Cheng, Wenya
(2013)
Essays on Chinese economy.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis consists of three independent chapters on Chinese economy. The
first chapter examines the impact of import tariff reduction and its interaction
with market-oriented policies on regional manufacturing employment in China
between 1998 and 2006. I address the concerns of tariff endogeneity by exploiting the fact that tariffs of WTO members are bound by common exogenous
WTO regulations. The IV estimates suggest that a reduction in tariffs on final
goods increases employment while decline in input tariffs reduces employment
in economic zones. Yet, opposite effects are found in non-economic zones. The
differential impact is mainly driven by reallocation of labour to economic zones
and, in particular, to foreign-invested enterprises and exporting firms. The second chapter models firm hiring across local labour markets and estimates the
role of distinct regional labour markets in firm input use, productivity and location using firm and population census data. Considering modern China as a
country with substantial regional variation, the results suggest that labour costs
vary by 30-80%, leading to 3-17% differences in total factor productivity once
non-labour inputs are considered. Favourably endowed regions attract more
value added per capita, providing new insights into within-country comparative advantage and specialization. The last chapter investigates the effects of
schooling on occupational status and children’s educational attainment using
trend deviations in graduation rates during the Chinese Cultural Revolution as
instruments of schooling. The results show that education increases the likelihood of obtaining an off-farm and white-collar job. Also, there is evidence of
causal relationship between parent’s and children’s education.
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