Does education promote social capital? Evidence from IV analysis and nonparametric-bound analysis

This study uses the British National Child Development Study to examine the effect of educational attainment on social capital at the individual level. Social trust and membership of voluntary groups are considered as two basic indicators of social capital. We employ the IV analysis and nonparametric bound analysis to tackle the problem of education endogeneity. Both the approaches reveal that the OLS estimator of the educational effect suffers from an upward bias in the study of group membership. We do not observe any significant bias in the educational effect on social trust. Our empirical findings indicate that education has a positive influence in promoting social trust and membership of voluntary groups.     

Does urbanization reduce rural poverty? Evidence from Vietnam

This paper uses data from household surveys to contribute to the urbanization-poverty nexus literature by assessing the effect of urbanization on income, expenditure, and poverty in rural households in Vietnam. We find that the urbanization process stimulates the transition from farm to non-farm activities in rural areas. More specifically, urbanization tends to reduce farm income and increase wages and non-farm income in rural households. This suggests that total income and consumption expenditure of rural households are more likely to increase with urbanization. Finally, we find also that urbanization helps decrease the expenditure poverty rate of rural households, albeit by a small magnitude.     

Does farmer economic organization and agricultural specialization improve rural income? Evidence from China

This paper builds simultaneous equations model based on survey data of 2445 Chinese villages to do empirical analysis of the relationship among farmer economic organization, agricultural specialization and rural income. It finds that raising the level of agricultural specialization can improve rural income significantly, and the development of farmer economic organization is an effective way to raise the level of agricultural specialization; The factors, which affect whether farmers participating in farmer economic organization, are characteristics of farmers, situation of farmer economic organization and relevant policies promoting the development of farmer economic organization. Therefore, it has great significance to agricultural specialization and rural income growth for government to take measures to promote development of farmer economic organization.     

Who benefit from government-led microfinance projects? Evidence from rural China

Drawing from a unique dataset of 2356 Chinese villages, this paper assesses the anti-poverty effect of the largest government-led microfinance project in the developing world. We find that the project can significantly increase the income level in the targeted villages. The main engine of the project lies in the expansion of access to nonfarm activities. We also highlight the importance of institutional circumstance in the effectiveness of the project. Specifically, a more democratized village with less political connection to local governments reaps more benefits from its participation.     

Does longer incarceration deter or incapacitate crime? Evidence from Truth-in-Sentencing reform

This article evaluates how Truth-in-Sentencing (TIS) laws impact both violent and property crimes through mandating violent offenders to serve a substantial proportion of sentenced terms before being eligible to release to community supervision. Focusing on states with effective TIS laws, I utilize the difference-in-differences design to investigate the treatment effect of TIS on crime. I observe statistically significant decline in both violent and property crimes in TIS states. A series of placebo tests confirm the robustness of the estimates and inferences. The dynamic impact of TIS is heterogeneous among the seven categories of violent and property crimes in TIS states: murder and robbery rates decline almost immediately after TIS, while property crime takes longer time to exhibit significant decline.     

Do community-driven development projects enhance social capital? Evidence from the Philippines

We explore the social capital impacts of a community-driven development project in the Philippines in which communities competed for block grants for infrastructure investment. The analysis uses a unique panel data set of about 2100 households, aggregated at the village-level, collected in 66 treatment and 69 comparison communities. We provide both difference-in-differences and propensity score matching estimates. We find that the project increased participation in village assemblies and the frequency with which local officials meet with residents and had a negative impact on collective action. There is also more limited evidence of a positive impact of the project on bridging (i.e., generalized) trust and of a negative impact on group membership.     

Does crime deter South Africans from self-employment?

The very high crime rate in South African cities is often argued to be the main reason for the country's small share of business ownership and self-employment. This paper revisits this hypothesis. We estimate the effect of crime on business ownership and performance using a matched dataset of census, survey and police data. In contrast to previous studies, which take into account perceived rather than actual crime and often focus on specific geographic areas, we do not find robust evidence that high crime rates have a negative impact on business ownership. Even though our estimate of the effect of crime is statistically significant and negative, it is economically small. Further, we find no evidence for a negative effect of actual crime on sales, profits and investment of informal businesses. This may imply that the low share of business ownership and self-employment in South Africa must have other reasons. These results may also suggest that crime may not be in general a serious threat for small businesses in low and middle-income countries, however, this needs further empirical research.     

