explaining the border effect the role of exchange rate variability shipping costs and geography this paper exploits a three dimensional panel data set of prices on 27 traded goods over 88 quarters across 96 cities in the us and japan we show that a simple average of good level real exchange rates tracks the nominal exchange rate well suggesting strong evidence of sticky prices focusing on dispersion in prices between city pairs we find that crossing the us japan border is equivalent to adding as much as 43 000 trillion miles to the cross country volatility of relative prices we turn next to economic explanations for this so called border effect and to its dynamics distance unit shipping costs and exchange rate variability collectively explain a substantial portion of the observed international market segmentation relative wage variability on the other hand has little independent impact on segmentation 2001 elsevier science b v all rights reserved

convergence to the law of one price without trade barriers or currency fluctuations using a panel of 51 prices from 48 cities in the united states we provide an upper bound estimate of the rate of convergence to purchasing power parity we find convergence rates substantially higher than typically found in cross country data we investigate some potentially serious biases induced by i i d measurement errors in the data and find our estimates to be robust to these potential biases we also present evidence that convergence occurs faster for larger price differences finally we find that rates of convergence are slower for cities farther apart however our estimates suggest that distance alone can only account for a small portion of the much slower convergence rates across national borders

effects of speculation and interest rates in a carry trade model of commodity prices abstract the paper presents and estimates a model of the prices of oil and other storable commodities a model that can be characterized as reflecting the carry trade it focuses on speculative factors here defined as the trade off between interest rates on the one hand and market participants expectations of future price changes on the other hand it goes beyond past research by bringing to bear new data sources survey data to measure expectations of future changes in commodity prices and options data to measure perceptions of risk some evidence is found of a negative effect of interest rates on the demand for inventories and thereby on commodity prices and positive effects of expected future price gains on inventory demand and thereby on today s commodity prices

the distribution of income in china preface notes on the contributors introduction k griffin z renwei part 1 the distribution of income household income and its distribution a r khan k griffin c riskin z renwei three features of the distribution of income during the transition to reform z renwei part 2 income and wealth in rural china the determinants of household income in rural china a r khan the distribution of wealth in rural china t mckinley income distribution and poverty in rural china c riskin part 3 employment and human capital workers in china s rural industries j knight s lina why urban wages differ in china j knight s lina the determinants of educational attainment j knight l shi annex the 1988 household sample survey m eichen z ming index

nonlinear dynamics in deviations from the law of one price a broad based empirical study abstract in this paper we test empirically the validity of the law of one price using data for five major bilateral us dollar exchange rates and nine goods sectors during the recent floating exchange rate regime since the early 1970s using threshold autoregressive models we find strong evidence of nonlinear mean reversion in deviations from the law of one price with plausible convergence speeds consistent with theoretical arguments on international goods markets arbitrage under transactions costs and with an emerging strand of empirical literature these results contribute towards forming a consensus view in favor of discrete regime switching in deviations from the law of one price and the presence of differing nonzero transactions costs across a broad range of goods and countries

purchasing power parity yet again evidence from spatially separated commodity markets abstract this paper examines the empirical validity of the law of one price by exploiting the non stationarity of prices set in us dollars of varieties of wheat that are traded simultaneously in the usa rotterdam and japan we demonstrate the crucial role of transport costs in achieving cointegration long run ppp although systematic short run deviations from ppp occur we show that this does not imply profitable arbitrage opportunities jel c5 f3 g1

are chinese cities too small this paper models and estimates net urban agglomeration economies for cities economic models of cities postulate an inverted u shape of real income per worker against city employment where the inverted u shifts with industrial composition across the urban hierarchy of cities this relationship has never been estimated in part because of data requirements china has the necessary data and context we find that urban agglomeration benefits are high real incomes per worker rise sharply with increases in city size from a low level they level out nearer the peak and then decline very slowly past the peak we find that a large fraction of cities in china are undersized due to nationally imposed strong migration restrictions resulting in large income losses

do the eu countries import at the same price the case of coffee the establishment of the economic and monetary union was expected to determine price convergence in the market of the european union leading to the equilibrium theorized by the law of one price this article investigates prices convergence in the coffee market among european importers coffee is not only a tradable and traded good but also one of the most valuable traded commodities we account for different qualities of coffee in a hedonic regression model which isolate and remove the effects of factors that might affect price dispersion adjusted import prices result to be significantly different between european member states and do not support the hypothesis of a deepening european market integration

