "ASEAN way," may hand member states a convenient pretext for noncompliance. How to enforce the accords remains an issue. If the AEC is to be more than a display of political solidarity, ASEAN must find a way to give the commitments more teeth. The real test for the community, therefore, will lie in the years ahead.
    Keywords: AEC 2015; ASEAN Economic Community; ASEAN economic integration; ASEAN trade and investment; economic integration; post-2015 agenda
    JEL: F13 F15 F20
    Date: 2015–05–01
  3. By: OBASE Takuma
    Abstract: The background of this dispute is the internationalization of supply chains within the Association of Southeast Asian Nations Free Trade Area (ASEAN FTA). As a result of trade liberalization in the ASEAN, companies can choose their place of production as they find most suitable, and export products to the place of consumption. This phenomenon makes it easy to discern trade restrictive measures taken by the country of import. The Thailand—Cigarettes dispute illustrates how and to what extent measures of the import country can be questioned by the World Trade Organization (WTO) law. This case involves WTO compatibility of measures ranging from customs valuation, internal taxation, administrative requirement concerning taxation to publication, and administration of trade regulations. It is interesting to note that the Panel considered it sufficient to identify any potential adverse effect on the competitive condition of imported products to find a violation of Article III:4 of the General Agreement on Tariffs and Trade (GATT). In one reading of this Panel Report, one might argue that Article III:4 of GATT requires removing any measure restrictive of competitive opportunities of imports. However, this reading is unfounded because Article III protects equality of competition between national and imported products.
    Date: 2015–07
  4. By: Dekle, Robert (University of Southern California); Pundit, Madhavi (Asian Development Bank)
    Abstract: We construct an index of financial development for 23 Asian economies based on subindices of access, depth, and efficiency of financial institutions and markets and find evidence that economies with weaker financial systems are catching up to the Asian benchmark economies, namely Hong Kong, China; Japan; the Republic of Korea; and Singapore. Gross domestic product (GDP) per capita, aggregate GDP, and mobile subscriptions all increase the growth rate of financial development in Asian economies while institutional factors have insignificant or ambiguous effects. We also evaluate the relative importance of the subindices in delivering high economic growth, low volatility, and greater financial access.
    Keywords: Asian economies; convergence to benchmark; financial development; index construction
    JEL: C82 G01 G02
    Date: 2015–07–01
  5. By: Prayudhi Azwar (Business School, University of Western Australia and Bank Indonesia); Rod Tyers (Business School, University of Western Australia and Research School of Economics Australian National University, and Centre for Applied Macroeconomic Analysis (CAMA) Crawford School of Government ANU)
    Abstract: Indonesia’s open, developing economy fielded shocks due to the Asian financial crisis (AFC) and the global financial crisis (GFC) quite differently. Although the origins of both crises were external, during the AFC the coincidence of financial contagion with domestic political upheaval saw the Indonesian economy collapse. By contrast, during the decade-later GFC, when most nations slumped into recession the Indonesian economy slowed but did not recess, achieving real growth of 6.1% (2008) and 4.5% (2009) and recording one of the world’s best performances for the period. This paper reviews these events and employs numerical modelling of stylized AFC and GFC shocks to show that some of the contrast stems from differences in the states of the global economy during the crises and the compositions of the external shocks in each case. This said, both shocks have capital flight elements and it is shown that the key policy responses include floating the exchange rate and fiscal expansions that are, where necessary, money financed. There is, nonetheless, evidence of evolution in Indonesian macroeconomic policy making between the crises that allowed its strong performance to be sustained.
    Date: 2015
  6. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Southeast Asia Department, ADB); Asian Development Bank (ADB) (Southeast Asia Department, ADB); Asian Development Bank (ADB)
    Abstract: Women’s economic empowerment is essential for more inclusive growth in Cambodia. This study takes stock of major gender issues in the Cambodian economy seen through the lens of women’s participation, benefit, and agency—the three prerequisites for a fairer distribution of growth benefits. It examines labor market trends and obstacles to women’s economic empowerment—particularly in agriculture, business development, and wage employment. Labor migration and vulnerability to shocks are highlighted as special themes. The study makes a series of policy recommendations, identifies areas for further research, and highlights how Asian Development Bank investments can promote women’s economic empowerment.
