China Economic Quarterly Vol.14, No.1


 date:2014-11-27 11:20:00 source:BiMBA         

China Economic Quarterly

Vol. 14 No. 1

October 2014

China Economic Quarterly

CONTENTS

Memorial Symposium in Honor of Gary Becker

Cherishing the Memory of Professor Gary Becker

…………………………………………………………………Justin Yifu Lin 1

The Impact of Higher Education Expansion on the Marriage MarketSingle Women? Single Men?

……………………………………………………Yaowu Wu    Qian Liu 5

Does Marrying up Make Your Life More Satisfied? Marriage Pattern and Its Long-term Effects

……………………………………Xiaoyan Lei    Wenjian Xu    Yaohui Zhao 31

Family Linkages and Social Interactions in Human Capital Formation

……………………………………………………Xiangrong Yu 51

Family Credit Constraint, Public Education Expenditure, and Social Mobility in China

……………………………………………………Lixing Li    Guangsu Zhou 65

The Determinants of Migrant’s Crime: An Empirical Study Based on a Prison Survey

…………………Dandan Zhang    Ye Wang    Xin Meng    Lisa Cameron 83

Symposium in Labor Economics

Introduction

……………………………………………………Xiaoyan Lei    Guo-en Liu 113

Do Chinese Households Smooth Consumption around Retirement?

…………………………………Hongbin Li    Xinzheng Shi    Binzhen Wu 117

Does Parental Son Preference Reduce Women’s Welfare? Evidence from Divorce and the Pressure of Raising Children

………………………………………………Wanjuan Lin    Yaohui Zhao 135

A Theoretical and Empirical Investigation on the Ex-ante Moral Hazard Induced by the New Rural Cooperative Medical Scheme

………………………………………………Xiaobo Peng    Xuezheng Qin 159

The Impact of Children Migration on the Health and Life Satisfaction of Parents Left Behind

……………………………………Yujun Lian    Wensu Li    Bihong Huang 185

Policy Evaluation of China’s New Rural Pension Program: Income, Poverty, Expenditure, Subjective Wellbeing and Labor Supply

…………………………Chuanchuan Zhang    John Giles    Yaohui Zhao 203

Rich Dad, Poor Dad and Offspring Income Inequality

………………………Renyu Li    Zaichao Du    Qinying He    Qiang Gong 231

Agriculture Growth and Cognitive Ability Development: Evidence from China’s Agricultural Reform

…………………………………………………Mengqi Niu    Xiaobo Zhang 259

Papers

Effects of China’s Monetary Policy Shocks: A Perspective of Instruments

……………………………………………………Langnan Chen    Lei Tian 285

Understanding the Pathways of the Education-Health Gradient: Evidence from the Chinese Elderly

…………………………………Lingguo Cheng    Ye Zhang    Ke Shen 305

Financial Agglomeration and International Finance Center Construction ResearchA Perspective of DSGE and News

……………………………ShockYu Wang    Xinqiang Guo    Chunhui Gan 331

Intergenerational Occupational Mobility and Intergenerational Income Mobility: An Empirical Research about Urban and Rural Families in China

…………………………………………………Xing Zhou    Peng Zhang 351

Climate Shocks, Dynastic Cycles and Nomadic Conquests

…………………………………………………………………Qiang Chen 373

Tullock Contest with Collective Effort Requirement and Optimal Contest Design: Collective Effort Requirement, Individual Effort Requirement or No Effort Requirement?

……………………………………Kun Hou    Lan Zhang    Yuanzhu Lu 395

 

The Impact of Higher Education Expansion on the Marriage MarketSingle Women? Single Men?

YAOWU WU*

 (Chinese Academy of Social Science)

QIANLIU

(The Economist Group)

Abstract     This paper evaluates the impact of Chinese college enrollment’s expansion to the marriage market. The policy from 1999 has rapidly increased higher education's scale and female students ratiowith noticeable lower marriage rates since. We hypothesize that a) a postponed entry into marriage markets shortens the searching time and enhances failure ratesb) a shift to female dominant higher education system increases matching difficulties under traditional assortative matingand c) higher income for women reduces the potential benefits from marriages. Difference-in-difference analysis of census and urban survey between 2000 and 2009 suggest a significantly negative association of college expansion with marriage markets.

