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

time inconsistent preferences and social security in this paper we examine the role of social security in an economy populated by overlapping generations of individuals with time inconsistent preferences who face mortality risk individual income risk and borrowing constraints we find that unfunded social security lowers the capital stock output and consumption for consumers with time consistent or time inconsistent preferences however it may raise or lower welfare depending on the strength of time inconsistency

monitoring costs in chinese agricultural teams large productivity gains have been observed in chinese agriculture following the transition from collective farming to household contracting using a model of mutual monitoring in an egalitarian production team we estimate that labor supervision absorbed about 10 20 percent of total labor time for a sample of chinese agricultural teams during 1970 76 these agency costs are lower than comparable estimates derived from aggregate data

micro and macro elasticities in a life cycle model with taxes we build a life cycle model of labor supply that incorporates changes along both the intensive and extensive margin and use it to assess the consequences of changes in tax and transfer policies on equilibrium hours of work we find that changes in taxes have large aggregate effects on hours of work moreover we find that there is no inconsistency between this result and the empirical finding of small labor elasticities for prime age workers in our model micro and macro elasticities are effectively unrelated our model is also consistent with other cross country patterns

a global assessment of human capital mobility the role of non oecd destinations discussions of high skilled mobility typically evoke migration patterns from poorer to wealthier countries which ignore movements to and between developing countries this paper presents for the first time a global overview of human capital mobility through bilateral migration stocks by gender and education in 1990 and 2000 and calculation of nuanced brain drain indicators building on newly collated data the paper uses a novel estimation procedure based on a pseudo gravity model then identifies key determinants of international migration and subsequently uses estimated parameters to impute missing data non oecd destinations account for one third of skilled migration while oecd destinations are declining in relative importance

a theory of remittances as an implicit family loan arrangement abstract the idea of an implicit and informal loan agreement between family members to explain migrants remittances is not new but its implications have not been fully explored in the theoretical literature many empirically testable propositions may be derived from this hypothesis when trying to explain why emigrants remit what the time profile of remittances is how it depends on the intent to stay on the expected length of stay and on interest rates what use people make of remittances and how the home family consumption behavior is affected by the economic prospects in the receiving country furthermore this theory yields many interesting policy prescriptions for less developed countries wishing to maximize the remittance flow from emigrants

quasi hyperbolic discounting and retirement abstract some people have self control problems regularly this paper adds endogenous retirement to laibson s quasi hyperbolic discounting savings model quarterly journal of economics 112 1997 443 477 earlier selves think that the deciding self tends to retire too early and may save less to induce later retirement still earlier selves may think the pre retirement self does this too much saving more to induce early retirement the consumption pattern may be different from that with exponential discounting other observational non equivalence includes the impact of changing mandatory retirement rules or work incentives on savings and a possibly negative marginal propensity to consume out of increased future earnings naive agents are briefly considered

dynamic consistency and regret abstract individuals often report that they regret not having saved more for retirement this fact raises concerns about the financial security of retirees and about the adequacy of traditional economic models in making predictions that are consistent with regret about having saved too little for retirement we provide an overview of four discounted utility models and examine their implications for the optimal level of retirement savings all of these models exhibit dynamically consistent decision making and some also feature backward discounting in order to generate regret about past saving decisions in our preferred parameterization with both forward and backward discounting a 66 year old at retirement will consider the optimal level of retirement savings to be almost twice as large as what was actually saved even though actual saving decisions are dynamically consistent across the entire life cycle compared to a model setting with fixed retirement adding choice over retirement timing compounds the regret that individuals experience about past saving decisions

education s role in china s structural transformation abstract we explore education s role in improving the allocation of labor between china s agricultural and nonagricultural sectors and measure the portion of china s recent growth attributable to this channel using detailed micro level data and an empirical model that allows for the endogenous selection of education and sector of employment we estimate the relationship between an individual s educational attainment sector and income we find that about 11 of aggregate growth in output per worker from 1978 to 2004 is accounted for by increased education with 9 coming through the labor reallocation channel and 2 attributable to increased within sector human capital

returns to education in china a meta analysis within labour economics returns to education is an area of focused research moreover amongst studies looking at emerging economies china is the most widely studied economy while there is a gen

the impact of china s economic reforms on agricultural productivity growth this paper presents a method for assessing the relative importance of price increases and strengthened individual incentives due to the introduction of the responsibility system for the post 1978 increase in china s agricultural productivity data on post 1978 chinese agricultural performance suggest that a little over three quarters of the measured productivity increase is due to payment system changes and the remainder to price increases we also use our method to calculate incentive indices giving an estimate of the fraction of their marginal product that peasants received under the pre 1978 regime

measuring self control problems we develop a survey instrument to measure self control problems in a sample of highly educated adults this measure relates in the manner that theory predicts to liquid wealth accumulation and personality measures yet while self control problems are typically seen as resulting in overconsumption and low wealth we identify a significant group who underconsume and thereby accumulate high levels of wealth in addition self control problems are smaller in scale for older than for younger respondents those who put money aside in retirement accounts may be delaying access to a point at which self control problems are no longer important jel d12 d14

