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2023 Volume 46 Issue 10
Published: 23 October 2023
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2023, 46(10): 3-32.Older people often face difficulties finding work in the Chinese labour market. This paper considers age differences in incomes and analyses the reasons for the employment difficulties of older people from the perspective of trade openness. First, it constructs a theoretical model that includes trade costs, technological innovation and the dual skill factor endowment of employees, and it clarifies the mechanism of trade liberalisation that affects the income-age structure. Based on China’s urban household survey data from between 1992 and 2014, it then takes the decrease in trade policy uncertainty caused by China’s accession to the WTO as a typical export expansion event and verifies that trade expansion brings about an increase (decrease) in the relative income of young (older) workers through an increase in the return of the experiential skill factor endowment relative to the iterative skill factor endowment. In addition, in regions with more severe ageing, export expansion has less impact on the relative income of young workers. The impact of trade liberalisation on the age structure of income is more reflected in the same industries and occupations but does not reflect gender differences. The study helps to fully exploit the market potential of older workers and better cope with the issue of population ageing.
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2023, 46(10): 33-63.Based on the CEPA between the Hong Kong SAR and Chinese mainland signed in 2003, this study examines the impact of progressive trade agreements on trade statistical differences. Three findings emerge. First, the positive relationship between import tariffs and statistical differences still exists, but the CEPA significantly reduces statistical differences by adjusting for trade volume rather than unit value. Second, considering statistical differences, the effect of duty cuts for similar products as a group is greater than that of stepwise duty cuts. Third, the implementation of more restrictive rules of origin may effectively reduce statistical differences, but it is also likely that this reduction is due to the re-export from third countries via Hong Kong.
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2023, 46(10): 64-90.Improving the spatial allocation of factors and products can optimize the economic structure, enhance energy utilization efficiency, and facilitate high-quality economic development. This paper introduces regional differences in energy utilization efficiency within the spatial general equilibrium framework, and quantitatively assesses how labor migration and trade costs across regions affect China’s economic structure, overall energy efficiency, and real GDP per capita. The counterfactual analysis reveals that reducing the costs of labor migration or trade increases the share of non-agricultural sector employment and real GDP per capita, and significantly reduces energy consumption per unit of GDP. These effects become more significant when agglomeration economies are stronger. The resulting conclusion indicates that smooth domestic market integration can simultaneously promote the optimisation of the economic structure, the improvement of economic growth and the increase of energy utilization efficiency, thereby reducing carbon emissions through agglomeration.
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2023, 46(10): 91-114.Based on the perspective of corporate earnings management, this paper shows the interaction between local governments and microenterprises in the context of an intensified fiscal pressure. The results indicate that when enterprises are located in regions with higher fiscal pressure, their earnings management level is lower. The analysis of the mechanism shows that the strengthening of tax collection and administration can mitigate the corporate earnings management and, based on the motivation of“hiding wealth”, enterprises can reduce their upward earnings management to avoid becoming shifting targets of the policy burden. A more detailed analysis reveals that the above effects are most prominent in regions with greater capacity for intervention and willingness of local governments, and they are more pronounced in large, profitable and state-owned enterprises, which are more likely to become prime targets for local fiscal pressure transfer. On the other hand, it is also found that enterprises are more likely to issue negative earnings warnings in response to the adverse impact of local fiscal pressure. This paper deepens the theoretical understanding of the internal logic and transmission mode of the local governments’ fiscal pressure on local microenterprises, providing an important policy reference in order to promote further reform of the fiscal system and effective resolution of local fiscal pressure.
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2023, 46(10): 115-144.China’s large cities adopt preferential settlement policies for highly skilled labour and stricter settlement requirements for low-skilled labour. This paper studies the impact of low-skilled labour on urban economic development by constructing a general equilibrium model of two cities, combining theoretical deduction, numerical simulation and empirical methods. The model reveals that it is possible to attract more low-skilled labour to settle in large cities by reducing their settlement requirements, thereby lowering the cost of urban living, increasing the attractiveness to highly skilled labour, maximising the agglomeration effect of highly skilled sectors, increasing real wage incomes and narrowing the income gap across society.
