This paper empirically analyzes the factors affecting personal income in urban China using survey data of the “Preference and Life Satisfaction Survey” conducted by the Global COE project of Osaka University from 2009 to 2013. We consider education level as an endogenous variable, and both ordinary least squares (OLS) regression and instrumental variable (IV) regression are performed. We find a number of factors, such as sex, age, education, and marriage that significantly affect personal income. In addition, differences between different occupations are also investigated.

The research examines the role of market expansion and international labor division in the British Industrial Revolution from the perspective of globalization. The research shows that British cotton textile output in pieces grew 275 times from the 1770s to the mid-1850s and documents that such growth would never have happened without a vast overseas market for the supply of raw cotton and the sale of products. The paper argues that the continuous and dramatic expansion of overseas markets allowed the British cotton industry to expand greatly without hitting the ceiling of marginal returns, leading not only to the great expansion of production, but also to technological and institutional innovations, and that international labor division made it possible for the industry to import ample amounts of raw cotton and export large amounts of cotton textiles. In contrast, foreign demand for Chinese cotton textiles increased significantly in the late 18th and early 19th centuries, but accounted for only 0.3% of production capacity, which was too little to lift the law of diminishing marginal returns and to induce either technological or institutional changes. As a result, only Smithian growths could be achieved through optimal resource utilization and specialization in production.

We study firm heterogeneity in economic development in an overlapping-generations general equilibrium model in which manufacturing firms engage in oligopolistic competition. Individuals differ in their productivities in the manufacturing sector and choose to become entrepreneurs or workers. The model is surprisingly tractable. In the steady state, an increase in the entry barrier in the manufacturing sector or an increase in the percentage of income spent on the agricultural good decreases the wage rate, but the level of output in the manufacturing sector does not necessarily decrease. An increase in the degree of patience of an individual increases the steady state wage rate and the capital stock. Even with increasing returns in manufacturing and constant returns in agriculture, neither the wage rate nor the output level in the manufacturing sector may increase with population size.

This paper attempts to investigate comprehensively, a “U”-shaped relationship between income inequality and crime rates in China after building a cost-benefit analysis model, by using time series data from 1981–2012 and panel data from 1999–2012. The empirical results show that: firstly, in the time series model, the U-shaped relationships between inequality and the total crime rate and rates of various crimes except from smuggling, are very significant in the period of 1981–2012, secondly, the panel threshold models show that inequality and crime tend to be correlated positively with each other during 1999–2012, because the inequality level during this period is much higher than the turning points of inequality estimated in the time series models, although three regions with different development levels are located in different parts of a U-shaped curve between inequality and crime.

In 2020, China proposed a new development paradigm centered on domestic circulation with a "dual circulation" model in which domestic circulation and international circulation promote each other. This new paradigm reflects a clear understanding of China's development trend that saw its share of exports in the GDP declining steadily since 2006. However, the new paradigm does not necessarily mean that China should change its past policy of fully utilizing domestic and international markets and resources in economic development. Because of large economies of scale in modern manufacturing sector, China should continue to make full use of international markets.

Entering year 2020, the Chinese economy was struck by the COVID-19 outbreak. The unprecedented pandemic, entangled with the already elevated complexities in the nation’s internal environment and external surroundings, aggravated its economic outlook. Internal factors including severe education mismatch in China’s labor force, its vanishing demographic dividend, the declined purchasing power of its middle-income groups, risen leverage ratio of households and enterprises, and soared local government debt reinforced to weaken China’s domestic demand. External factors, especially uncertainty in the China-US relation in the face of the re-shaping global value chain, dragged world economic recovery and thus China’s exports and imports. This summary report highlights some major challenges and opportunities faced by the nation under its new development strategy that stresses internal circulation of domestic economy aided by its interaction with the globe. Our analyses based on IAR-CMM model provide a unified framework for addressing China’s short-, medium-, and long-term issues in an internally coherent manner. Looking into year 2021, our benchmark projection reports an 8.4% annual real GDP growth rate. Alternative scenario analyses and policy simulations are conducted to assess the impacts of potential downside risks and the corresponding policy options for ensuring implicit targets. Through the lens of these analyses, we conclude that a refocus on effective management of internal demand, while deepening structural reforms on supply side and advancing orderly opening up, can help smooth the internal and external circulations of the Chinese economy to achieve high-quality development.