JEL Classification     J12, J10, I23

 

Does Marrying up Make Your Life More Satisfied? Marriage Pattern and Its Long-term Effects

XIAOYAN LEI     YAOHUI ZHAO

(Peking University)

WENJIAN XU*

(University of Michigan)

Abstract     We describe the marriage pattern in the last decades of China and explore its long-term effects on life satisfaction and mental health by using CHARLS 2011-2012 national baseline dataset. We find that women feel more satisfied and less depressed when marrying upwhile there is no significant effect among men. Moreoverthe effect of marrying up is larger in poor communities and rural areasand insignificant in rich and urban areas.

JEL Classification     J12, J16, I31

 

Family Linkages and Social Interactions in Human Capital Formation

XIANGRONG YU*

 (Hong Kong Monetary Authority)

Abstract     This paper extends the classic Beckerian model to allow for endogenous parent-child interactions in human capital formation.I characterize the equilibrium outcome, which determines the intergenerational transmission of human capital and family wealth. The model is then reconsidered in a group setting in which social interactions may lead to intra-generational transmission of human capital. I explore the implications of the interplay between inter and intra generational forces for human capital dynamics, the rise and fall of families, and the evolution of social inequality.

JEL Classification     E24, J24, J62

 

Family Credit Constraint, Public Education Expenditure, and Social Mobility in China

LIXING LI     GUANGSU ZHOU*

(Peking University)

Abstract     Human capital investment is an important way to break social immobilization. However, credit constraint prohibits families from optimally investing in children’s human capital, which could strengthen the intergenerational transmission of human capital and income. Using data from CHARLS 2011 and CGSS 2008, this paper provides evidence on the impact of credit constraint on intergenerational mobility of income and education. By matching with public education expenditure data, we find that public education expenditure alleviates the credit constraint problem faced by poor families, and thus generates a positive effect on social mobility of education.

JEL Classification     D63, I28, J62

 

The Determinants of Migrant’s Crime: An Empirical Study Based on a Prison Survey

DANDAN ZHANG   

 (Peking University)

YE WANG

(University of WisconsinMadison)

XIN MENG

(Australian National University)

LISA CAMERON

(Monash University)

Abstract    Based on a prison survey, we adopt Multinomial Logit model to analyze the differences in individual attributes, personality traits and family background among various crime choices of migrant workers. The results show that migrant criminals are clustered in violence and property crime; compared to ordinary migrant workers, violence and burglary criminals in general have younger age, less education, poor personality, more siblings and lower educated mother. While those who involving in drug related and economic crimes tend to have more migration experience, higher cognitive ability and no significant difference in age and mother’s education.

JEL Classification    J12, J24, K24

 

Do Chinese Households Smooth Consumption around Retirement?

HONGBINLI     XINZHENGSHI     BINZHENWU*

 (Tsinghua University)

Abstract     Using data from China’s Urban Household Survey, we test whether retirement consumption puzzle exists in China. We exploit China’s mandatory retirement policy and apply the regression discontinuity approach to estimate the impact of retirement on household non-durable expenditures. We find that retirement reduces total non-durable expenditures by about 21 percent. Specifically, retirement reduces work-related expenditures and food expenditures at home, but it does not affect entertainment expenditures. Moreover, retirement has no significant effect on the remaining non-durable expenditures, which suggests that the retirement consumption puzzle may not exist in China if an extended life-cycle model with home production is considered.

JEL Classification     D12, J14, O53

 

Does Parental Son Preference Reduce Women's Welfare? Evidence from Divorce and the Pressure of Raising Children

WANJUAN LIN     YAOHUI ZHAO

 (Peking University)

Abstract     Using data from the 1990 and 2000 China Censuses, we explore an area currently lacking academic research: how a mother’s welfare is impacted by the gender of her first-born child, specifically in terms of parental divorce, child custody arrangements and probability of co-resident grandparents. We find that mothers of a first-born daughter are more likely to divorce and obtain child custody than mothers of a first-born son. There is also less probability for mothers of a first-born daughter to live with children’s grandparents. This paper calls for more attention for policy makers to improve the welfare of mothers of first-born daughters.

