Junsen Zhang

Mortality decline and long-run economic growth

This paper examines the impacts of mortality decline on long-run growth in a dynastic family, two-sector growth model with social security. A rise in longevity has direct effects on fertility, human capital investment, and growth, as well as indirect effects through increasing unfunded social security contributions. Both the direct and indirect effects depend on the relative strength of the tastes for the number and welfare of children and may have different signs. The net effects of rising longevity on fertility tend to be negative, but positive on human capital investment and growth

Dowry and Wife's Welfare: A Theoretical and Empirical Analysis

Becker attributes the existence of marital transfers to inflexibility in the division of joint product within the marriage. If that were the only reason, we would not have observed the coexistence of dowries and bride‐prices. This paper offers an alternative analysis. While Beckers interpretation is retained for bride‐prices, a dowry is now represented as a premortem bequest by altruistic parents for a daughter. It not only increases the wealth of the new conjugal household but also enhances the bargaining power of the bride in the allocation of the output within the household, thereby safeguarding here welfare. Using micro data from Taiwan, we found that a dowry improves the brides welfare whereas a bride‐price has no effect. These empirical results support the theoretical predictions of the model.

Rising longevity, education, savings, and growth

This paper examines the impact of declines in adult mortality on growth in an overlapping generations model. With public education and imperfect annuity markets, a decline in mortality affects growth through three channels. First, it raises the saving rate and thereby increases the rate of physical capital accumulation. Second, it reduces accidental bequests, lowers investment, and thereby lowers the rate of physical capital accumulation. Third, it may lead the median voter to increase the tax rate for public education initially but lower the tax rate in a later stage. Starting from a high mortality rate as found in many Third World populations, the net effect of a decline in mortality is to raise the growth rate. However, starting from a low mortality rate such as is found in most industrial populations, the net effect of a further decline in mortality is to reduce the growth rate. The findings appear consistent with recent empirical evidence.

Do high birth rates hamper economic growth

This paper examines the impact of the birth rate on economic growth by using a panel data set of 28 provinces in China over twenty years. Because Chinas one-child policy applied only to the Han Chinese but not to minorities, this unique affirmative policy allows us to use the proportion of minorities in a province as an instrumental variable to identify the causal effect of the birth rate on economic growth. We find that the birth rate has a negative impact on economic growth. The finding not only supports the view of Malthus, but also suggests that Chinas birth control policy is indeed growth enhancing.

Economic Returns to Communist Party Membership: Evidence from Urban Chinese Twins

This paper estimates the returns to membership of the Chinese Communist Party using unique twins data we collected from China. Our OLS estimate shows that being a Party member increases earnings by 10%, but the within-twin-pair estimate becomes zero. One interpretation of these results is that the OLS Party premium is due to omitted ability and family background. This interpretation would suggest that Party members fare well not because of their special political status per se, but because of the superior ability that made them Party members. The estimates are also consistent with an alternative interpretation that Party membership not only has its own effect but also has an external effect on the sibling.

The heritability of attitude toward economic risk

The propensity to take risk underpins a wide variety of decision-making behavior, ranging from common ones such as asking for directions and trying out a new restaurant to more substantial economic decisions involving, for instance, ones investment or career. Despite the fundamental role of risk attitude in the economy, its genetic basis remains unknown. Using an experimental economics protocol combined with a classical twin strategy, we provide the first direct evidence of the heritability of economic risk attitude, at 57%. We do not find a significant role for shared environmental effects, a common observation in behavioral genetics that is contrary to commonly held views in economics. Our findings complement recent neuroeconomic studies in enhancing the understanding of the neurobiological basis of risk taking.

Trends in the Gender Earnings Differential in Urban China, 1988-2004

This paper analyzes changes in the gender earnings gap in urban China over the period 1988–2004 using urban household survey data. The mean female/male earnings ratio declined from 86.3% to 76.2%. Mainly responsible for this diverging trend were rapid increases in returns to both observed and unobserved skills, which accentuated the disadvantage associated with womens lower skill levels. The gender gap in observed skills such as education narrowed over the study period, but did not close, and there is evidence that the gap in unobserved skills widened considerably. Increased discrimination may also have served to widen the gender earnings gap. Analyses by earnings percentile and by sub-period show that although the gap widened much more at the lower end of the earnings distribution than at the upper end over the period as a whole, it widened greatly at the upper end in the most recent years (2001–2004).

SEX RATIOS AND CRIME: EVIDENCE FROM CHINA

Since the introduction of the one-child policy in China in 1979, many more boys than girls have been born, foreshadowing a sizable bride shortage. What do young men unable to find wives do? This paper focuses on criminality, an asocial activity that has seen a marked rise since the mid-1990s. Exploiting province-year level variation, we find an elasticity of crime with respect to the sex ratio of 16- to 25-year-olds of 3.4, suggesting that male sex ratios can account for one-seventh of the rise in crime. We hypothesize that adverse marriage market conditions drive this association.

Social Security, Intergenerational Transfers, and Endogenous Growth

In this paper, the effects of social security in a simple model of endogenous growth with alternative motives of having children are analyzed. It shows how the effects of social security depend on the size of the social security tax, the motive to have children, and the pattern of intergenerational transfers. The pattern of intergenerational transfers itself, however, is shown to change with the social security tax rate. When the social security tax is not too high, social security increases per capita income growth and tends to enhance welfare.

Altruism, Favoritism, and Guilt in the Allocation of Family Resources: Sophie's Choice in Mao's Mass Send Down Movement

We use survey data on twins in urban China, among whom many experienced the consequences of the forced mass rustication movement of the Cultural Revolution, to identify the roles of altruism, favoritism, and guilt in affecting family behavior. We exploit the fact that many families were forced to select one of their adolescent children to be sent down. We show the conditions under which guilt, favoritism, and altruism can be identified using such data. We find that parents behaved altruistically, showed favoritism, but also exhibited guilt: the child experiencing more rustication years received higher parental transfers despite having higher earnings.