By means of a literature review, this paper strives to provide some clarity on the much-debated relationship between product market competition and firms’ incentives to innovate. It shows that in the literature there does not exist a robust relationship between competition and incentives to innovate. Therefore, it would be futile to continue the debate over whether competition stimulates or hinders innovation. A more useful approach is to make a distinction between pre-innovation competition and post-innovation competition, as it provides a way for reconciling many of the seemingly contradictory findings from the literature. Another important insight from the literature is that the relationship between competition and innovation depends on the source of increased competition.

With the rapid urbanization and mass internal migration in China during the past several decades, the population of children who migrate with their parents to the cities has now reached over 35 million. The education of migrant children poses significant challenges to China’s hukou based education system. In this paper, we first review the policy developments and descriptive studies related to migrant children’s education to offer a comprehensive view of the issue. We then provide in-depth examination of several important quantitative literatures, including the effect of parental migration on children’s education, schooling choices of migrant children and their impacts on school performance, peer effects of migrant children in urban public schools. Overall, although considerable progress has been made regarding migrant children’s education in China, more fundamental policy reforms are necessary to improve the quality of migrant children’s education at the compulsory education level and beyond.

This article examines (i) how retailers position private label products, (ii) why private labels are sold in some product categories but not in others, and why some national brand products may have difficulty in accessing retailers’ shelves, (iii) why some private label products are positioned as ”premium” brands, and (iv) how consumers’ surplus and totalwelfare are affected by private labels. We find that private label positioning leads to less differentiation in product category, which structurally changes a retailer’s product line in return. Consumer welfare and total welfare are lower.

From the 1970s, the global currency system has two features: the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies. This paper points out that the costs of the dollar’s use as an international reserve currency exceed the benefits for both the US and the rest of the world. These costs include the exporting of American manufacturing as a byproduct of its current account deficit needed to supply its currency to the rest of the world. In addition to the detriment to trade from unpredictable exchange rate fluctuations, the termination of the U.S. obligation to redeem its currency for gold also removed an important restraint on deficit financing for the US and many other countries in the short-run, thus promoting excessive leverage that was a major contributor to the 2008 financial crisis. The paper suggests replacing several main countries’ currencies in international reserves with a real Special Drawing Right (SDR) issued according to currency board rules.

Industry interaction is becoming an important approach to promoting high-quality economic development. In this paper, the multi-sector general equilibrium model is developed to clarify the theoretical mechanism among industry interaction, structure transformation, and high-quality economic development; the empirical tests are carried out based on the provincial panel data from 2000 to 2017; and the empowerment paths for digital technologies are explored to drive high-quality economic development. The findings are as follows. (1) The industry interaction can promote high-quality economic development in China on the whole, but it shows a significant imbalance and a healthy two-way promotion mode have not been formed. (2) The impact of industry interaction on high-quality economic development is significantly heterogeneous at the sector and regional levels. (3) The current unhealthy industry interaction may widen the productivity gap between manufacturing and service sectors, and transform China’s economic into service-oriented structure, thus leading the economic development to a vicious circle of “low efficiency to low-end servitization and further to lower efficiency,” and hindering the sustainability of high-quality economic development. (4) Digital technologies can break the development dilemma and achieve high-quality economic development by alleviating structural contradictions, boosting healthy industry interaction, and narrowing the productivity gap among sectors. The conclusions provide empirical evidence for the government to promote the integration of advanced manufacturing and modern service sectors and achieve high-quality economic development.

There has been much discussion of the sources of China’s growth slowdown but little formal econometric analysis of this question. Chen and Groenewold (2019) show that the slowdown was primarily supply-driven, but they stopped short of identifying specific supply variables. This paper extends their analysis and distinguishes several potential supply components: labor supply, productivity, and capital accumulation. Our results confirm their main conclusion that supply dominates the explanation of the slowdown. A model with two supply factors (labor supply and productivity) reveals that both components contribute to the slowdown, although productivity makes the greater contribution. However, when capital stock is added to the model, the decline in the capital accumulation rate becomes an important factor in the growth slowdown, to some extent replacing the effects of both labor supply and productivity.

