Journal articles published externally

2011, Huang, Jikun, Zhi, Huayong, Huang, Zhurong, Rozelle, Scott, Giles, John

This paper examines the effect of the financial crisis on off-farm employment of China's rural labor force. Using a national representative dataset, we find that there was a large impact. By April 2009 off-farm employment reached 6.8% of the rural labor force. Monthly earnings also declined. However, while we estimate that 49 million were laid-off between October 2008 and April 2009, half of them were re-hired in off-farm work by April 2009. By August 2009, less than 2% of the rural labor force was unemployed due to the crisis. The robust recovery appears to have helped avoid instability.

2010, Duclos, Jean-Yves, Araar, Abdelkrim, Giles, John

The paper contributes to the measurement of poverty and vulnerability in three ways. First, it proposes a new approach to separating poverty into chronic and transient components. Second, it provides corrections for the statistical biases introduced when using a small number of periods to estimate the importance of vulnerability and transient poverty. Third, it applies these tools to the measurement of chronic and transient poverty in China using a rich panel data set that extends over 17 years. Alternative measurement techniques are found to yield significantly different estimates of the relative importance of chronic and transient poverty. The precision of the estimates is also considerably enhanced by simple statistical corrections.

2009, Goh, Chor-ching, Luo, Xubei, Zhu, Nong

This paper examines the growth performance and income inequality in eight Chinese provinces during the period of 1989-2004 using the China Health and Nutrition Survey data. It shows that income grew for all segments of the population, and as a result, poverty incidence has fallen. However, income growth has been uneven, most rapidly in coastal areas, and among the educated. A decomposition analysis based on household income determination suggests that income growth can largely be attributed to the increase in returns to education and to the shift of employment into secondary and tertiary sectors.

2009, Bidani, Benu, Blunch, Niels-Hugo, Goh, Chor-Ching, O'Leary, Christopher

Recent years have seen a surge in work on the impacts of active labor market programs for numerous countries. However, little evidence has been presented on the effectiveness of such programs in China. Recent economic reforms, associated with massive lay-offs, and the accompanying public retraining programs make China fertile ground for rigorous impact evaluations. This study uses survey data from the two large industrial cities Shenyang and Wuhan, covering the period 1998 to 2000, to evaluate retraining programs for over 2,000 workers two years after they had been observed as displaced and unemployed. Using a comparison group design, this study is, to our knowledge, the first evaluation of its kind in China. The evidence suggests that retraining helped workers find jobs in Wuhan, but had little effect in Shenyang. The study raises questions about the overall effectiveness of retraining expenditures, and it offers some directions for policy-makers about future interventions to help laid-off workers.

2011, Lin, Justin Yifu

This paper offers a novel explanation for the lower urbanization rate and great urban-rural inequality in China. Our study reveals that, heavy-industry-oriented development strategy will result in lower urbanization rate and higher urban-rural inequality. The greater the degree of heavy-industry-oriented development strategy is, the lower the urbanization rate is, and the higher the urban-rural inequality is. From a dynamic perspective, heavy-industry-oriented development strategy reduces the capital accumulation rate, which results in a slower progress of urbanization and a highly persistent urban-rural inequality. The higher the degree of heavy-industry-oriented development strategy, the slower the progress of urbanization, and the longer the urban-rural inequality will last. This mechanism can potentially explain the lower urbanization rate and higher urban-rural inequality in China under a unified framework.

2010, Ravallion, Martin

Western notions of the 'middle class' are of little obvious relevance to developing countries. Instead, the middle class is identified here as those living above the median poverty line of developing countries, even if still poor by rich-country standards. Over 1990-2005, economic growth and global distributional shifts allowed an extra 1.2 billion people to join the developing world's middle class. Four-fifths came from Asia, and half from China. Many of those in this new middle class remain fairly close to poverty. Only 100 million of the 1.2 billion would not be considered poor in any developing county. Economic growth typically came with an expanding middle class.

2009, Fajnzylber, Pablo, Fernandes, Ana M.

Using two new firm-level datasets, this article investigates the impact of three international economic activities--the use of imported inputs, exports, and foreign direct investment--on skilled labour demand in Brazil and China. We find that Brazilian firms that engage in these activities exhibit a higher skilled labour demand than firms that do not. In contrast, Chinese firms that engage in these activities have a lower skilled labour demand than firms that do not. Thus, international economic activities act as a channel for skill-biased technology diffusion in Brazil but have an effect of specialization according to comparative advantage in unskilled labour-intensive goods in China.

2010, Zhu, Nong, Luo, Xubei

Large numbers of agricultural labor moved from the countryside to cities after the economic reforms in China. Migration and remittances play an important role in transforming the structure of rural household income. This article examines the impact of rural-to-urban migration on rural poverty and inequality in a mountainous area of Hubei province using the data of a 2002 household survey. Since migration income is a potential substitute for farm income, we present counterfactual scenarios of what rural income, poverty, and inequality would have been in the absence of migration. Our results show that, by providing alternatives to households with lower marginal labor productivity in agriculture, migration leads to an increase in rural income. In contrast to many studies that suggest that the increasing share of nonfarm income in total income widens inequality, this article offers support for the hypothesis that migration tends to have egalitarian effects on rural income for three reasons: (1) migration is rational self-selection--farmers with higher expected return in agricultural activities and/or in local nonfarm activities choose to remain in the countryside while those with higher expected return in urban nonfarm sectors migrate; (2) households facing binding constraints of land supply are more likely to migrate; (3) poorer households benefit disproportionately from migration.

2009, Dong, Xiao-yuan, Xu, Lixin Colin

This paper examines the patterns and determinants of the labor restructuring process in China using two large firm-level datasets for the period between 1998 and 2002. We find that the public sector has undergone substantial labor retrenchment. The removal of employment guarantees for state workers has led to substantial employment shifts both within and between sectors. As compared to many Central and East European countries and the countries of the Commonwealth of Independent States in their early phases of transition, China has experienced a more synchronized pace of job destruction and creation as well as higher rates of excessive reallocation. Our results also show that the employment adjustment and downsizing process has been driven largely by market forces. We find a notable resemblance in the patterns of enterprise response to demand shocks across the public and the private sectors.

2009, Ravallion, Martin

At the outset of China's reform period, the country had a far higher poverty rate than Africa as a whole. Within five years that was no longer true. This paper tries to explain how China escaped from a situation in which extreme poverty persisted due to failed and unpopular policies. While acknowledging that Africa faces constraints that China did not, two lessons for Africa stand out. The first is the initial importance of productivity growth in smallholder agriculture, which will require both market-based incentives and public support. The second is the role played by strong leadership and a capable public administration at all levels of government.