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2023, 46(10): 145-169.Product scope adjustment is an important channel for optimal the allocation of resources within firms. Using the quasi-experiment of establishing administrative approval center in China, this paper studies the effect and mechanism of streamlining administration and delegating power on enterprise product scope adjustment. We find that the establishment of administrative approval center did promote the expansion of firm product scope, and after a series of robustness tests, the results are still significant. Mechanism test shows that streamlining administration and delegating power can promote the expansion of enterprise product scope mainly by optimizing the allocation of entrepreneurial activities, that is, after streamlining administration and delegating power, entrepreneurs will reduce input in non-productive activities and instead invest more time and money in R&D, innovation and other productive activities, thus promoting the expansion of enterprise product scope. A more detailed decomposition of the adjustment of the enterprise’s product scope is carried out to verify Schumpeter’s “creative destruction” theory. The results show that the streamlining of administration and delegating power not only results in the adjustment of the enterprise’s product scope, but also promotes the optimal allocation of resources within the enterprise. Therefore, the government should streamline administration and delegate power to further release institutional dividends and inject vitality into China’s economic growth.
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2023, 46(10): 170-195.This paper creates a novel dataset on patent trading between cities, exploring boundary barriers to knowledge trading and assessing potential efficiency losses. Empirical evidence shows that crossing boundaries significantly suppresses patent trading. On average, patent trading in the same city is approximately 17.654 times higher than between neighbouring cities in the same province, while, on the other hand, patent trading between neighbouring cities in the same province is approximately 2.406 times higher than between neighbouring cities across provinces, indicating that“provincial boundaries” are more difficult to cross than “municipal boundaries”. Mechanism analysis indicates that the institutional transaction costs constitute an important source of boundary barriers. Through new institutional arrangements, such as patent trading centres and intellectual property courts, it is proven that improving institutional quality can effectively reduce boundary barriers. Finally, the paper constructs a theoretical framework to describe the patent trading behaviour, structurally assessing efficiency losses caused by boundaries and ultimately breaking down their sources. The results indicate that approximately 78.8% of cities experience efficiency losses, with a mean and median of 3.5% and 4.2% respectively. The explanatory power of institutional costs on the difference in efficiency losses is more than 5.5 times that of distance. The conclusion of this paper suggests that deepening supply-side structural reform, constructing a large unified market for knowledge and supporting relevant policies are crucial for optimising knowledge allocation and improving innovation efficiency.
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2023, 46(10): 196-216.China is actively participating in building a global tax governance system and taking measures against tax avoidance, including the corporate tax avoidance motivation represented by thin capitalisation. This paper examines debt transfer activities in the context of the tax rate difference between subsidiaries and parent companies of corporate groups by using a manually constructed equity association network of Chinese group companies. The study indicates that: (i) due to the group’s unified tax planning considerations, as the parent company’s tax rate increases, incentives to undertake debt transfers from other subsidiaries that are subject to a low tax rate begin to emerge, this activity mainly being reflected in its short-term debt; and (ii) the mechanism of action demonstrates that the debt transfer process is mainly based on the adjustment of interest expense between subsidiaries and parent companies, and therefore an income transfer channel between them also exists. As a result, the annual scale of tax avoidance caused by intra-group debt transfer in the sample is up to 5.23 billion yuan, which further differentiates the debt financing cost and investment behavior of subsidiaries.
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2023, 46(10): 217-240.Overtime work is a common labor phenomenon among Chinese firms. How does overtime work influence labor income share? Empirical evidence of such question is helpful to understand the current situation of income distribution in China, and has important implications for formulating government policies for common prosperity. However, the challenges in constructing a good proxy of overtime work limit the acquisition of empirical evidence from large sample. Based on daily- frequency satellite night light data, we proxy the degree of overtime work at the firm level. Our empirical results show that the degree of overtime work decreases labor income share. Such effect occurs mainly in industries with lower competition, regions with inferior legal environment, and non- state-owned enterprises. We also find that labor liquidity, media coverage and corporate social responsibility reporting alleviate the inverted relationship between overtime work and labor income share. Our paper sheds lights on the research of labor income share in China, and has policy implications for promoting common prosperity.