lifetime consumption and investment retirement and constrained borrowing retirement flexibility and inability to borrow against future labor income can significantly affect optimal consumption and investment with voluntary retirement there exists an optimal wealth to wage ratio threshold for retirement and human capital correlates negatively with the stock market even when wages have zero or slightly positive market risk exposure consequently investors optimally invest more in the stock market than without retirement flexibility both consumption and portfolio choice jump at the endogenous retirement date the inability to borrow limits hedging and reduces the value of labor income the wealth to wage ratio threshold for retirement and the stock investment

the social discount rate what discount rate should be applied to social investments it is standard to use the market interest rate thereby respecting private preferences we show that application of this revealed preference criterion rests on faith not on logic it is justified only if preferences over all choices including past choices are time invariant the conditions for this to be true are stringent under more reasonable conditions policy makers should be more patient than private citizens whose choices define the most short sighted pareto optimum

winners and losers in transition returns to education experience and gender in slovenia the authors identify winners and losers in slovenia s economic transition by tracing changes in returns to education experience and gender and changes in wage inequality from 1987 to 1991 they find the following relative wages and employment rose for the most educated and fell for the least educated in all industries relative wages and employment rose with years of work experience until pensionable age at pensionable age relative wages increased very rapidly and relative employment was greatly reduced using pension policies to encourage early retirement drastically reduced the supply of very experienced workers either the policy caused firms to bid up wages for workers of pensionable age to keep them from retiring or it caused a selection process in which only the highest paid workers remained in the workforce regardless the pension policy has proved to be costly and early retirements did not make room for the youngest workers but for those just under pensionable age women gained relative to men in both wages and employment primarily because they occupy education and industry groups less adversely affected by the transition not because of economywide reductions in discrimination against women increasing returns to education and experience contributed to wage inequality but the variance in wages also increased for individuals with identical skills big changes in relative wages should signal future reallocation of labor toward more productive higher paying sectors setting minimum wages fixing ranges of pay and indexing wages to inflation did not prevent increases in wage variation from occuring wage minimums did not appear to have an effect presumably because inflation reduced real minimum wages so quickly that most workers were paid above the minimums in slovenia policy changes are reflected in labor market outcomes disabling the tax transfer policy from relatively profitable to relatively unprofitable firms and eliminating worker referendums on wage scales removed mechanisms that tended to compress wage variation greater demand for skilled workers also reflected both the economywide need to cope with uncertainty and such industry specific factors as reduced labor demand especially in less skill intensive industries the results in slovenia contrast sharply with those in eastern germany eastern german workers have had decreasing returns to education and experience but it is not clear how relevant the eastern german experience is to other transitional economies because of western germany s efforts to alleviate problems more similar to the authors findings are the results of flanagan 1993 on the czech republic which show increasing returns to education but decreasing returns to experience in some respects slovenia is atypical because it is richer and more western in orientation than other transitional economies however economies could learn from the experience in slovenia because slovenia also had social ownership full employment coupled with substantial hidden unemployment and an egalitarian wage structure and slovenia has introduced labor market reform and experienced social dislocations similar to those in other transitional european economies

human capital adaptive ability and the distributional implications of agricultural policy the ability to adapt efficiently to an economic environment that has been altered in a specific way may be a scarce resource in agriculture schultz 1 the setting that i wish to focus upon is one in which farmers face uncertainty about the future course of events production technologies prices and governmental policies and production is dynamic a large share of inputs is purchased from the nonfarm sector and a significant share of output is exported information is available on past realizations of events storing and analyzing information is costly consequently farmers are not assumed to have complete information farmers are assumed to differ in their adaptive ability which is viewed as a form of human capital and to employ efficiently the information that they acquire the thesis of this paper is that adaptive ability is unimportant when the processes generating the variables which farmers take as exogenous are stationary and unaltered however when these processes undergo structural change adaptive ability is expected to affect the quality of production marketing and investment decisions farmers who have superior adaptive skills are expected on average to make better decisions furthermore given the highly competitive nature of u s agriculture successfully adapting to structural change is selective farmers possessing poor adaptive skill can be expected to comprise a relatively large share of the persons forced by economic circumstances to seek alternative employment or retirement provided governmental intervention does not neutralize this selection process when farmers make production marketing and investment plans their decision rules can be expected to incorporate the anticipated values of uncertain variables that are exogeous to their choices the unanticipated components of these exogenous variables however may confuse them and reduce the efficiency of otherwise good plans 2 when shocks occur because of domestic or foreign macroeconomic policy u s agriculture is saddled with transmitting business cycle disturbances