    Keywords: women, economic empowerment, poverty reduction, Cambodia, wage employment, labor migration
    Date: 2015–03
  7. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in Brazil and Colombia (over and above market income poverty) due to high consumption taxes on basic goods. The marginal contribution of direct taxes, direct transfers and in-kind transfers is always equalizing. The marginal effect of net indirect taxes is unequalizing in Brazil, Colombia, Indonesia and South Africa. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile, Colombia and South Africa, roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru.
    Keywords: fiscal incidence, social spending, inequality, developing countries
    JEL: H22 D31 I3
    Date: 2015–07
  8. By: LE Thi Anh Nguyet
    Abstract: The potential market distortions caused by state-owned enterprises (SOEs) have attracted significant attention from Trans-Pacific Partnership (TPP) members during the negotiations for this agreement in the 21st century. Particularly, in the TPP meetings, Vietnam, as the only nonmarket economy TPP negotiator, has been the focus of discussions concerning SOE issues and reforms to ensure a level playing field for all business sectors, both domestically and regionally. On one hand, SOE reforms can support TPP member governments in financial management and corporate governance more effectively and transparently. On the other hand, the reforms have also left a substantial burden on implementation by the Vietnamese government and the competitiveness of SOEs. The paper (1) examines the principles of SOE management in the TPP negotiation; (2) analyzes the equitization of SOEs in Vietnam in the light of nondiscrimination and on a commercial basis principle; and (3) evaluates the potential cost and benefit of its nonmarket economy status in TPP negotiation.
    Date: 2015–07
  9. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Office of Anticorruption and Integrity, ADB); Asian Development Bank (ADB) (Office of Anticorruption and Integrity, ADB); Asian Development Bank (ADB)
    Abstract: The Office of Anticorruption and Integrity (OAI) helps ensure that development funds entrusted to the Asian Development Bank (ADB) are not misused through fraud or corruption. This publication highlights OAI’s 2014 activities such as providing integrity due diligence support, investigating allegations of integrity violations, and proactively reviewing projects. OAI also delivered integrity-focused training and support for staff, civil society, and project officials in line with ADB’s goal to improve project efficiency through strengthening country systems and control.
    Keywords: adb, asian development bank, asdb, asia, pacific, poverty asia, anticorruption, integrity, oai investigations, adb operations, sanctions, fraud, corruption, paris declaration, transparency, ethical standards, violations, anticorruption, asian development bank, integrity due diligence, advisory support, risk mitigation
    Date: 2015–03
  10. By: Polek, MaryLou
    Keywords: Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,
    Date: 2014
  11. By: Jean-Pascal Bassino; Marion Dovis; John Komlos
    Abstract: This paper investigates the biological standard of living toward the end of Spanish rule. We investigate levels, trends, and determinants of physical stature from the birth cohorts of the 1860s to the 1890s using data on 23,000 Filipino soldiers enlisted by the U.S. military between 1901 and 1913. We use truncated regression technique for estimating average height and use province level information for investigating the determinants of biological wellbeing. The results indicate a decline of more than 1.5 cm cm (0.6 inches) in the height of soldiers born between the early 1870s and the late 1880s. The decline in heights at the end of the 19th century occurred at a time when there was an expansion of commercial activity in cash crop production for export. Heights did not regain the level of the 1870s until the late 1930s and early 1940s. We also find that at 159.3 cm (62.7 inches), the average height of soldiers born in the mid-1870s was very short even for the time. The low biological standard of living in late 19th century was not due to the tropical disease environment alone since taller men were found in the same period in other parts of Asia.