Does bank shareholding impact corporate innovation? Evidence from China

Corporate innovation is an engine of economic development, while bank shareholding is the phenomenon of having a bank as a shareholder. Their relationship, however, has been underexamined. We provide the first study on the direct impact of bank shareholding on corporate innovation. Using patents granted to Chinese firms from 1999 to 2013, our findings suggest that bank shareholding significantly contributes to corporate innovation. Additional analysis suggests that easing financial constraints can facilitate the positive impacts of bank shareholding on corporate innovation. We also find that bank shareholding works better when firms have effective external monitoring and when they are nonstate-owned firms with nonstate-owned banks as shareholders. We contribute to the literature by showing that (1) despite the restrictions some countries impose on bank shareholding, allowing it could be a good economic policy for promoting corporate innovation, and (2) successful corporate innovation requires proper monitoring and incentives.     

Does an intra-household flypaper effect exist? Evidence from the educational fee reduction reform in rural China

We test for evidence of an intra-household flypaper effect by evaluating the impact of an educational fee reduction reform in rural China on different categories of household expenditure, including spending on individual children. Using pre- and post-reform data, this study exploits cohort comparisons, variation in the extent of school fee reductions across different villages, and variation in the subsidies received by children enrolled in different grades within the same family to identify the impact of the reform. The results show that educational fee reductions are matched by increased voluntary educational spending on the same children who receive the fee reductions, providing strong evidence of an intra-household flypaper effect.     

Does China really lose from RMB revaluation? Evidence from some export industries

This study attempts to examine the impacts of Real Exchange Rate (RER) misalignment on China's export performance. Using the SUR methodology coupled with disaggregate panel export data, it shows that China's export sector may not necessarily lose from the Central Government's decision to revalue its RMB against the US dollar because the negative impact of the RER appreciation on Chinese exports may be diluted by the positive impacts attributing to a reduction in the RER misalignment.     

Does simplifying divorce and marriage registration matter? Evidence from China

This article evaluates the marital consequences of easier access to divorce and marriage by exploiting a major policy change in China that simplifies both. I first use a regression discontinuity design to examine the short-run effect and find that simplified registration immediately triggered more and faster divorces and marriages. In estimating the long-run effect, I adopt a difference-in-differences strategy that further exploits cross-sectional variation in urbanization rate. Results indicate that the positive effect on marital outcomes, especially on marriage rate, persisted in the medium run for 4 years.     

Does fiscal decentralization affect local governments' strategic behaviours? Evidence from South Korea

Local governments tend to show strategic behaviours when making their spending decisions. However, few studies have examined strategic behaviours when promoting fiscal decentralization. Thus, this study empirically examines the presence of strategic interactions in expenditure decisions in South Korea as well as how fiscal decentralization affects those interactions, using a panel data set from 2010 to 2017. The results demonstrate that a local government mimics other governments' spending when those governments' residents share similar age demographics. Moreover, local governments in South Korea engage in strategic interactions as their expenditure side becomes more decentralized. However, local governments tend to demonstrate less isomorphic behaviour in welfare spending decisions when they have higher revenue decentralization. This is because local governments have no motive to emulate other welfare policies, as the central government delegates the provision of social services to local governments by providing grants with strings attached.     

Income inequality among minority farmers in China: Does social capital have a role?

We used recently available household panel data collected by China's National Bureau of Statistics to examine the effects of natural, human, material, and social capital on income inequality among minority farmers in China's Xinjiang Province between 2011 and 2012. Results obtained from panel quantile regression and correlated random effects’ models show that income inequality and the poverty of ethnic farmers have been decreasing to some extent. Results also indicated that human capital exacerbates income inequality among the minorities, whereas the effect of natural capital on income inequality is not evident. Social and material capital reduce income inequality among ethnic minorities. Results from the decomposition of the Gini coefficient indicate that material and social capital contribute to a substantial majority of the income inequality in the region.     