motives for private transfers over the life cycle an analytical framework and evidence for peru abstract this paper tests for the motives for private income transfers we consider two motives altruism and exchange the question of private transfer motives is important because such motivation can influence the effects of public income transfers on the distribution of income using a household survey for peru we find that transfer amounts received increase with recipient pre transfer income which contradicts a key prediction of the strong form of the altruism hypothesis but is consistent with exchange we also find that capital market imperfections are likely to be an important cause of private transfers and that social security benefits crowd out the incidence of private transfers

rural reforms and agricultural growth in china this paper employs province level panel data to assess the contributions of decollectivization price adjustments and other reforms to china s agricultural growth in the reform period decollectivization is found to improve total factor productivity and to account for about half of the output growth during 1978 84 the adjustment in state procurement prices also contributed positively to output growth its impact came mainly from the responses in input use the effect of other market related reforms on productivity and output growth was very small reasons for slowdown in agricultural growth after 1984 are also analyzed copyright 1992 by american economic association

retirement pensions and ageing we study the effects of demographic shocks and changes in the pension system on the macroeconomic performance of an advanced small open economy facing a given world interest rate we construct an overlapping generations model which includes a realistic description of the mortality process individual agents choose their optimal retirement age taking into account the time and age profiles of wages taxes and the public pension system the early retirement provision in most pension systems acts as a trap inducing most workers to retire well before the normal retirement age simulations show that pension reform must be drastic for it to have any effects on the retirement behaviour of workers

education in production measuring labor quality and management production function studies have used the education of the head of the household or the average education of farm workers to assess the contribution of schooling to farm efficiency in this paper i critically examine the information content of these measures by developing a team production model which suggests separate education measures to approximate labor quality and managerial skills empirical analyses based on chinese farm household data show that the new measures are statistically superior to the existing alternatives there is evidence of centralized decision making on the farms where the highest schooling contributes the most to production efficiency

motives for private income transfers private income transfers are becoming increasingly recognized as a key aspect of the u s economy the majority of private income transfers occur inter vivos i e between living persons but very little is known about this type of transfer behavior this paper tests alternative hypotheses concerning motivation for inter vivos transfers two motives are considered altruism and exchange evidence presented here casts doubt on the altruistic model of transfer behavior observed patterns for inter vivos transfers are more consistent with exchange related motives this finding has important implications for the effects of public transfer programs on the distribution of economic well being

decreasing impatience a criterion for non stationary time preference and hyperbolic discounting despite recent interest in hyperbolic discounting there has been little discussion of exactly what property of time preferences is instantiated by hyperbolic or quasi hyperbolic functional forms the paper revives an earlier proposal in prelec 1989 that the key property is prattarrow convexity of the log of the discount function which corresponds to decreasing impatience di at the level of preferences di provides a natural criterion for assessing the severity of departure from stationarity in that greater di is equivalent to more choices of dominated options in two stage decision problems as well as greater convexity of the log of the discount function inefficient choices may arise as intentional precommitments or as unintended reversals of preference by naive agents

returns to education under collective and household farming in china abstract this paper presents a theoretical model and shows that greater distributional equality decreases individuals returns to education the evidence from a production team in 1977 and the rural household farming in 1990 both in china lends support for the model production team did not reward most members especially for those with higher work points such as the married and males education during most of their lifetimes in distributing work points and labor income however under the household farming system a household s average or highest educational level increased its net agricultural income and total efficiency labor for all households at any average highest educational and age levels thus our findings support the idea that reaping returns from schooling investments requires appropriate economic political environments

education and allocative efficiency household income growth during rural reforms in china this paper studies the contribution of schooling to rural income in china during factor market liberalization between 1986 and 1995 the relaxation of controls permitted farm households to reallocate productive inputs from agriculture to nonagricultural activities it is hypothesized that education facilitates this adjustment panel data from sichuan province suggest that schooling enhanced the ability of farmers to devote labor and capital to nonfarm production given the evidence that less than optimum levels of these inputs were allocated to nonagricultural uses during the transition the expansion of nonfarm activities contributed significantly to household income growth

consumption smoothing migration and marriage evidence from rural india a significant proportion of migration in low income countries particularly in rural areas is composed of moves by women for the purpose of marriage we seek to explain these mobility patterns by examining marital arrangements among indian households in particular we hypothesize that the marriage of daughters to locationally distant dispersed yet kinship related households is a manifestation of implicit interhousehold contractual arrangements aimed at mitigating income risks and facilitating consumption smoothing in an environment characterized by information costs and spatially covariant risks analysis of longitudinal south indian village data lends support to the hypothesis marriage cum migration contributes significantly to a reduction in the variability of household food consumption farm households afflicted with more variable profits tend to engage in longer distance marriage cum migration the hypothesized and observed marriage cum migration patterns are in dissonance with standard models of marriage or migration that are concerned primarily with search costs and static income gains

diaspora growth and aggregate remittances an inverted u relationship this paper presents a model in which remittances stem from a decision made jointly by a family coalition of multiple migrants and non migrants allowing two alternative interpretations migrants a