JEL Classification     J12,J16

 

A Theoretical and Empirical Investigation on the Ex-ante Moral Hazard Induced by the New Rural Cooperative Medical Scheme

XIAOBO PENG

(Graduate School of Chinese Academy of School of Social Sciences)

XUEZHENG QIN*

(Peking University)

Abstract     Health insurance can improve the accessibility of medical care, but it can also lead to ex-ante moral hazard by reducing the self-protection investment of the insured. Based on the 2000-2009 China Health and Nutrition Survey (CHNS) data, we use the baseline regressions, instrumental variables (IV) and first difference (FD) estimations to test the ex-ante moral hazard effect of the New Rural Cooperative Medical Scheme (NRCMS) in China. After controlling the endogeneity of insurance participation, we find that NRCMS participation tends to decrease the health risk prevention among the enrollees by increasing their tendency of smoking, drinking, being sedentary, consuming high calorie food as well as being overweight.Policy proposals on reforming the NRCMS program are given based on the above findings.

JEL Classification     I13, I18, D03

 

The Impact of Children Migration on the Health and Life Satisfaction of Parents Left Behind

YUJUN LIAN     WENSU LI

(Sun Yat-sen University)

BIHONG HUANG

(University of Macau)

Abstract     Using the 2006 and 2009 waves of China Health and Nutrition Survey (CHNS) data, this paper investigates the impacts of adult children migration on their parents left behind via the ordered Probit model. The urban unemployment rate and the change of employment structure are used as instrumental variables to account for the issue of endogeneity. The empirical results indicate that having migrant children is negatively related with the parents-self-report health and life satisfaction.

JEL Classification     J15, J14, J13

 

Policy Evaluation of China’s New Rural Pension Program: Income, Poverty, Expenditure, Subjective Wellbeing and Labor Supply

CHUANCHUAN ZHANG*

 (Central University of Finance and Economics)

JOHN GILES

(World Bank)

YAOHUI ZHAO

(Peking University)

Abstract     Using data from China Health and Retirement Longitudinal Study (CHARLS) and employing regression discontinuity method and difference-in-differences strategy, this paper evaluates the policy effects of China’s new rural pension program (NRPP) on income, poverty status, expenditure, subjective wellbeing and labor supply of the rural elderly. Empirical results show that, pension benefits of NRPP significantly increased personal income, decreased the incidence rate of poverty, enhanced subject-wellbeing, and marginally increased household expenditure and decreased labor supply. Further studies show that policy effects are larger and more significant for people with poor health status, suggesting heterogeneity of the policy effects.

JEL Classification     H55,J26,I38

 

Rich Dad, Poor Dad and Offspring Income Inequality

RENYU LI     ZAICHAO DU*     QIANG GONG

(Southwestern University of Finance and Economics)

QINYING HE

(South China Normal University)

Abstract     In this paper we evaluate the effect of paternal income on children’s income inequality. We construct the counterfactual income of children from poor family if they have the same covariates as children from rich family. We then decompose the rich dad effect on income inequality into income structure effect and composition effect. We solve the endogeneity problem by using the instrumental variable quantile regression method. We find that composition effect is the major source of the income difference between children from rich families and from poor families. However, the income structure effect contributes to the income gap for low-income children.

JEL Classification     D31, E24, J62

 

Agriculture Growth and Cognitive Ability Development: Evidence from China's Agricultural Reform

MENGQI NIU     XIAOBO ZHANG*

(Peking University)

Abstract     Existing studies on agricultural reform have neglected its effect on health. This paper complements them by examining the effect of Chinas agricultural reform on cognitive ability. Using data from the survey of disabled population of China in 1987 and 2006, we find that the incidence of cognitive disability of cohorts aged 8-20 declined by 1.34 percentage points during the time period, of which the agricultural reform accounts for 74.68%. This finding supports the fetal origin hypothesis and implies that the impact of agricultural reform might be deeper and broader than previous studies have contended.

JEL Classification     I12, I18, J24

 

Effects of China’s Monetary Policy Shocks: A Perspective of Instruments

LANGNAN CHEN

(Sun Yat-Sen University)

LEI TIAN*

(Zhejiang Sci-Tech University)

Abstract     We evaluate and compare effectiveness of main instruments (i.e. open market operation, required reserve ratio and interest rates) of the PBOC through developing a mixed identification method that combines pure sign restrictions with some short restrictions in a structural VAR model. We find a contractionary monetary policy shock exerts negative effects on real output and price. In terms of impulse responses and variance decomposition, RRR and open market operation shocks bring stronger effects on real output while interest rate shock influences price dynamics more powerfully.