Does religious faith affect household financial market participation? Evidence from China

Based on the 2013 China Household Finance Survey data, this paper investigates the impact of religious faith on household financial market participation and portfolio choice. The results show that religious faith can significantly promote household financial market participation. Besides, religious faith can increase the proportion of risky assets held by households, including equities. We also find that the need for social interaction and human capital accumulation can significantly induce religious residents to participate in financial markets and hold risky assets. Overall, our results reveal how faith affects household finance activities in China.     

Does technological diversification matter for regional innovation capability? Evidence from China

This study empirically examines the relationship between technological diversification and regional innovation capability (RIC) based on 30 Chinese provinces from 2001 to 2011. Our results support the positive role of technological diversification in affecting RIC. We also investigate the moderating effects of R&D investments and openness on the diversification-innovation relationship. The results indicate that R&D investments exert a positive effect on RIC, while openness, measured as foreign direct investment, exerts a negative influence on RIC. We thus argue that the positive diversification-innovation relationship is contingent on multiple factors. Both policy and practical implications are discussed.     

Does Over-credit Stimulate Corporate Investment? Evidence from Listed Companies in China

We define and quantify for the first time over-credit at the firm level, which refers to the case in which the amount of bank credit that a firm obtains exceeds its expenditure on corporate investment for the year. Then, we explore how over-credit affects corporate investment to determine whether credit expansion in China is consistent with the principle of finance serving the real economy. The results show that over-credit promotes firm investment, and this effect was enhanced by the housing boom. However, the effect of the property market reversed after 2012, owing to China’s economic transition from a quantitative to a structural mismatch between supply and demand. Finally, we explore how over-credit affects the capacity utilization ratio and whether it has aggravated the overcapacity problem in China. The results show that over-credit reduces firms’ capacity utilization ratio. This finding indicates that excessive credit expansion has exacerbated the overcapacity problem in China.     

Does ethnic diversity decrease economic interactions? Evidence from exchange networks in rural Gambia

Using a unique dataset collected in 59 rural Gambian villages, we study how ethnic heterogeneity is related to the structure of four economic exchange networks: land, labour, inputs and credit. We find that different measures of village‐level ethnic fragmentation are mostly uncorrelated with network structure. At a more disaggregated level, household heads belonging to ethnic minorities are not less central than those from the predominant ethnicity in any of the networks and, at the dyadic level, the fact that two households share ethnicity is not an economically significant predictor of link formation. Our results indicate that, in the particular setting of our study, the structure of the exchange networks is better defined by other variables than ethnicity and that ethnic heterogeneity is unlikely to be a driver for sub‐optimal economic exchanges.     

How does anti-corruption affect firm labour inputs? Evidence from a quasi-natural experiment in China

This study investigates the impact of anti-corruption on firm labour inputs. Using the province-by-province rollout of the central inspection team campaign in China, we find that the labour intensity rises by 9% in the firms located in the provinces inspected by the central inspection teams. Moreover, firms with low corruption are more susceptible to the policy shock.     

Does government paternalistic care promote entrepreneurship in China? Evidence from the China Employer-Employee Survey

ABSTRACT

This article examines whether government paternalistic care exerts positive effects on entrepreneurship in China, and the channels through which paternalistic care affects entrepreneurship, using data from the 2015 baseline of the China Employer-Employee Survey (CEES). The data suggests that over 70% of manufacturing firms received at least one type of government paternalistic care, though the distributions are different depending on the firm’s size, ownership, industry, firm and entrepreneur’s age. The empirical analysis indicates that government paternalistic care negatively affects entrepreneurship by diminishing innovation capability. Human capital and imported intermediate goods should be the driving forces for a firm’s development, but government paternalistic care has a counterproductive effect on those two factors, thereby impeding entrepreneurship. The results show that those good intentions have gone awry. The government should gradually terminate its paternalistic policies for firms, and firms need to promote their own solid innovation capability.

Abbreviations: CEES: China Employer-Employee Survey SOE: State-owned enterprise