The paper discusses the effects of the digital economy on high-quality urban development and its mechanism. Theoretically, the digital economy can empower high-quality development by boosting entrepreneurial vitality. Empirically, the paper measures the overall level of the digital economy and high-quality development of the 222 Chinese cities at and above the prefecture level during 2011–2016, depicts the entrepreneurial vitality of the cities with the microscopic data of the business registration information and makes quantitative analysis on this basis. The result shows: Digital economy has remarkably improved high-quality development and this conclusion still exists after the robustness test selecting historical data as the instrumental variables and the Broadband China pilot policy as the quasi experiment. The analysis of the mechanism of action indicates that encouraging public entrepreneurship is an important mechanism of the digital economy to release the dividend of high quality development. Finally, thanks to the threshold model and the spatial model, it is found that the positive effect of the digital economy has the characteristics of nonlinear increment and spatial spillover of the “marginal effects.” The research of the paper stimulates the reasons for high-quality development and the understanding of the effects, mechanisms and regional differences of high-quality development empowered by the digital economy.

This paper examines what determines the offer price for a ChiNext IPO and discusses how we can improve the current “Chinese-style” bookbuilding process. We establish that the ChiNext IPO underwriter relies upon the institutional investors to discover the issuer’s intrinsic value (in the form of a preliminary price), and that the same underwriter adjusts the preliminary price to establish the final offer price, based on its assessment of the institutional investors’ motivations. Since the underwriter does not have discretionary power in new share allocation, this “Chinese-style” bookbuilding process contains certain pitfalls from an information asymmetry standpoint. The institutional investors mainly use “simple and direct” variables that do not adequately reflect the issuer’s true intrinsic value to develop the preliminary price, while the underwriter adjusts that price downward to establish the offer price to clear the market, as a measure to counter a perceived free-rider issue among the institutional investors. This process, in effect, contributes to initial IPO underpricing and causes principal-agent conflicts between the underwriter and the issuer. We argue that such a pricing inefficiency could be improved by an innovative “bookbuilding plus price discretionary auction” process, which is a combination of the modified OpenIPO and Taiwan-style auctioned IPO approaches.

The spread of Western economics in modern China is a content-rich historical event which has taken more than a century. A complete understanding of this event depends on the analysis and summary of its features. This paper suggests that the spread of Western economics in modern China exhibits five main features: openness, periodicity, applicability, localization and limitation. Openness reflects the active attitude of Chinese scholars to learning and propagating Western economics. Periodicity reflects the changes in its effectiveness and focus over time. Applicability reflects its goal of promoting the development of Chinese economics and providing policy applications for China’s economic growth. Localization of Western economic theories in China follows the trend of selected introduction and modification according to local situations. And limitation is inevitable because of the many difficulties facing the spread of Western economics during early modern times. Furthermore, this spread has a profound impact on China which is embodied in its features: it promotes the establishment of Chinese modern economics, provides appropriate examples for the modernization and evolution of Chinese society, and promotes transformation of the traditional economic system in China.

Despite the lack of political accountability, ancient autocracies maintained a level of monetary stability that rivals modern democracies. This paper hypothesizes that it is the threat of counterfeiting that has constrained currency debasement. Unwilling to share seigniorage with counterfeiters, who are active only if currency is debased, the government refrains from debasement unless in extreme fiscal situations. To document the facts, we build a database of historical Chinese copper coins that covers the period from the Qin dynasty (221 BC–207 BC) to the Republic of China. We also use the introduction of the steam press in late Qing China as a natural experiment to test the theory. The steam press produced coins of fine patterns that counterfeiters were unable to mimic. As the theory predicts, the removal of the threat of counterfeiting triggered the most serious debasement in the history of the Qing dynasty (1644–1912).

This paper studies airlines’ competitive behavior in the U.S. airline industry, focusing on 2014 data. I use a structural model to estimate demand and test several supply models, including noncooperative competition, perfect collusion, and tacit coordination. There are three different types of tacit coordination, formed by multimarket contact, common ownership, and codeshare agreement, respectively. I find that the model that fits the data best is a tacit coordination model with coalitions between airlines with at least 30% of their markets overlapped and using price rather than quantity as the strategic variable. I further analyze the consumer welfare loss, each carrier’s profit gains, and changes in market variables due to the tacit coordination.

The global COVID-19 pandemic caused various economic contraction in most countries, including all of China’s major trading partners. Using a difference-in-differences model, this study examines the impact of the COVID-19 pandemic on China’s monthly exports from January 2019 to May 2020. We find strong and robust evidence that China’s exports to countries at high risk from the pandemic experienced a larger decline than exports to low-risk countries after the onset of the pandemic, with the prices of exports increasing significantly. Furthermore, the results of a triple differences model show heterogeneous effects across different industries and goods. Chinese industries located upstream in the global value chain are more vulnerable than those located downstream. Industries with high labor and contract intensity (proxies for processing trade) experienced greater declines than other industries. Exports of goods with high import elasticity of substitution experienced higher prices and moderate volume losses due to the pandemic.

