Linda Yueh

The role of social capital in the labour market in China

Social capital is thought to play an economic role in the labour market. It may be particularly pertinent in one that is in transition from an administered to a market-oriented system. One factor that may determine success in the underdeveloped Chinese labour market is thus guanxi, the Chinese variant of social capital. With individual-level measures of social capital, we test for the role of guanxi using a data set designed for this purpose, covering 7,500 urban workers and conducted in early 2000. The basic hypothesis is supported. Both measures of social capital - size of social network and Communist Party membership - have significant and substantial effects in the income functions. Indeed, social capital may be just as important as human capital: remarkably, one additional reported contact contributes more than one additional year of education. Social capital can have influence either in an administered system or in one subject to market forces. We find that it does so in both parts of the labour market, but some of the evidence suggests that it is more important in the latter.

What Drives China's Growth?

This paper analyses the drivers and components of Chinas economic growth, showing that the structure of the economy is just as important as standard growth factors in determining its growth. The structural reforms that dismantled state-owned enterprises and shifted factors from agriculture to urban areas are key, as are technology transfers and know-how. Taking these factors into account, the paper shows that total factor productivity (TFP) not derived from those one-off reforms accounted for less than one-eighth of Chinas GDP growth during the first thirty years of the reform period. There are signs that efficiency is improving in the 2000s and productivity must continue to increase for the country to sustain its development.

Parental Investment in Children's Human Capital in Urban China

The present study tests the extent of parental forgone consumption used instead to invest in childrens human capital by use of intrahousehold resource allocation models. Using an unusual, comprehensive data set for urban China, there is more spending on boys aged 13 to 15 but more on girls aged 16 to 18, suggesting that standard human capital theories and traditional perceptions of gender bias do not completely explain educational expenditure decisions. The evidence from urban China is consistent, though, with human capital models which consider parental intertemporal preferences. Also, the findings suggest that the perceived bias in favour of sons exists weakly in contemporary urban China.

Do social networks increase labour supply elasticity

Using an original data set including measures of social networks of migrants in China, we find that social networks increase the elasticities of labour supplies for migrant workers. The effects differ for men and women and can help explain part of the importance of developing social networks to improve labour market outcomes.

Legal Development, Financial Repression, and Entrepreneurship in a Marketizing Economy

The nature of entrepreneurship in a marketizing economy will be affected not only by personal and socioeconomic characteristics, but also by the extent of legal development and financial repression. Many developing countries have underdeveloped legal and credit systems that can impede self-employment. Since China is an economy characterized by legal and institutional imperfections as well as underdeveloped financial markets, its growing and important nonstate sector poses a puzzle. This article tests whether such institutional constraints have affected the development of entrepreneurship in China, with implications for other countries in the process of liberalization. After examining the impact of legal and financial development, improvements in the legal system are found to lead to greater entrepreneurship, while financial repression is not a significant factor. Legal protection increases protection of property rights that can promote self-employment, while start-up money is often obtained from informal avenues such that financial repression is not a deterrent for starting a business, though it may be more important in the later stages of business expansion.

Re-balancing China: Linking Internal and External Reforms

The re-balancing of the Chinese economy requires the linking of internal and external sector reforms. The shift toward greater domestic demand necessitates a series of measures, including the adjustment of interest rates and the exchange rate. A more balanced Chinese economy would generate more sustainable growth, particularly as global macroeconomic imbalances fall from their pre-crisis peak.

The Chinese Entrepreneur

Many in the West have acknowledged the recent emergence of China as an economic powerhouse without fully understanding how it came to be says that one fact about China has to be taken into account: it is home to a growing population of entrepreneurs.

China's productivity challenge

After capturing the worlds attention with the 2008 Olympics, whats next for China? Linda Yueh says the answer can be found by tracking Chinas labour productivity.

Globalisation and economic growth in China

Growth and Internal Reforms: Is Chinas Growth Real and Sustainable? (J Y-F Lin) Market Instability and Economic Complexity: Theoretical Lessons from Transition Experiments (P Chen) The Impact of Privatisation on Firm Performance in China (L-G Song & Y Yao) External Reforms and Impact: Putting the Cart Before the Horse? Capital Account Liberalisation and Exchange Rate Flexibility in China (E Prasad et al.) Chinas Competitiveness, Intra-Industry and Intra-Regional Trade in Asia (L Yueh) The Economic Impact of Globalisation in Asia-Pacific: The Case of the Flying Geese Model (C Ljungwall & O Sjoberg) Chinas Trade Policies in Wider Asian Perspective (R Sally) After the CMI: The Future of Asian Monetary Cooperation and Chinas Role (F He et al.) Conclusion and Implications: Chinas Economic Reforms in the Globalisation Era (J Y-F Lin et al.).

Does Incorporation Improve Firm Performance

Since the 1990s, China has made a significant effort to transform its state-owned enterprises into shareholding companies and allow its private firms to become incorporated. This corporatization policy has been used to restructure state-owned enterprises as well as govern a growing and diverse set of firms in a marketizing economy. The intent of these reforms is that, as has been found in other economies, incorporation should improve firm performance through granting previously state-owned and private firms the various legal forms that provide better protection of property rights and limited liability protection, among others. The findings are that incorporation improves firm performance separately from privatization and listing on stock markets. Even with an under-developed legal system and imperfect capital markets, incorporation generates a productivity improvement which bodes well for the emerging corporate sector in China.