CEO incentive contracts in China: why does city location matter?

CEO incentive contracts are commonplace in China but their incidence varies significantly across Chinese cities. We show that city and provincial policy experiments help explain this variance. We examine the role of two policy experiments: the use of Special Economic Zones (SEZs) to attract foreign direct investment (FDI), and the privatization of state owned enterprises (SOEs). The introduction of SEZs is found to be uncorrelated with the prevalence of CEO incentive contracts. However, firms are more likely to use such contracts in areas that saw rapid SOE privatisation, irrespective of the firm's own current ownership status and irrespective of the size of the SOE sector in the late 1970s. The positive effect of privatisation is robust to various estimation techniques and model specifications. These findings suggest that domestic privatisation policies have been more influential than FDI in driving the expansion of incentive contracts in China

Trade liberalization and the gender employment gap in China

This paper investigates the impact of import liberalization induced labor demand shocks on male and female employment in China. Combining data from population and firm census waves over the period of 1990 to 2005, we relate prefecture-level employment by gender to the exposure to tariff reductions on locally imported products. Our empirical results show that increasing import competition has kept more females in the workforce, reducing an otherwise growing gender employment gap. These dynamics were present both in the local economies as a whole and among formal private industrial firms. Examining channels through which tariff reductions differentially affected males and females, we find that trade induced competitive pressures contributed to a general expansion of female intensive industries, shifts in sectoral gender segregation, reductions in gender discrimination in the labor market, technological upgrading through computerization and general income growth

Can direct union elections increase workers’ economic wellbeing in China?: testing effects and explaining mechanisms

Direct union elections, a new institutional arrangement in grassroots trade unions in China, have been introduced experimentally in coastal regions since 2000. Using matched employer–employee data, this study examines the effects of direct union elections on workers’ economic wellbeing. Results reveal that 1) union members with directly elected leaders receive higher wages than those without and 2) direct union elections are positively correlated with worker satisfaction. Additional evidences suggest that effects of direct elections work through stronger union leadership and harmonious industrial relations, resembling the voice-response face of unionism. The effect of direct elections significantly weakens or disappears when we exclude the large firms from the analysis. Meanwhile, the effect of union membership regains its significance. We argue that direct elections are a government-sponsored experiment in which large firms are selected to form an incentive-compatible framework among local governments, firms, and workers for explaining union effects with Chinese characteristics

Can direct union elections increase workers’ economic wellbeing in China?: testing effects and explaining mechanisms

Direct union elections, a new institutional arrangement in grassroots trade unions in China, have been introduced experimentally in coastal regions since 2000. Using matched employer–employee data, this study examines the effects of direct union elections on workers’ economic wellbeing. Results reveal that 1) union members with directly elected leaders receive higher wages than those without and 2) direct union elections are positively correlated with worker satisfaction. Additional evidences suggest that effects of direct elections work through stronger union leadership and harmonious industrial relations, resembling the voice-response face of unionism. The effect of direct elections significantly weakens or disappears when we exclude the large firms from the analysis. Meanwhile, the effect of union membership regains its significance. We argue that direct elections are a government-sponsored experiment in which large firms are selected to form an incentive-compatible framework among local governments, firms, and workers for explaining union effects with Chinese characteristics

China's "Great Migration": the impact of the reduction in trade policy uncertainty

We analyze the effect of China's integration into the world economy on workers in the country and show that one important channel of impact has been internal migration. Specifically, we study the changes in internal migration rates triggered by the reduction in trade policy uncertainty faced by Chinese exporters in the U.S. This reduction is characterized by plausibly exogenous variation across products, which we use to construct a local measure of treatment, at the level of a Chinese prefecture, following Bartik (1991). This allows us to estimate a difference-in-difference empirical specification based on variation across Chinese prefectures before and after 2001. We find that prefectures facing the average decline in trade policy uncertainty experienced a 24 percent increase in their internal in-migration rate - this result is driven by migrants who are “non-hukou", skilled, and in their prime working age. Finally, in those prefectures, working hours of \native" unskilled workers significantly increased, and internal migrants found employment in the places they migrated to

China's "Great Migration": the impact of the reduction in trade policy uncertainty

We analyze the effect of China's integration into the world economy on workers in the country and show that one important channel of impact has been internal migration. Specifically, we study the changes in internal migration rates triggered by the reduction in trade policy uncertainty faced by Chinese exporters in the U.S. This reduction is characterized by plausibly exogenous variation across sectors, which we use to construct a local measure of treatment, at the level of a Chinese prefecture, following Bartik (1991). This allows us to estimate a difference-in-difference empirical specification based on variation across Chinese prefectures before and after 2001. We find that prefectures facing the average decline in trade policy uncertainty experience an 18 percent increase in their internal in-migration rate this result is driven by migrants who are "non-hukou", skilled, and in their prime working age. Finally, in those prefectures, working hours of "native" unskilled workers significantly increase - while the employment rates of neither native workers nor internal migrants change