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This paper estimates the effects on rural education of the send-down movement during the Cultural Revolution, when about 16 million urban youth were mandated to resettle in the countryside. Using a county-level dataset compiled from local gazetteers and population censuses, we show that greater exposure to the sent-down youths significantly increased rural children’s educational achievement. This positive effect diminished after the urban youth left the countryside in the late 1970s but never disappeared. Rural children who interacted with the sent-down youths were also more likely to pursue more-skilled occupations, marry later, and have smaller families than those who did not.

Using staggered entry of two dockless bike-sharing firms, we study whether the entrant expands or steals the market from the incumbent in 59 cities. Compared with 23 cities without entry, the entry helps the incumbent to serve more trips, make more bike investment, achieve higher revenue per trip, improve bike utilization, and form a wider and more dispersed network. The market-expanding effect on new users dominates a significant market-stealing effect on old users. These findings, plus a theory that highlights consumer search and network effects, suggest that a market with positive network effects and multihoming users is not necessarily winner-takes-all.

Prior literature on foreign direct investment (FDI) spillovers has mainly focused on how the presence of FDI affects the productivity of domestic firms. In this study, we advance the literature by examining the effect of the diversity of FDI country origins on the productivity of domestic firms. We propose that the diversity of FDI country origins can facilitate FDI spillovers by increasing the variety of technologies and management practices brought by foreign firms, to which domestic firms are exposed and that they can potentially utilize. Further, the extent to which domestic firms can utilize these technologies and practices depends upon their absorptive capacity. Using panel data on Chinese manufacturing firms during the period 1998-2003, our results support these propositions. We find that the diversity of FDI country origins in an industry has a positive relationship with the productivity of domestic firms in the industry. This positive relationship is stronger when domestic firms are larger, and when the technology gap between FDI and the domestic firms is intermediate.

We report results from a large, randomized field to study how access to formal microinsurance affects production and economic development. We induce exogenous variation in insurance coverage at the village level by randomly assigning performance incentives to the village animal husbandry worker who is responsible for signing farmers up for the insurance. We find that promoting greater adoption of insurance significantly increases farmers' sow production, and this effect seems to persist in the longer run; moreover, the increase in sow production in response to the sow insurance does not seem to be the result of the substitution of other livestock.

This paper investigates the impact of the abolition of the civil service exam on local governance in early twentieth-century China. Before the abolition, local elites collected surtaxes that financed local public goods, but they were supervised by the state and could lose candidacy for higher status if they engaged in corrupt behavior. This prospect of upward mobility (POUM) gave them incentives to behave well, which the abolition of the exam removed. Using anti-elite protests as a proxy for the deterioration of local governance, we find that prefectures with a higher POUM experienced more incidents of anti-elite protests after the abolition.

Motivated by the prevalence of economic targets at all levels of territory administration in China, this article proposes a Tullock contest model to study optimal target setting in a multi-layered tournament-based organisation. In our model, targets are used by upper-level officials to convey the importance of economic growth and incentivise subordinates in the tournaments. Our model predicts a top-down amplification of economic growth targets along the jurisdiction levels, which explains the observed pattern in China. Using both provincial and prefectural-level data, we test the model predictions and find consistent evidence.

This article aims at engaging in a constructive dialogue with Philip Huang. We approach China’s administrative governance and economy from different perspectives but arrive at similar and complementary characterizations. I argue that what makes any theory about China valuable and valid lies in its ability to penetrate both China’s history and its present, link theory and evidence, go beyond left and right, and combine East and West. Since it has been dominated by Western standards, academic research about China should stand firmly on historical reality as well as constructive dialogue with Western doctrines, but with full awareness of their implicit assumptions, some of which are bundled with Western-specific experiences, and their potential conceptual traps when applied to China. As an ambitious goal, we also should seek to generalize the experiences of both East and West.

Using the nationally representative Urban Household Income and Expenditure Survey (UHIES) conducted by the National Bureau of Statistics (NBS) of China, we document a steadily rising trend in income and consumption inequality during the period from 1992 to 2003 in urban China. Despite the rising urban inequality over time, the social welfare of urban residents unambiguously improved because every income group saw their income and consumption increase over this period (higher income groups experienced faster increases). Moreover, consumption inequality follows income inequality very closely. Labor income inequality accounts for about two‐thirds of total income inequality quite consistently over time. We find that only about one‐third of urban inequality can be attributed to observable individual choices and characteristics, of which education has increasing explanatory power, while regional differences become less important over time. We also find that restructuring of the SOE sector, urbanization, and globalization are important contributing factors to rising overall urban inequality and the within‐group inequality not accounted for by observable individual choices and characteristics.

We construct housing price indices for 120 major cities in China in 2003–2013 based on sequential sales of new homes within the same housing developments. By using these indices and detailed information on mortgage borrowers across these cities, we find enormous housing price appreciation during the decade, which was accompanied by equally impressive growth in household income, except in a few first-tier cities. While bottom-income mortgage borrowers endured severe financial burdens by using price-to-income ratios over eight to buy homes, their participation in the housing market remained steady and their mortgage loans were protected by down payments commonly in excess of 35%. As such, the housing market is unlikely to trigger an imminent financial crisis in China, even though it may crash with a sudden stop in the Chinese economy and act as an amplifier of the initial shock.

On the eve of its economic reforms, China achieved a much higher secondary school enrollment rate than other countries with a similar per capita income at the time. This study investigates the source of this high enrollment rate by examining a massive expansion of rural schools during the Cultural Revolution that increased the number of secondary schools more than tenfold. We estimate the impact of the expansion by compiling a new county-level dataset from local gazetteers and exploiting the county-level variation in the speed of expansion for identification purposes. We provide strong evidence that the program significantly increased rural children’s years of schooling and suggestive evidence that teachers contributed more to this improvement than schools. By building a pool of middle-skilled labor years later, the expansion program boosted local agricultural yields and increased the productivity of the township and village enterprises that emerged after the reform. Finally, we find some evidence that this rapid expansion was associated with a deterioration in the quality of schooling.