Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

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A Locally Linear Estimation of Regression Discontinuity
Chunrong Ai, Meixia Meng
Front Econ Chin. 2011, 6 (4): 495-506.

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In this paper, we propose a locally linear estimation of a regression discontinuity model. The proposed estimator is applicable to evaluation of the effectiveness of the program treatment, and it improves upon the existing literature by providing not just the treatment effect at discontinuity but also insight of the treatment effect on those near discontinuity. Under some familiar conditions, we establish the consistency and asymptotic normality of the proposed estimator. We also provide an easy to compute consistent covariance matrix.

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Why Was China Trapped in an Agrarian Society? An Economic Geographical Approach to the Needham Puzzle
Guanzhong James Wen
Front Econ Chin. 2011, 6 (4): 507-534.

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This paper argues that before the world started to globalize, the differences in the geographical endowments that different population faced were the most important constraints to their long-term production and consumption. The paper uses this central hypothesis to explain the sharp contrast between the flourishing Song and the stagnant Ming and Qing. During the Song dynasty, despite the fact that China lost a significant amount of arable land to invading nomads as its population peaked, China witnessed a higher urbanization level, more prosperous commerce and international trade, and an explosion of technical inventions and institutional innovations. However, after having significantly improved its man-to-land ratio in the period after the Song China only found itself induced deeper into the agrarian trap, resulting in reduced urbanization, withering foreign trade, a declining division of labor, and stagnant in technology.

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Transition of China’s Growth Pattern
Ding Lu
Front Econ Chin. 2011, 6 (4): 535-555.

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China has achieved hyper economic growth in the past three decades. The achievement, though spectacular, is nothing incomprehensible to modern economic theories. A number of characteristic factors, short-term or long-term, have been favorable to fast growth. The market-oriented reforms that started thirty years ago have installed the preconditions for the economy to benefit from these factors. As China rises to the rank of middle-income countries, some conditions that used to support fast economic growth are now undergoing profound changes. These changes have important implications on capital formation and productivity growth, the two major drivers of growth. With the era of hyper economic growth coming to its end, the growth pattern of the Chinese economy is in transition. That calls for a transformation of government’s role in the economy to answer the challenges of this transition.

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Developmental Aspects of China’s Trade Pattern: The Role of Imported Intermediate Goods
John Berdell, Qi Hong Dong
Front Econ Chin. 2011, 6 (4): 556-567.

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This paper studies the relationship between China’s trade and its economic development. More than two centuries ago Adam Smith argued that it is the use of imported intermediate goods that constitutes the vector through which openness improves productivity. Imported intermediate goods can relieve what would otherwise be key constraints allowing faster growth, together with better human development. While China’s trade reform is often related to its productivity growth, there has been remarkably little attention to the relationship between imports and productivity growth at the industry-sectoral level. Our paper examines the sector-specific impact of intermediate goods utilizing a time series for the share of imported intermediate goods in each sector derived from our model calculations. Our study indicates that imported intermediate goods are playing an important role in the growth of Chinese productivity.

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Parental Education and Wages: Evidence from China
Yuanyuan Chen, Shuaizhang Feng
Front Econ Chin. 2011, 6 (4): 568-591.

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This paper investigates the relationship between parents’ education and children’s wage using two nationally representative data sets in China. Controlling for other things, both father’s and mother’s education are positively correlated with children’s wage. Nevertheless, returns to father’s education are lower in more market-oriented segments of the economy, including coastal regions, the non-state sector, and the later period of the reform era (post-1992), while the opposite is true for mother’s education. We argue that this new empirical evidence is consistent with the story that father’s education mainly indicates family connections useful for locating a better-paying first job, while mother’s education primarily captures unmeasured ability.

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Climate Change, Health and Migration in Urban China
Jingkui Zhou
Front Econ Chin. 2011, 6 (4): 592-615.

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In this paper, I empirically investigate the effect of climate change on health and migration in China. Using urban survey data sets from different Chinese cities, I find that an increase in female morbidity is associated with current high temperature change, especially for the symptom of frailty; past hot weather is related to the exacerbation of health problems in women, and the effect on females is larger than that on males who migrate from rural areas to cities; past temperature change is also correlated with a higher probability of chronic symptoms for females. I also find that migration preference from a rural area to a city is correlated with avoiding exposure to hot weather shocks, which shows a regressive tendency. Finally, the migration preferences of male residents who migrate from one city to another city are not associated with the effects of past low temperature changes on health.

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Confucianism and the Legalism: A Model of the National Strategy of Governance in Ancient China
Haiwen Zhou
Front Econ Chin. 2011, 6 (4): 616-637.

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The Confucian school emphasizes family value, moral persuasions, and personal relations. Under Confucianism, there is a free-rider issue in the provision of efforts. Since national officials are chosen through personal relations, they may not be the most capable. The Legalist school emphasizes the usage of incentives and formal institutions. Under the Legalism, the ruler provides strong incentives to local officials which may lead to side effects because some activities are noncontractible. The cold-blood image of the Legalism may alien citizens. By exploiting the paternalistic relationship between the ruler and the ruled under Confucianism and the strength of institution-building under the Legalism, the ruler may benefit from a combination of Confucianism approach and the Legalism approach as the national strategy of governance. As each strategy has its pros and cons, which strategy of is optimal depends on factors such as the minimum enforceable level of public service and the level of institution building costs.

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