labor migration and earnings differences the case of rural china this article presents empirical evidence supporting the hypothesis that the decision of chinese rural people to migrate is affected by noneconomic forces using the 1820 rural household survey from sichuan province migration behavior and earnings are analyzed logistic probability models show that the decision to migrate is driven largely by the availability of rural non farm employment opportunities however if jobs are available in the province even at lower wages rural people will choose to stay rather than to migrate the major deterrent to migration is the lack of safety during transportation and in destination cities as well as forced separation from families moreover rural migrants are denied the legal right to reside permanently in cities furthermore findings reveal that although labor productivity in migrant activities is higher than it is in local non farm sectors the economic cost of migration in china is so high as to significantly limit reallocation one implication of this study is that without artificial barriers to labor migration the number of migratory workers would be higher since the important objective of the chinese government is to control rural to urban migration it is likely that restrictive migration policies will continue however putting aside the issue of social justice the economic efficiency loss under the chinese system should not be ignored

urban biased policies and rising income inequality in china since the start of economic reforms in 1978 china has experienced the largest increase in income inequality of all countries for which comparable data are available according to the world bank 1997 china s gini coefficient increased from 28 2 in 1981 to 38 8 in 1995 based on official survey data another study that used internationally standard definitions for incomes estimated china s gini ratio at 38 2 in 1988 and 45 2 in 1995 a level that already surpassed many developing economies in asia azizur khan and carl riskin 1998 are these income inequality changes the consequence of institutional reforms that replaced egalitarian rewards with work incentives employment contracts and labor mobility this paper uses household survey data collected by china s state statistical bureau ssb to investigate the sources and causes of this rising inequality by analyzing gini ratios and generalized entropy measures i decompose the overall inequality into three sectoral components i inequality within rural areas ii inequality within urban areas and iii sectoral disparity the data indicate that increases in rural urban income differentials have been the driving factor behind the rising overall inequality in china i argue that urbanbiased policies and institutions including labor mobility restrictions welfare systems and financial policies of inflation subsidies and investment credits to the urban sector are responsible for the long term rural urban divide and the recent increases in disparity

china s uneven progress against poverty while the incidence of extreme poverty in china fell dramatically over 1980 2001 progress was uneven over time and across provinces rural areas accounted for the bulk of the gains to the poor though migration to urban areas helped the pattern of growth mattered rural economic growth was far more important to national poverty reduction than urban economic growth agriculture played a far more important role than the secondary or tertiary sources of gross domestic product gdp rising inequality within the rural sector greatly slowed poverty reduction provinces starting with relatively high inequality saw slower progress against poverty due both to lower growth and a lower growth elasticity of poverty reduction taxation of farmers and inflation hurt the poor external trade had little short term impact

rural urban disparity and sectoral labour allocation in china this study examines china s rural urban segmentation and its causes in the context of economic reforms household survey and aggregate data indicate a v shaped process in which rural urban consumption and income differentials decreased between 1978 and 1985 but then have continually increased to historically high levels this sectoral division is consistent with production function estimates based on provincial data that reveal higher labour productivity in urban state owned industries than in rural industries and agriculture to explain the v shaped change we argue that the precedent of successful rural reforms raised farmers relative earnings but the remaining obstacles to an efficient sectoral allocation of labour have prevented china from eliminating dualism recent financial policies consisting of urban price subsidies and increased investment credits have also had influential distribution effects that are biased against the rural sector

some pitfalls in testing the law of one price in commodity markets abstract several articles find no support for the lop in commodity markets a few articles find some support rejecting the lop would strike at the heart of economic theory rejection would suggest that firms do not maximize wealth and households do not maximize utility our objective is to show how four common pitfalls can cause tests of the lop to fail when in fact the lop holds all tests that fail to support the lop fall in to at least two pitfalls all of these pitfalls are the result of ignoring important practical implications of arbitrage

migration externalities in chinese cities we analyse the impact of internal migration in china on natives labour market outcomes we find evidence of a large positive correlation of the city share of migrants with natives wages using different sets of control variables and instruments suggests that the effect is causal the large total migrant impact 10 when one moves from the first to the third quartile of the migrant variable distribution arises from gains due to complementarity with natives in the production function 6 4 and from gains due to agglomeration economies 3 3 finally we find some evidence of a stronger effect for skilled natives than for unskilled as expected from theory overall our findings support large nominal wage gains that can be expected from further migration and urbanisation in china