JEL Classification     E51, E52, E58

 

Understanding the Pathways of the Education-Health Gradient: Evidence from the Chinese Elderly

LINGGUO CHENG

(Shanghai University of Finance and Economics)

YE ZHANG*

(Nanjing University)

KE SHEN

(Fudan University)

Abstract     This paper attempts to shed light on the complimentary relationship between education and health, the two most important components of human capital. Using a sample from Chinese Longitudinal Healthy Longevity Survey (CLHLS), we explore the effect of education on health status among the Chinese elderly. And in particular we investigate the possible internal mechanisms of the education-health gradient. Our results confirm the well-established positive education-health association in the existing literature that mainly uses data from advanced economies. And the pathway analysis shows that education promotes health mainly through rationalizing people’s health behaviors and improving their socioeconomic conditions.

JEL Classification     I12, I18, I21

 

Financial Agglomeration and International Finance Center Construction ResearchA Perspective of DSGE and News Shock

(Inner Mongolia University)

XINQIANG GUO

(Shanghai University of Finance and Economics)

CHUNHUI GAN

(Shanghai Customs College)

Abstract    Based on China’s financial market and the Shanghai International Financial Center Construction, the paper builds up the DSGE model of financial agglomeration. The numerical simulation and mechanism analysis proves that:(1) the reduction of income taxes, finance asset income taxes and business taxes are favorable, among which the permanent taxes reduction is proved to be the most effective way;(2) the institutional mechanism of encouraging financial innovations permanently promote financial institutions agglomeration; (3) as the news shock, the strategy influences the expectations and optimization decisions of the institutions, hence significantly affects the scale and the speed of international institutes agglomeration.

JEL Classification    G28, F47, E10

 

Intergenerational Occupational Mobility and Intergenerational Income Mobility: An Empirical Research about Urban and Rural Families in China

XING ZHOU

(Nankai University)

PENG ZHANG   

(Chinese Academy of Social Sciences)

Abstract    This paper analyze the link between intergenerational occupational transmission and intergenerational income mobility in Chinese families, and draw the following conclusions: First, the probability of the urban families’ intergenerational occupational transmission is increasing following childrens career, father engaged in non-agricultural employment have a positive influence on the intergenerational occupational upward mobility in rural. Second, the children with high level of education are beneficial to move upward the higher occupational hierarchy, and the family background factors also have a significant impact on the intergenerational occupational transmission and mobility. Third, intergenerational occupational transmission increases the likelihood of the intergenerational income transmission, so it hinders the intergenerational income mobility.

JEL Classification    J62, D62, J31

 

Climate Shocks, Dynastic Cycles and Nomadic Conquests

QIANG CHEN   

(Shandong University)

Abstract    Nomadic conquests have helped to shape world history, yet we know little about why they occurred.Using climate and dynastic data from historical China since 221 BCE, we find that the likelihood of nomadic conquest increased with less rainfall proxied by drought disasters, which drove pastoral nomads to attack agrarian Chinese for survival. Moreover, consistent with the dynastic cycle hypothesis, the likelihood of China being conquered increased when a Chinese dynasty was established earlier than a rival nomadic regime. These results survive a variety of robustness checks, including using the latitude of the Sino-nomadic border as an alternative dependent variable

JEL Classification    N45, O11, Q00

 

Tullock Contest with Collective Effort Requirement and Optimal Contest Design: Collective Effort Requirement, Individual Effort Requirement or No Effort Requirement?

KUN HOU     LAN ZHANG

(Southwestern University of Finance and Economics)

YUANZHU LU   

(Central University of Finance and Economics)

Abstract    Players are usually faced with effort requirement in the contest; we study the effect of collective effort requirement in Tullock contest. We characterize the equilibria in the model and compare the equilibrium effort level with that of contest with individual effort requirement or no effort requirement. To induce the maximal total effort, the optimal requirement should be infinitely close to (but less than) the value of the high-type contestant for the collective and symmetric individual effort constraint, while for the optimal asymmetric individual requirement, the optimal level should be slightly lower than the valuation of the high-type contestant.

JEL Classification    C70, D72, D74

 
 
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