    JEL: I10 N35 O10
    Date: 2015–07
  12. By: Lavado, Rouselle (World Bank); Domingo, Gabriel Angelo (University of California, Davis)
    Abstract: Efficiency and equity are cornerstone concepts in rational service delivery in the public sector. This paper benchmarks efficiency and equity in public spending on health, education and social protection in a broad group of Asian Development Bank (ADB) member economies with varying levels of development. We describe public expenditure trends in health, education and social protection in the region. Following Herrera and Pang (2005), we conduct a formal efficiency benchmarking exercise using Data Envelopment Analysis and available input and output data from WDI, GFS, and ADB databases to deconstruct each member economy’s efficiency changes in health and education spending. We next turn to review service provision inequality within ADB economies using utilization rates and benefit incidence, and note the deficiency of pro-poor spending in some sectors.
    Keywords: governance and institutions; MDGs and inclusive growth; poverty; social protection
    JEL: H51 H52 H53
    Date: 2015–07–01
  13. By: Gordon, Jennifer
    Abstract: The paper suggests an approach that reshapes the market for recruitment services by engaging with employers in destination countries at the top of the labour supply chain, who could play a key role in influencing the recruitment business worldwide. It presents several case studies through which this approach was tested through regulatory efforts, such as the Philippines, the Netherlands, the United Kingdom, several Canadian provinces; and in three agreements negotiated with employers by United States agricultural workers’ organizations to govern the terms of recruitment for migrant workers further down the chain. This paper draws on these public and private sectors’ case studies to propose regulatory and market approaches that promote fair recruitment practices.
    Keywords: international migration, labour migration, recruitment, migration policy, workers rights, labour contract, legal aspect, case study, migration internationale, migrations de main-d'oeuvre, recrutement, politique migratoire, droits des travailleurs, contrat de travail, aspect juridique, étude de cas, migración internacional, migraciones laborales, contratación, política migratoria, derechos de los trabajadores, contrato de trabajo, aspecto jurídico, estudio de casos
    Date: 2015
  14. By: Estrada, Gemma (Asian Development Bank); Noland, Marcus (Peterson Institute for International Economics); Park, Donghyun (Asian Development Bank); Ramayandi, Arief (Asian Development Bank)
    Abstract: Recent key challenges highlight the need to revisit Asia’s financial development. These include the region’s growth slowdown since the global crisis, compounded by a less benign external environment; internal structural challenges, such as population aging; and the maturing of much of the region into middle-income status. The evolving shift in the region’s growth paradigm from one based primarily on investment to one based on both investment and productivity growth also underscores the urgency for financial development. For economic growth to benefit more from a sound and efficient financial system, financial development should be complemented with structural and policy reforms in other areas. This means that financial development and inclusion work best in a policy environment that is conducive to growth and development.
    Keywords: economic growth; finance sector; financial development; financial inclusion; productivity
    JEL: E44 G20 G28
    Date: 2015–07–01
  15. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (East Asia Department, ADB); Asian Development Bank (ADB) (East Asia Department, ADB); Asian Development Bank (ADB)
    Abstract: Despite its success to date, the People’s Republic of China (PRC) faces some major challenges in finance sector development. Like all success stories, the PRC is finding it increasingly difficult to maintain momentum. The finance industry needs greater involvement from the private sector, including input in decision making. Achieving the desired outcomes will require a careful balance between the pace at which controls are removed and that at which the regulatory and legal infrastructure is strengthened. Long-term success will also require that economic growth be inclusive, with financial services available to all members of society.