an empirical examination of long run purchasing power parity as theory of international commodity arbitrage an empirical analysis of long run purchasing power parity ppp as a theory of international commodity arbitrage between uk and us prices and the sterling us dollar exchange rate for the period 1975 1980 is presented econometric techniques concerning the cointegration of economic time series are applied to a sample of 35 manufactured commodities which in 1977 constituted approximately a quarter of the net output of all manufacturing industry in great britain our results are extremely unfavourable to the ppp hypothesis as a stable long run proportionality between exchange rates and disaggregated prices

spatial aspects of chinese development issues outcomes and policies 1949 79 despite wide initial spatial inequalities and a respectable rate of national economic growth since 1949 available evidence suggests that certain key spatial inequalities in china have narrowed progress has been uneven however and there is no simple correlation to be found between the pursuit of maoist regional policies and the narrowing of spatial inequalities that actually occurred this points to the need to qualify the conclusion of many western scholars that maoist policies actually succeeded in achieving rapid sustainable growth while narrowing most differentials including spatial differentials

on the internal contradictions of the law of one price as stated originally the venerable law of one price succinctly describes long run equilibrium in a perfectly competitive market the law was later amended defining a market as the geographic area within which the same thing sells for the same price at the same time allowance being made for transportation costs modified in that way the law has two plausible interpretations by one interpretation every production site is a market by the other prices in fact do not differ by transportation costs the transportation cost amendment thus introduces internal contradictions that render the revised law of one price either useless or wrong jel d40 l10 a market according to the masters is the area within which the price of a commodity tends to uniformity allowance being made for transportation costs that is two places are in the same market for a good if the prices at the two places differ by transportation costs stigler 1987 77 economic terms seem to pass in their historical development through a series of stages which without pretension to rigidness may be described as follows first no definition is given but it is assumed that every one has a sufficiently clear idea of the subject to make a formal definition unnecessary second a definition is attempted and a number of exceptional forms are noted third with the further increase of data the relative importance of the various forms changes confusion in discussion is introduced logomachy takes the place of constructive investigation fourth a complete classification of the forms embraced under the original term is made and problems are investigated with reference to these classes the bewildering vagueness of economic theory is largely due to the fact that the terms used are in all of these stages of development moore 1906 211 i introduction delineating the boundaries of markets engaged economists attention early on many product attributes are important to consumers but price is an objectively measurable margin along which rivalry is sharply engaged market prices transmit information about changing demand and supply conditions to buyers and sellers and widening price cost margins signal profit opportunities to which alert entrepreneurs respond price consequently has held center stage in economists attempts to define markets augustin cournot 1927 51 for instance wrote that a market is the entire territory of which the parts are so united by the relations of unrestricted commerce that prices take the same level throughout with ease and rapidity alfred marshall 1930 325 supplied a similar definition in his celebrated declaration that the more nearly perfect a market is the stronger is the tendency for the same price to be paid for the same thing at the same time in all parts of the market more recently joseph stiglitz 1993 19 summarized what he called the law of the single price stating that under this law there is a uniform price in the market and price differences are quickly eliminated by arbitrage 1 marshall 1930 325 introduced an important qualification however when he observed that but of course if the market is large allowance must be made for the expense of delivering the goods to different purchasers each of whom must be supposed to pay in addition to the market price a special charge on account of delivery that qualification subsequently found its way into stigler s price theory textbook quoted in the epigraph intentionally or not the law of one price was thereby converted into a law of different prices other economists subsequently added transaction costs and information costs to the list of caveats culminating in a multiplicity of prices nevertheless claimed to be consistent with the law of one price economics has few laws

the law of one price in international commodity markets a reformulation and some formal tests abstract we report formal tests of whether the law of one price lop holds in the long and in the short run for commodities traded in orgnized markets we formalize the distinction between short and long run by introducing lagged price adjustments also we introduce expectations explicitly tests support the long run lop but they reject the short rn lop the long run lop holds better for future prices than for spot prices on average 90 per cent of the deviation from lop is eliminated within 10 weeks but this ranges from 1 to 120 weeks