This paper discusses the benefits of investment in skills in China. We highlight the achievements China has made over time in human capital investments and the new challenges that have emerged as the country develops. To fuel China’s further economic growth and social developments, it is essential to take a more holistic view on skill investments. We suggest policies that promote both economic efficiency and social mobility.

Digital economy, a new driving force for China’s economic development, creates a good opportunity for rural revitalization. This paper begins with a theoretical analysis of the impact of the digital economy on rural revitalization. Based on panel data from 30 provinces and cities in China from 2011 to 2018, as well as measurement-based digital economy development Index and rural revitalization index, the empirical test is conducted of the driving effect, mechanism and heterogeneity of digital economy on rural revitalization. Results show that the digital economy has a significant driving effect on rural revitalization, a conclusion that still holds even after taking into account endogenous problems and conducting a series of robustness tests. Technological innovation and human capital constitute the important mechanism for the digital economy to drive rural revitalization. Furthermore, the digital economy has a spatial spillover effect on rural revitalization, that is, it can promote rural development in neighboring areas. As regards various dimensions of rural revitalization, the digital economy can significantly promote ecological livability, civilized rural style, effective governance and prosperity. But its impact on the industrial boom is yet to appear. The western region enjoys more digital economy dividends in rural revitalization are more significant than central and eastern regions. Rural revitalization requires the government to deepen the integration of the digital economy and agriculture and implement a differentiated digital economy development strategy.

As developed economies have substituted away from manufacturing towards services, so too have developing countries—to an even greater extent. Such sectoral change may be premature for economies that never fully industrialised in the first place. This article presents evidence that countries with smaller manufacturing sectors substitute away from manufacturing to a larger extent, suggesting a trade channel through which falling international relative prices of manufacturing lead price-taking developing economies to substitute accordingly.

Based on the Chinese General Social Survey 2006 and 2008 data, this paper assesses the influence of the family planning policy on the qualitative development of children using education attainment and individual income of only children versus children with siblings as parameters. Our results show the following: (1) only children are better-educated than their counterparts with siblings; (2) only children earn higher income in comparison to their counterparts with siblings; (3) the income and education gaps between girls with and without siblings are greater than those between boys; (4) the education gaps between only children and children with siblings are greater for those born in the 1970s, but the income difference between only children and children with siblings is only significant for those born in the 1980s; and (5) the income and education gaps between only children and children with siblings are higher in urban regions. Results indicate that families with only one child invest more resources in children’s quality under the family planning policy, which is consistent with the “quantity–quality trade-off” theory proposed by Gary Becker.

The paper discusses the diffusion of new technologies from the perspective of the classical economists and Schumpeter. After a comparison of the pre- and post-technical change long-period positions of the economy, we illustrate the process of transition between the two in terms of a two-sector model. Next, we turn to a system with joint production. The fact that some products may be “bads” that need to be disposed of leads to a study of systems of production-cum-disposal. Finally, we investigate the selection pressure innovations exert on incumbent firms. An important message is that technical change cannot generally be studied within a partial framework of the analysis.

China’s export performance is marked by large regional disparities which affect trade patterns at the national level. This paper uses data from input-output tables to estimate the comparative advantage of Chinese provinces in the three main economic sectors over the period 1992–2007. In contrast to existing studies, we include the services sector in the analysis and construct not only indices of revealed comparative advantage for overall trade, but also bilateral indices for interprovincial trade. The results indicate that West and Central China have a comparative advantage in agriculture/mining, coastal provinces in manufacturing, and metropolitan provinces in services. However, interprovincial trade exhibits a more complex pattern. Regression analysis identifies labor endowments as the key determinant of comparative advantage in total trade, while physical capital is the driving force in domestic trade. Human capital and government spending have a positive effect, whereas industrial loans and taxes, along with provincial trade barriers, impair comparative advantage.

This study examines the specific motivation of college students to volunteer, based on the interpretation of volunteering as entailing both consumption and investment. Analysis of micro-level data, collected in an online survey from non-volunteers and volunteers on the RenDa Economics Forum, one of the main social networking sites in China, and from volunteers at the Shanghai World Expo 2010 in China, provides strong support for consumption-related motivation. However, we find no clear statistical evidence for the validity of the investment motive. Volunteering activities are found to play no significant role in determining future income when compared to other factors, such as test scores, gender, age, parents’ education, job location, and the type of employer.