    Keywords: People's Republic of China, money matters, public finance, fiscal reform, local government debt, taxation, VAT, implicit guarantees, public expenditures, fiscal debt, public-private partnerships, Third Plenum Initiatives, National Audit Office
    Date: 2015–01
  16. By: Roland-Holst, David (University of California Berkeley); Park, Cyn-Young (Asian Development Bank)
    Abstract: We use a dynamic forecasting model to evaluate a wide array of opportunities for sustained economic growth in Myanmar. Our simulation results suggest that the government of Myanmar can advance potential growth drivers, by maintaining a stable macroeconomic environment that is conducive to private investment, promoting human capital development and public investment, facilitating domestic and international private agencies for market development, and strengthening regional economic integration. The government needs a balanced approach to sector interests to promote inclusive and equitable growth. Increasing agricultural productivity, for example, will not only benefit the country’s rural poor majority, but it will also release labor resources to facilitate industrial and service sector development. Conversely, industrial and urban development will facilitate agrifood supply chains, improving market access and real incomes in rural areas. Public commitments to improving infrastructure, education, and public health will also be essential to realizing Myanmar’s vast economic potential.
    Keywords: Calibrated General Equilibrium (CGE) model; economic forecasting; Myanmar; policy simulation; potential growth
    JEL: D58 F41 O11 O47
    Date: 2015–04–01
  17. By: Papageorgiou,Chris; Spatafora,Nikola L.; Wang,Ke
    Abstract: Economic development critically involves diversification and structural transformation?that is, the continued, dynamic reallocation of resources from less productive to more productive sectors and activities. This paper documents that, over an extended period, developing Asia has on average been particularly successful in diversifying its exports, particularly in comparison with Sub-Saharan Africa. Much of the progress has occurred through diversification along the ?extensive margin,? that is, through entry into completely new products. In addition, developing Asia has on average benefited significantly from quality upgrading, helping it capitalize on already existing comparative advantages. Yet, agricultural and natural resources tend to have lower potential for quality upgrading than manufactures. Therefore, for lower-income ?frontier? countries, diversification into products with longer ?quality ladders? may be a necessary first step before large gains from quality improvement can be reaped.
    Keywords: Pro-Poor Growth,Agribusiness&Markets,Economic Theory&Research,Emerging Markets,Environmental Economics&Policies
    Date: 2015–07–28
  18. By: Findlay, Ronald (Columbia University); Park, Cyn-Young (Asian Development Bank); Verbiest, Jean-Pierre (Mekong Institute)
    Abstract: Recognizing the need to formulate policy strategies for the changes it faces, Myanmar started a multifaceted reform process in 2011. But speeding up development requires a multipronged but more coherent strategy targeted at strong and resilient growth, employment generation and, ultimately, rapid reduction of poverty. The government needs to carefully prioritize and sequence reforms, and identify and address the constraints to allow acceleration of economic growth by expanding the large domestic market and developing a vibrant manufacturing export sector that can generate substantial employment. This paper briefly reviews Myanmar’s history and its legacy, examines the economy and some of the main policy reforms undertaken since 2011, assesses development potential, and outlines medium- and long-term growth strategy based on the country’s specific context and international best experiences and practices.
    Keywords: economic diversification; macroeconomic stability; Myanmar; natural resource-based sectors; regionally balanced development; social inclusion
    JEL: E02 E61 O14 O25
    Date: 2015–07–01
  19. By: Pawel Dziewulski
    Abstract: The literature has documented a positive effect of foreign ownership on firm performance. But is this effect due to a one-time knowledge transfer or does it rely on continuous injections of knowledge? To shed light on this question we focus on divestments, that is, foreign affiliates that are sold to local owners. To establish a causal effect of the ownership change we combine a difference-in-differences approach with propensity score matching. We use plant-level panel data from the Indonesian Census of Manufacturing covering the period 1990-2009. We consider 157 cases of divestment, where a large set of plant characteristics is available two years before and three years after the ownership change and for which observationally similar control plants exist. The results indicate that divestment is associated with a drop in total factor productivity accompanied by a decline in output, markups as well as export and import intensity. The findings are consistent with the benefits of foreign ownership being driven by continuous supply of headquarter services from the foreign parent.