the impact of migration on rural poverty and inequality a case study in china large numbers of agricultural labor moved from the countryside to cities after the economic reforms in china migration and remittances play an important role in transforming the structure of rural household income this article examines the impact of rural to urban migration on rural poverty and inequality in a mountainous area of hubei province using the data of a 2002 household survey since migration income is a potential substitute for farm income we present counterfactual scenarios of what rural income poverty and inequality would have been in the absence of migration our results show that by providing alternatives to households with lower marginal labor productivity in agriculture migration leads to an increase in rural income in contrast to many studies that suggest that the increasing share of nonfarm income in total income widens inequality this article offers support for the hypothesis that migration tends to have egalitarian effects on rural income for three reasons 1 migration is rational self selection farmers with higher expected return in agricultural activities and or in local nonfarm activities choose to remain in the countryside while those with higher expected return in urban nonfarm sectors migrate 2 households facing binding constraints of land supply are more likely to migrate 3 poorer households benefit disproportionately from migration

the law of one price in scandinavian duty free stores many empirical studies have rejected the law of one price that prices of a good differ across locations has been explained by differences in product attributes and costs of local inputs transport costs trade barriers and that buyers have imperfect information about prices in different locations see penelopi k goldberg and michael m knetter 1997 for a survey we examine the law of one price in situations where none of the mentioned reasons for its failure can be invoked it has also been suggested that deviations from the law of one price are a consequence of rigid nominal prices and that different countries typically have different currencies we explore whether this can contribute to our understanding of deviations from the law of one price our data are taken from three scandinavian duty free outlets where each product at the same location has price tags in at least two currencies hence a consumer has the option to choose between several prices for the same identical good in such a setting there is a strong prior that the law of one price lop hereafter holds well however the potential for arbitrage will arise because nominal prices are not continuously adjusted while exchange rates fluctuate daily based on standard tests we reject lop at all duty free outlets given that lop does not hold here it is less surprising that many previous studies have found that prices of similar products at different locations differ significantly nevertheless the main conclusion of the paper is that in this natural experiment lop remains a useful guide to the behavior of relative prices as deviations become large nominal prices are adjusted to reduce the deviations from lop thereby limiting arbitrage opportunities the patterns at the duty free outlets suggest that there is a band of inaction so that small deviations from lop may persist for almost a decade in one case but that large deviations quickly lead firms to adjust relative prices the findings are consistent with costly arbitrage and fixed costs of adjusting nominal prices

unequal migration and urbanisation gains in china abstract we assess the role of internal migration and urbanisation in china on the nominal earnings of three groups of workers rural migrants low skilled natives and high skilled natives we estimate the impact of many city and city industry characteristics that shape agglomeration economies as well as migrant and human capital externalities and substitution effects we also account for spatial sorting and reverse causality location matters for individual earnings but urban gains are unequally distributed high skilled natives enjoy large gains from agglomeration and migrants at the city level both conclusions also hold to a lesser extent for low skilled natives who are only marginally negatively affected by migrants within their industry by contrast rural migrants slightly lose from migrants within their industry while otherwise gaining from migration and agglomeration although less than natives the different returns from migration and urbanisation are responsible for a large share of wage disparities in china

spatial wage disparities sorting matters spatial wage disparities can result from spatial differences in the skill composition of the workforce in non human endowments and in local interactions to distinguish between these explanations we estimate a model of wage determination across local labour markets using a very large panel of french workers we control for worker characteristics worker fixed effects industry fixed effects and the characteristics of the local labour market our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills interaction effects are mostly driven by the local density of employment not controlling for worker heterogeneity leads to very biased estimates of interaction effects endowments only appear to play a small role

ignorance in a multi agent setting abstract i extend the demski and sappington 1984 model to the case where the agents are with some exogenous probability ignorant i show that an ignorant agent either is not exposed to risk or he receives a lower transfer when the other agent is the informed type the principal wants to discourage choosing the contract designed for an ignorant agent

