Belton M. Fleisher

Risk, Return and Regulation in Chinese Stock Markets

Abstract This paper studies the dynamic behavior of risks and returns in Chinese stock markets. We characterize the time-series properties of stock-market returns and volatility. We estimate an empirical model which captures the effects of local and global information variables on the conditional mean of stock-market excess returns, and characterize the second-order conditional moments using three-error generation processes. We find that stock-market volatility is time-varying, mildly persistent, and is best described by a fat-tailed distribution such as the Stable distribution. We also find that the government’s market intervention policies have affected stock-market volatility in China.

Evaluating Teaching in Higher Education

The authors develop an original measure of learning in higher education, based on grades in subsequent courses. Using this measure of learning, they show that student evaluations are positively related to current grades but unrelated to learning once current grades are controlled. They offer evidence that the weak relationship between learning and student evaluations arises, in part, because students are unaware of how much they have learned in a course. They conclude with a discussion of easily implemented, optimal methods for evaluating teaching.

The Effect of Unemployment on Juvenile Delinquency

F ROM the point of view of public policy it is extremely important to understand the relationship between juvenile delinquency and labor-market conditions. If, for instance, delinquency rates increase with unemployment, public policies which aim to eliminate excess aggregate labor supply will yield benefits over and above those usually claimed for them. Furthermore, we should like to know whether policies intended to ease the entrance of young persons into the labor force and policies which attempt to speed the geographic and industrial redistribution of structurally unemployed labor are likely to reduce delinquency. In short, whether equilibrium conditions in the labor market are reached quickly or slowly may have important effects on social welfare in addition to those caused by the loss of resources associated with prolonged unemployment. Other aspects of the functioning of the labor market, such as the determination of levels and

Why Does Return Volatility Differ in Chinese Stock Markets

We estimate a modified mixture of distribution model (Andersen, 1996) to explore the underlying causes of the volatility differences between domestic A shares and foreign B shares listed in Chinese stock markets. Using return and trading volume data for 24 firms as well as value-weighted portfolios constructed, we obtain parameter estimates characterizing the distribution of the underlying news information flows. We find evidence that news enters the A-share market more intensively, is more correlated with A-share trading, and is more persistent for A shares than for B shares. Our cross-sectional test results also indicate that some of the greater return volatility for A-shares is due to variation in firms profits, firm size, and a substantially larger number of investors leading to a high probability of trading on a given news flow.

Husband's health and wife's labor supply

This paper examines the labor supply response of the wife to deterioration in the husbands health. Unlike past cross-sectional studies, responses over time are directly examined through the use of longitudinal data. The empirical results suggest that the magnitude and direction of the response depend crucially on the attractiveness of transfers which the family may qualify for when the husbands health deteriorates. When no transfers are available the wife increases her market work in order to replace the lost earnings of the husband. However, as transfers become more attractive, the wife begins to reduce her labor supply, enabling her to spend more time at home caring for her husband.

Mother's home time and the production of child quality.

This paper deals with the effect of mother’s time spent out of the labor force, and presumably in the home, on the “production” of child quality, where child quality is measured by intelligence (IQ), level of schooling attained, and market earning power. The results indicate that mother’s home time is most effective in producing (male) child quality for mothers who have attained relatively high levels of schooling. The results suggest that education programs which devote equal school resources to all (male) children do not necessarily provide equal educational opportunity and that the influence of family background on economic success is indirect, operating through home investments in children.

Problems of China's Rural Labor Markets and Rural-Urban Migration

Problems of China’s Rural Labor Markets and Rural-Urban Migration* Belton M. Fleisher Ohio State University and Dennis Tao Yang Virginia Polytechnic Institute and State University Center for China in the World Economy, Tsinghua University October 2005 * We would like to thank Nicholas Hope, John Pencavel, Xiaojun Wang, and participants in Stanford conference on China’s Market Reforms and 2004 Chinese Economists Society meetings for valuable comments and suggestions on earlier versions of this paper.

Potential residual and relative wages in Chinese township and village enterprises

We examine the role of potential residual revenue in determining the pay of skilled workers and enterprise directors relative to production workers in Chinas Township and Village Enterprises (TVEs) in the period from 1984 to 1990. The potential residual is proxied negatively by returns to scale and positively by aggregate market conditions. We find that the ratio between the wages both of directors and of technical workers to those of production workers is positively related to the potential residual, while holding constant local unemployment, land per person, and FDI per worker. This evidence is consistent with the hypothesis of de facto residual claimancy.

The Long-Term Health Effects of Fetal Malnutrition: Evidence from the 1959-1961 China Great Leap Forward Famine

We report evidence of long-term adverse health impacts of fetal malnutrition exposure of middle-aged survivors of the 1959-1961 China Famine using data from the China Health and Retirement Longitudinal Study. We find that fetal exposure to malnutrition has large and long-lasting impacts on both physical health and cognitive abilities, including the risks of suffering a stroke, physical disabilities in speech, walking and vision, and measures of mental acuity even half a century after the tragic event. Our findings imply that policies and programs that improve the nutritional status of pregnant women yield benefits on the health of a fetus that extend through the life cycle in the form of reduced physical and mental impairment.

Financial intermediation, inflation, and capital formation in rural China

Abstract We focus on rural capital formation, with particular attention to the direction of rural household saving toward housing versus “productive” investments or savings deposits in financial institutions. A two-period model of rural household behavior is developed, from which three equations for investment in housing, business-agricultural capital, and savings deposits are derived. These equations are estimated using data for 28 provinces over the period 1986–1989. The econometric results confirm that housing investment is sensitive to both the nominal deposit rate of interest (negatively) and to the rate of inflation (positively). Household agricultural and business investment is also negatively related to the real deposit interest rate, while savings deposits are positively, although weakly, related. These results suggest that if the expected real deposit rate of interest had been a positive one percent instead of an average of a negative three percent during the period studied (1986–1989), total expenditure on housing would have declined substantially; indeed, the decline in housing outlays would have been equal to three-fourths the amount spent by rural collectives on fixed capital. This finding leads us to recommend improvements in financial intermediation, possibly including a stock market, in order to increase the rate of rural economic development.