    Keywords: revealed preference, testable restrictions, rationalisation, time-preference, discounted utility, hyperbolic discounting, exponential discounting
    JEL: C14 C60 C61 D11 D12
    Date: 2015–06–15
  20. By: Tien Manh Vu (Japan Society for the Promotion of Science, Osaka University)
    Abstract: We examined the gender gap between wives and husbands with regard to time spent on unpaid housework and the interaction terms between the appearance of home appliances and gender among 36,480 Vietnamese households. We found the gender gap of time is persistent regardless of the number of coresiding children, age cohorts, household size and income, and working status of the couples. Wives spent 40.3-58.6 minutes more on unpaid housework daily. In household fixed-effect estimations, we found the interaction terms had a positive relationship with the time spent on unpaid housework. Where a gas cooker was available, the time spent on unpaid housework of the wife was 16.9 minutes more than that of her husband on a daily basis. However, we did not detect any significant interaction effects among pure dual-wage earners, and where husbands are aged less than 26 years.
    Keywords: Home appliances, Gender gap, Housework, Time use, Housework division
    JEL: D13 J16 J22
    Date: 2015–08
  21. By: Nijathaworn, Bandid (Thai Institute of Directors); Chaikhor, Suwatchai (Bank of Thailand); Chotika-arpa, Suppakorn (Bank of Thailand); Sakkankosone, Suchart (Bank of Thailand)
    Abstract: Myanmar’s macroeconomic policy framework does not adequately support the new functions of the Central Bank of Myanmar. The monetary policy regime is deficient and institutions that complement the working of a market-based economy lacking. This paper identifies 10 priority areas for reform to allow the central bank to effectively perform its emerging new functions in support of economic growth and stability. This is a three-front effort: dismantle nonmarket arrangements, especially in the finance sector; implement a monetary policy framework and operational procedures, including financial markets development; and enhance central bank policy capacity. The latter includes elevating the policy process, central banking functions, and institutional roles to match the tasks of a modern monetary authority in a market-based economy.
    Keywords: central bank; financial markets; monetary policy; Myanmar
    JEL: E51 E52 E58
    Date: 2015–05–01
  22. By: Weihong HUANG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332); Yu ZHANG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332)
    Abstract: This paper studies investors' strategy change frequency and their wealth accumulation by financial investments. Artificial investors are put into a real stock market. They trade S&P 500 following common strategies in practice. Fundamental analysis generally surpasses technical analysis in all market situa- tions except boom periods. Though investors' strategy change behavior, which is driven by the past performance of strategies, seems reasonable, a faster strat- egy change does not guarantee a higher final wealth. Active strategy change hurts investor' wealth in bear markets and in markets with major trend rever- sals. In bull markets, both fast and slow strategy change behaviors work better than a moderate speed of strategy change. A detailed decomposition of wealth accumulation via ?nancial investment shows the dependence of wealth on in- vestors' past transactions. This may explain the relation between investors' strategy change frequency and their wealth.
    Keywords: Financial Investment Strategy, Strategy Change Frequency, Wealth Accumulation, Standard & Poor's 500
    JEL: C63 G19
    Date: 2015–07
  23. By: Li, Wenchao (National University of Singapore); Yi, Junjian (National University of Singapore)
    Abstract: This paper first finds a clear pattern of child gender difference in family migration in China. Specifically, our estimates show that on average, the first child being a son increases the father's migration probability by 25.2 percent. We hypothesize that the family's competitive earning incentive for sons drives this child gender effect on family migration: parents migrate to earn more money in an attempt to improve their sons' relative standing in response to the ever-rising pressure in China's marriage market. This competitive-earning-incentive hypothesis is then supported by additional empirical evidence. We further find that, facing heavier financial pressure from the marriage market, parents spend less on their sons' education and more on marriage and buying houses and durable goods. This gender difference in resource allocation, together with the absentee-father problem resulting from paternal migration, may unexpectedly adversely affect boys' long-run human capital development in China.
    Keywords: competitive earning incentive, sex ratio, migration
    JEL: J11 J13 O15
    Date: 2015–07

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