the law of one price revisited new evidence on the behavior of international prices i introduction the law of one price asserts that prices of identical goods should be equalized internationally when expressed in a common currency and adjusted for any contract differences transportation costs and trade distortions the intuition is that international arbitrage should work to eliminate any persistent price discrepancies due solely to differences in the country of origin or sale of goods thus stated the law of one price is frequently assumed to hold in theoretical and empirical models of international trade yet based on evidence from the 1950s 1960s and early 1970s the proposition does not appear to characterize the actual price behavior of many traded goods the evidence further indicates that deviations from absolute price equalization are often both large and protracted even during periods of comparative exchange rate stability 1 the relative version of the law of one price posits that rates of change in prices will be equalized meaning that exchange rate adjusted inflation rates should be the same for similar traded goods empirical support for this alternative has also been lacking 2 as isard 1977b indicates this evidence calls into question any appeal to microfoundations as a basis for macroeconomic price convergence in the form of purchasing power parity ppp it also casts doubt on the role of price linkages in both international market integration and the transmission of economic disturbances across national borders the prevailing view on international price equalization derives from evidence and analyses which are dated and need not apply to current economic conditions most published studies involve data from fixed rate periods very early episodes of floating rates or the first years of the present flexible rate system an analysis based on more contemporary data is warranted in view of the substantial exchange rate movements and the perceived increase in international integration that have occurred since these earlier studies 3 in addition a fresh look at the evidence can make use of both the longer time series data and new time series techniques that are now available accordingly this study updates the microeconomic evidence on international price equalization while investigating the existence and nature of the long run relationship between traded goods prices it analyzes the behavior of u s export prices relative to japanese and german dollar export prices for carefully matched identically weighted categories of manufactured goods over the current floating rate period stationarity and cointegration tests are used to assess the time series properties of these relative export prices and to determine the extent to which the common currency prices of similar exports are related internationally in the long run while these methods have been used in analyses of purchasing power parity they have not been extended to studies of traded goods prices at the microeconomic level ii data description this study is based on a set of quarterly relative dollar export price indexes constructed by the bureau of labor statistics bls the data represent ratios of u s export prices to german or japanese export prices expressed in dollars for highly comparable product groups conceptually the series measure the average price of a particular set of u s exports to all foreign markets relative to a dollar price index for a similar set of exports from germany or japan the indexes are weighted averages of transactions contract prices of individual exports reported on an f o b free on board or f a s free along side ship basis for the final month of each quarter and adjusted for quality changes the categories are fairly disaggregated e g valves trucks over 2000cc so that the comparison is between relatively narrow product categories two additional features in the bls s design of the series ensure a high degree of comparability between the pairs of export categories

understanding the city size wage gap in 2000 wages of full time full year workers were more than 30 percent higher in metropolitan areas of over 1 5 million people than rural areas the monotonic relationship between wages and city size is robust to controls for age schooling and labor market experience in this paper we decompose the city size wage gap into various components we propose an on the job search model that incorporates latent ability search frictions firm worker match quality human capital accumulation and endogenous migration between large medium and small cities counterfactual simulations of the model indicate that variation in returns to experience and differences in wage intercepts across location type are the most important mechanisms contributing to the overall city size wage premium steeper returns to experience in larger cities is more important for college graduates while differences in wage intercepts is more important for high school graduates sorting on unobserved ability within education group and differences in labor market search frictions and distributions of firm worker match quality contribute little or slightly negatively to observed city size wage premia in both samples

income inequality in the people s republic of china trends determinants and proposed remedies the issue of income inequality in the people s republic of china prc has attracted world wide attention leading to a sizable literature this paper attempts to provide a nonexhaustive literature review of the prc s inequality trends and determinants and suggested government interventions it discusses profiles of income inequality along three dimensions interhousehold disparity regional divides and urban rural gaps this is followed by an exploration of the driving forces behind rising inequality including the notorious hukou system policy biases location or geographic factors globalization and education finally the paper summarizes and proposes government interventions for containing or reducing income inequality in the prc important areas for future research are also suggested in the final section of the paper

production externalities and two way distortion in principal multi agent problems this paper studies an otherwise standard principal agent problem with hidden information but where there are positive production externalities between agents the output of any agent depends positively on the effort expended by other agents it is shown that the optimal contract for the principal exhibits two way distortion the effort of any agent is oversupplied relative to the first best when his marginal cost of effort is low and undersupplied taken his marginal cost of effort is high this pattern of distortion cannot otherwise arise in optimal single or multi agent incentive contracts unless there are countervailing incentives however unlike the countervailing incentives case the pattern of distortion we find is robust to the precise form of the externality journal of economic literature classification numbers d21 d28 c 2000 academic press

