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Hayek, Local Information, and the Decentralization of Chinese State-owned Enterprises
Lixin Colin Xu, May 23, 2018Hayek (1945) predicts that where local information is important, the organization of production should be decentralized. This prediction is tested and supported in the context of the decentralization of Chinese state-owned enterprises (SOEs). SOEs are more likely to decentralize with increasing distance from the seat of the oversight government. This likelihood is especially strong when performance heterogeneity is greater and/or transportation costs are higher.
Does Spatial Misallocation in China’s Housing and Land Markets Drive Up Housing Prices?
Yongheng Deng, Yang Tang, Ping Wang, Jing Wu, Mar 23, 2022We documented pervasive spatial misallocations in the housing and land markets in China. We find larger cities with more competitive land markets and strict land supply restrictions have fewer subsidies in housing sales, and consequently a higher housing price compared to its frictionless benchmark. Removing frictions brings welfare gain because more individuals live in larger cities.
GDP Management to Meet or Beat Growth Targets
Changjiang Lyu, Kemin Wang, Frank Zhang, Xin Zhang, Oct 24, 2018We apply the discontinuity methodology from the accounting literature to a political economy setting of GDP reporting and examine whether Chinese local governments manage regional GDP numbers. We find strong evidence of discontinuities around zero in the distribution of actual minus target GDP growth rates. The frequencies of just meeting or beating GDP growth targets are about five (four) times the frequencies of just missing targets at the prefecture (province) level. The results are stronger for governors with longer tenures and those without political connections to higher-level officials as well as for local governments with more resources under their control.
Industrial Clusters, Networks, and Resilience of Firms to the Covid-19 Shock in China
Ruochen Dai, Dilip Mookherjee, Yingyue Quan, Xiaobo Zhang, Jan 06, 2021Both entry of new firms and performance of incumbents were less adversely affected by the Covid-19 shock in Chinese counties with a greater presence of industrial clusters. To explain these results, we find evidence of the role of two specific attributes of clusters: reliance on informal hometown-based entrepreneur networks and spatial proximity to suppliers and customers.
Lucky Dragons
Chih Ming Tan, Xiao Wang, Xiaobo Zhang, Feb 21, 2024This article explores the intriguing connection between Chinese zodiac signs and parental investment in children’s development. Particularly, parents invest more in children born under the “lucky” sign of the dragon, potentially impacting their cognitive and noncognitive skills alike.
