Albert Francis Park

Education and poverty in rural China

We analyze household and school survey data from poor counties in six Chinese provinces to examine the effects of poverty, intra-household decision-making, and school quality on educational investments (enrollment decisions) and learning outcomes (test scores and grade promotion). Unlike previous studies, we use direct measures of credit limits and womens empowerment. Drawing a distinction between the effects of wealth (measured by expenditures per capita) and credit constraints, we find that the former improves learning while the latter reduces educational investments. We find evidence of a story of gender bias in which academically weak girls are more likely to drop out in primary school while most boys continue on to junior secondary school. Womens empowerment reduces the likelihood of dropping out but does not affect other outcomes. Finally, our measures of school quality have some effect on the duration of primary school enrollment but not on learning.

Microfinance with Chinese Characteristics

Analyzing household survey data from three microfinance program sites, we provide an early systematic assessment of Chinese microfinance programs, which have grown rapidly since 1994, are based on the Grameen model, and include an unprecedented large-scale government initiative. We examine the empirical propositions that underpin successful microfinance programs---reaching the poor (targeting), financial and operational performance (sustainability), and program benefits (impact). We find that nongovernmental programs perform well in all three areas, but that governmental programs perform poorly. Given the remote location and focus on agricultural projects in Chinas poor areas, we advocate greater flexibility in loan contract terms, especially repayment schedules.

Regional Poverty Targeting in China

We evaluate the effectiveness of regional targeting in China’s large-scale poverty alleviation program begun in 1986 by analyzing a panel data set of all counties in China for the period 1981–1995. Estimates of models of poor county designation and poverty fund allocation and newly defined targeting gap and targeting error measures show that political factors have affected targeting and that leakage has increased while coverage has improved. Only one of the three main programs is progressive. Growth model estimates find that poor county designation increased incomes per capita by 2.28% per year during 1985–1992 and 0.91% during 1992–1995. These results are relatively robust to redefining control groups using propensity-score matching methods.

Market Emergence and Transition: Arbitrage, Transaction Costs, and Autarky in China's Grain Markets

Using trimonthly Chinese provincial grain prices from 1988 to 1995, we estimate a parity-bounds model of interregional trade for four subperiods to characterize how multiple aspects of market performance change during the process of economic transition. For each period, we estimate the extent to which arbitrage opportunities are realized by traders, the transaction costs between location pairs, and the likelihood that regions do not trade. Trade restrictions cannot explain the pattern of uneven market development over time. Infrastructure bottlenecks, managerial incentive reforms, and production specialization policies, all were likely important factors affecting market performance.

China's poverty statistics

Abstract Chinas official poverty statistics show a dramatic reduction in poverty from 31% of the rural population in 1978 to 3% in 2000. We evaluate possible sources of bias in these estimates and conclude that the official statistics underestimate rural poverty and overstate the speed of poverty reduction. Direct measures of nutritional outcomes support the contention that poverty is more widespread than suggested by official statistics. Priority should be given to constructing new statistics to accurately measure urban poverty. The method for calculating county income per capita, a key policy variable affecting official poor county designation, is ad hoc and subject to political influence.

Joint liability lending and the rise and fall of China's township and village enterprises

Using data from a recent survey of bank and enterprise managers and government officials in southern China, we present a new explanation for the rise and fall of collectively-owned township and village enterprises (TVEs) based on the willingness of banks to finance collective enterprise development. Until recently bank loans to TVEs exhibited the key features of joint liability lending, supported by the unique sanctioning ability of local leaders. Beginning in the mid 1990s, liquidation costs fell, firm performance deteriorated, real interest rates rose, and financial competition increased. These changes led to a dramatic change in the lending preferences of banks in favor of private firms. Empirical estimates of the determinants of bank lending preferences, the involvement of township leaders in lending, and the ability of firms to obtain loans support our explanation.

Risk and Household Grain Management in Developing Countries

A dynamic model is presented of a households joint production, storage, and trade decisions when facing transaction costs and risk in prices and yields. Grain management decisions balance the goals of maximising profits and reducing consumption price risk. Model solutions calibrated to Chinese data show that grains consumption role makes it an attractive form of precautionary saving even when households have access to credit, the joint nature of production and savings decisions limits the income loss associated with risk-coping, and the desire to store grain can explain why subsistence households are frequently net purchasers but rarely net sellers of grain.

Bureaucrat to entrepreneur: the changing role of the state in China's grain economy.

The pursuit of efficiency, on the one hand, and the desire for low-priced, abundant food for urban consumers on the other, has led China’s reformers to undertake a series of erratic policy swings in the course of managing the nation’s grain economy. Although some analysts have recognized the deleterious effects of such inconsistent policies on long-run economic development, political and economic considerations have until recently prevented policy makers from deepening reforms of China’s grain economy. While government leaders permitted free market commodity trade as part of a dual-track pricing strategy, the leadership never advocated sweeping liberalization of grain markets during the 1980s. Instead, planners directed a vast network of bureaucratic agents to procure, store, transport, process, and sell grain in an effort to preserve the government’s influence over the economy. Especially when market forces were seen to be causing price instability, leaders relied on employees in China’s parastatal marketing agencies to play a leading role in controlling the scope of market activity and moving goods to key sectors and regions. Such actions frequently were taken to protect urban residents in inland cities. The strategy also was designed to put pressure on deficit regions to increase investments in agriculture by threatening to deny them grain shipments.

China’s 2008 Labor Contract Law: Implementation and implications for China’s workers

This article presents empirical evidence from household and firm survey data collected during 2009−2010 on the implementation of the 2008 Labor Contract Law and effects on China’s workers. The Government and local labor bureaus have made substantial efforts to enforce the provisions of the new Law, which has likely contributed to reversing a trend toward increasing informalization of the urban labor market. Enforcement of the Law, however, varies substantially across cities. The article analyzes the determinants of worker satisfaction with the Law’s enforcement, workers’ propensity to have a labor contract, their awareness of the Law’s content and their likelihood of initiating disputes, and finds that all are highly correlated with education level, especially for migrants. Although higher labor costs may have had a negative impact on manufacturing employment growth, this has not led to an overall increase in aggregate unemployment or prevented the rapid growth of real wages. Less progress has been made in increasing social insurance coverage, although signing a labor contract is more likely to be associated with participation in social insurance programs than in the past, particularly for migrant workers.

School Meals as a Safety Net: An Evaluation of the Midday Meal Scheme in India

Despite the popularity of school meals, little evidence exists on their effect on health outcomes. This study uses newly available longitudinal data from the state of Andhra Pradesh in India to estimate the impact of the introduction of a national midday meal program on anthropometric z-scores of primary school students and investigates whether the program ameliorated the deterioration of health in young children caused by a severe drought. Correcting for self-selection into the program using a nonlinearity in how age affects the probability of enrollment, we find that the program acted as a safety net for children, providing large and significant health gains for children whose families suffered from drought.