what is different about urbanization in rich and poor countries cities in brazil china india and the united states abstract are the well known facts about urbanization in the united states also true for the developing world we compare american metropolitan areas with analogous geographic units in brazil china and india both gibrat s law and zipf s law seem to hold as well in brazil as in the u s but china and india look quite different in brazil and china the implications of the spatial equilibrium hypothesis the central organizing idea of urban economics are not rejected the india data however repeatedly rejects tests inspired by the spatial equilibrium assumption one hypothesis is that spatial equilibrium only emerges with economic development as markets replace social relationships and as human capital spreads more widely in all four countries there is strong evidence of agglomeration economies and human capital externalities the correlation between density and earnings is stronger in both china and india than in the u s strongest in china in india the gap between urban and rural wages is huge but the correlation between city size and earnings is more modest the cross sectional relationship between area level skills and both earnings and area level growth are also stronger in the developing world than in the u s the forces that drive urban success seem similar in the rich and poor world even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop

income inequalities in china evidence from household survey data on the basis of a household data set this paper compares household income inequality in urban and rural china decomposes inequality into intra and interprovincial components and analyzes the contribution of various income sources to total income equality the main findings of the paper are first that unlike in most developing economies income inequality in urban areas is lower than in rural areas second nationwide income inequality is due mostly to intraprovincial inequality third components of income associated with economic reforms are more unequally distributed than the rest

the law of one price in 1901 i introduction the law of one price states that absent search information costs a particular good is sold at the same price by all sellers in the same market as first pointed out by stigler 1961 however search costs can cause an equilibrium characterized by price dispersion it is no longer optimum for consumers to search until the lowest price is found as stigler observes price dispersion is a manifestation and indeed it is the measure of ignorance in the market p 214 various studies over the past four decades report evidence that price dispersion is ubiquitous and that its magnitude is affected by the costs and benefits of search for example relative dispersion the coefficient of variation is less for more expensive and frequently purchased goods where the benefits of search are greater some recent works have examined the issue in the context of internet markets e g automobiles books and cds testing the presumption that lower online search costs lead to lower price dispersion and also price levels perhaps surprisingly these studies find that dispersion in internet markets differs little from their conventional counterparts 1 the present study extends the record on price dispersion in local markets back more than a half century before the earliest modern studies circa 1960 2 this is possible because of a unique u s government survey conducted and published in 1901 the survey yields retail prices of four products at more than 1500 stores nationwide three of these are still sold today allowing comparisons based on modern survey data the intervening century saw the introduction of search cost reducing technology at least as dramatic as the internet in both transportation e g the automobile and communication e g telephone radio and television 3 also the general migration of people from the farm to cities during the early twentieth century produced a broadening of markets although not as dramatic as that created by the internet was price dispersion in 1901 more than that observed today the answer is that if anything dispersion was less in 1901 the article is organized as follows section i describes the data used in the present study section ii reports price dispersion for the four 1901 products section iii presents the modern data and makes comparisons section iv provides a summary and conclusions ii the 1901 survey in 1901 the u s industrial commission usic conducted an investigation of the local differences in prices of articles produced by certain industrial combinations usic 1901 773 the motivating concern was what is today called predatory pricing which was alleged to occur in local or regional geographic markets 4 the investigation consisted of a national survey to gather information on the prices of certain products the usic sent questionnaires to 5 000 retail dealers from whom 1 578 replies were received representing every state in the union at that time 773 74 six products were included illuminating oil kerosene granulated sugar three grades of salt and royal baking powder a specific brand the usic stated that these were chosen primarily because of the fairly uniform quality of the product which it was believed would make it possible to compare accurately the prices in different localities 773 individual dealer responses anonymous for four of these products excluding two salt grades were published in tabular form by state and city and constitute the data source for the present study 5 the issue at hand is price dispersion in a given local market the usic identifies dealers by their city of residence only and so that is the basis for market definition 6 to measure dispersion deviations from the mean there must be at least two dealers per city the first column of table 1 summarizes the number of cities markets with multiple dealers by product