By using household survey data, this paper examines the effect of legal knowledge, a proxy for farmers’ ability to protect their land, on agricultural development in rural China. The Ordinary Least Square (OLS) estimation results indicate that legal knowledge in a household raises agricultural production. Further, once the production effect of legal knowledge is controlled for, the objective measure of land expropriation has no production effect. These results survive for alternative measures of legal knowledge and subsample analysis. A two-stage least squares strategy further confirms that the effect of legal knowledge on farm production is causal. A preliminary channel analysis suggests that the impact of legal knowledge on farm production works mainly through farmyard manure investments and labor incentives.

This paper seeks to examine the determinants of the profitability of the Chinese banking sector during the post-reform period of 2000–2005. The empirical findings from this study suggest that all the determinants variables have statistically significant impact on China banks profitability. However, the impacts are not uniform across bank types. We find that liquidity, credit risk, and capitalization have positive impacts on the state owned commercial banks (SOCBs) profitability, while the impact of cost is negative. Similar to their SOCB counterparts, we find that joint stock commercial banks (JSCB) with higher credit risk tend to be more profitable, while higher cost results in a lower JSCB profitability levels. During the period under study, the empirical findings suggest that size and cost results in a lower city commercial banks (CITY) profitability, while the more diversified and relatively better capitalized CITY tend to exhibit higher profitability levels. The impact of economic growth is positive, while growth in money supply is negatively related to the SOCB and CITY profitability levels.

In this paper we design a compensation mechanism for the relocated households in the process of New-Type Urbanization in China. Based on the theories of dynamic rent spatial separation, bid-rent and non-renewable resource exploitation, we give a theretical look at how the current compensation mechanism shapes the welfare of relocated households. Firstly, land rent growth has a spatial difference and the growth rate of the marginal location rent is much higher than that of the mature site. Secondly, there is a demolition championship contest under the sole static money compensation, which can easily lead to land urbanization faster than population urbanization. Thirdly, in the long run the welfare loss of the household is mainly due to the absence of a dynamic compensation mechanism. Furthermore, we design a dynamic compensation mechanism based on the establishment of an asset securitization capital pool, which could be an alternative scheme in the process of New-Type Urbanization.

Along with the changes in China’s development stage and internal and external conditions, sci-tech innovation has become the core driving force for China’s high-quality economic development in the new era. From the perspective of finance-driven technological progress, this paper constructs an endogenous growth DSGE model to analyze the relationship between financial resource allocation, technological progress, and economic growth. This study proves the counter-cyclicality of technological innovation in China, and finds that the allocation of financial resources between enterprises’ productive investment and innovation investment can affect economic growth by changing the scale of factor inputs and technological progress rate, and that there is a see-saw relationship between these two effects, with the latter dominant. On that basis, this paper explains the dynamic transmission mechanism among finance, technology and economy. During the economic expansion period, enterprises expand their production scale, financial resources provide more support to productive investment, with less support to innovation investment, thus the technological progress rate goes down; and during the economic contraction period, enterprises reduce their production scale, financial resources cut support to productive investment and turn to innovation investment, so technological progress rate goes up. The implications of this study on policy are as follows: when faced with new contradictions and challenges in the current development stage, China should get a grip on the new development pattern, seize new opportunities, further deepen financial reforms, optimize the financial resource allocation mechanism, encourage innovation investment, and give full play to the role of equity markets in supporting corporate R&D and innovation. Meanwhile, coupling with prudent and moderate macro-control policies, China should provide a positive macro-environment for corporate innovation, stimulate corporate on innovation demand, promote technological progress, and boost high-quality economic development.

Modernizing the industrial system is an integral and strategic priority within the broader scope of modernizing the economic system. It demands a focus on boosting China’s labor productivity and self-sufficiency rate of key technology products, with the aim to advance industrial upgrading and optimize the industrial structure. Hence, China must promote the strategy to expand domestic demand and accelerate the creation of a new development pattern from the supply side, coordinate economic development across regions, establish a national unified market, and create a more open industrial system. Specifically, China should increase funding in scientific research and experimental development, enhance the innovation capacity of core technologies in key fields, optimize the digital economy structure, strengthen the modern service industry, raise the labor productivity of the service industry, maximize the market’s decisive role and the government’s function in resource allocation, and build a talent system tailored to the modern industrial system.