urban income inequality in china revisited 1988 2002 abstract using newly available spatial price deflators this paper shows that inequality evaluations in the literature overstate the magnitude of inequality and inequality changes in china as well as the role played by regional differences in the recent inequality rise

urban rural gap and poverty traps in china a prefecture level analysis urban rural gap and regional inequality are long standing problems in china and result in considerable number of studies this article examines the dynamic behaviours of incomes for both urban and

pension reform in china challenges and opportunities china s current segmented pension system features regional imbalance fiscal inefficiency social inequality and economic unsustainability it is a result of three decade evolution guided by vague long term objectives constrained by economic and political circumstances and swayed by interest group infighting expecting rapid population ageing and economic transformation china aims to establish a national pension system that provides wide coverage basic security multi level options and sustainability by 2020 the paper reviews the history of china s pension system examines proposed reform options and discusses the challenges and opportunities faced by the reform

does the law of one price really hold for commodity prices in spite of the empirical failure of the law of one price it is usually assumed that commodity prices are perfectly arbitraged at least in the long run this paper argues that this assumption is counterfactual and that much of the empirical evidence provided to support it is flawed and affected by econometric shortcomings spurious regressions nonstationarity in the data inappropriate use of first differences an alternative methodology co integration by which a long run relationship between nonstationary series can be tested is proposed tests of nonstationarity and co integration for a group of commodities show quite uniformly that the law of one price as a long run relationship fails and that deviations from the pattern are permanent

a simpler mechanism that stops agents from cheating abstract this note considers a principal multi agent model of a firm subject to adverse selection with just the usual optimal incentive constrained contracts being offered there exist multiple bayes nash equilibria in the agents subgame moreover from the agents perspective there exists an equilibrium that pareto dominates the equilibrium desired by the principal by exploiting the structure of the model this note develops a new approach for eliminating unwanted equilibria while retaining the desired equilibrium the approach when compared to existing approaches employs a simpler mechanism one with a smaller message space and makes weaker assumptions about the agents behavior journal of economic literature classification numbers c72 d82

interprovincial disparities in china output and consumption 1952 1987 the flood of economic information from china in recent years has permitted reassessment of the chinese model of development and the extent to which china s own development experience has conformed to it the prevailing consensus of the 1970s concerning the substance of the model itself typically characterized in terms of the chinese leadership s objectives and priorities and its strategy for pursuing them has stood up quite well the same cannot be said about past appraisals of the extent to which china s economic reality has been reshaped to accord with the model s prescriptions one of the most widely remarked elements of the chinese model is the high priority assigned to regional objectives and more specifically to balance in the distribution of productive capacity and equity in the distribution of income and hence consumption during the maoist era i e prior to 1979 the central government pursued regional objectives through such measures as interregional transfers of investment resources effected via the planning system subsidization of health and education expenditures in poor regions and attempts to maintain a safety net of state relief effected largely via control of grain surpluses in short there is little doubt that prior to 1979 the chinese leadership placed an unusually high value on the spread of modern growth and the improvements in welfare associated with it and persistently acted to limit the emergence or widening of interregional disparities although china s post mao leaders have shown greater concern with efficiency and with the potential trade offs between efficiency and such goals as balance and equity their continuation of many redistributive policies indicates that they have not abandoned regional objectives but how successful has china been in achieving these objectives

a numerical simulation analysis of hukou labour mobility restrictions in china abstract we use numerical simulation methods to analyze the hukou system of permanent registration in china which many believe has supported growing relative inequality over the last 20 years by restraining labour migration both between the countryside and urban areas and between regions and cities our aim is to inject economic modelling into the debate on sources of inequality in china which thus far has been largely statistical we first use a model with homogeneous labour in which wage inequality across various geographical divides in china is supported solely by quantity based migration restrictions urban rural areas rich poor regions eastern central and western non coastal zones eastern and central western development zones eastern central western zones more disaggregated 6 regional classifications and an all 31 provincial classification we calibrate this model to base case data and when we remove migration restrictions all wage and most income inequality disappears results from this model structure points to a significant role for hukou restrictions in supporting inequality in china we then present a further model extension in which urban house price rises retard rural urban migration the impacts of removing hukou restrictions on migration are smaller but are still significant finally we modify the model to capture labour productivity differences across regions calibrating the modified model to estimates of both national and regional gini coefficients removal of migration barriers is again inequality improving but less so