A numerical simulation analysis of (Hukou) labour mobility restrictions in China

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.     

How much could be saved in Chinese hospitals in procurement of anti-hypertensives and anti-diabetics?

Background: Efficient use of government funding has been increasingly relevant for the success and sustainability of ongoing health-system reform in China; however, as there is no generic substitution policy, patients and basic health-insurance programs pay more for public-preferred brand originators. Such phenomenon is especially typical in public hospitals. The objective of this study is to estimate the potential cost savings in procurement by Chinese public hospitals when switching from brand originators of anti-hypertensive and anti-diabetic medications to their generic equivalents between 2012–2014.

Method: IMS Health volume and value consumption data (IMS China Hospitals Audit system 2012–2014) were used, which covered all Chinese hospitals with 100 beds and above. The top 60% IMS volume consumption of respective anti-hypertensive and anti-diabetic medication with unique dosage form and strength were included. The potential cost savings were calculated from a switch of brand originators with their generic equivalents on the Chinese and international market. An independent sample t-test was conducted to compare the difference of proportion of cost savings in value between the Chinese and international market.

Results: An average of 44% (US$44 million) and 87% (US$90 million) and a total of US$1.4 and 2.8 billion (2014?US$) could be saved from a switch from originator brand anti-hypertensives and anti-diabetics to domestically and internationally available generic equivalents, respectively. The differences of cost savings (in proportion) between domestic and international market were statistically significant (α?=?0.005, p?=?0.003, p?=?0.002, p?=?0.000).

Conclusion: Expensive brand originators dominated the anti-hypertensive and anti-diabetic market in Chinese hospitals between 2012–2014. Preference of brand originators wastes a huge amount of health resources in China and these limited resources could have been used more efficiently. As one of the world’s key generic suppliers, if China wants to use its health resource more efficiently on medicines, comprehensive measures are needed to address both demand-side (consumers’ low trust in the quality of local generics) and supply-side barriers (health professionals’ preference of brand originators).     

Will China’s population aging be a threat to its future consumption?

ABSTRACT

Based on the household level survey data, the paper makes a projection on China’s household consumption in 2049 with reasonable assumptions of disposable income, demographic structure, urbanization rate and total population in 2049. The results show that at annual income growth rates of 3%, 4% and 5%, China’s total household consumption in 2049 will be 71.0, 97.8 and 133.8 trillion CNY, respectively, 3.1~5.8 times of the total household consumption in 2015. Moreover, our projection shows that even excluding the income growth effect, the future consumption increased by rapid urbanization is much larger than the consumption depressed by the demographic change. The result highlights that as long as the Chinese government can successfully eliminate institutional constraints imposed on rural-urban migration, such as Hukou system or residency permits in the urban areas, population aging would not be a major threat to its future development.     

A Humean theory of choice of which rationality may be one consequence

For the reader who considers economic theory of choice as a special case of a more general theory of action, Hume's discussion of the determinants of action in the Treatise of Human Nature (1739?–?40), in the Enquiry on Human Understanding (1748) and in the Dissertation on Passions (1757) deserves attention. However, according to some modern commentators, Hume does not seem to have given any evidence that would favour what nowadays we would consider as the kind of rationality involved in modern theories of rational choice. On the contrary, this paper arrives at the conclusion that consistency between preferences and choice, like the usual properties of completeness and transitivity, may be considered as outcomes of a mental process, described by means of a decision algorithm that aims to represent Hume's theory of choice.     

A Monte Carlo simulation estimating US hospital cost reductions associated with hypotension control in septic ICU patients

Objective: This economic analysis extends upon a recent epidemiological study to estimate the association between hypotension control and hospital costs for septic patients in US intensive care units (ICUs).

Methods: A Monte Carlo simulation decision analytic model was developed that accounted for the probability of complications—acute kidney injury and mortality—in septic ICU patients and the cost of each health outcome from the hospital perspective. Probabilities of complications were calculated based on observational data from 110?US hospitals for septic ICU patients (n?=?8,782) with various levels of hypotension exposure as measured by mean arterial pressure (MAP, units: mmHg). Costs for acute kidney injury (AKI) and mortality were derived from published literature. Each simulation calculated mean hospital cost reduction and 95% confidence intervals based on 10,000 trials.

Results: In the base-case analysis hospital costs for a hypothetical “control” cohort (MAP of 65?mmHg) were $699 less per hospitalization (95% CI: $342–$1,116) relative to a “case” cohort (MAP of 60?mmHg). In the most extreme case considered (45?mmHg vs 65?mmHg), the associated cost reduction was $4,450 (95% CI: $2,020–$7,581). More than 99% of the simulated trials resulted in cost reductions. A conservative institution-level analysis for a hypothetical hospital (which assumes no benefit for increasing MAP above 65?mmHg) estimated a cost decline of $417 for a 5?mmHg increase in MAP per ICU septic patient. These results are applicable to the US only.

Conclusions: Hypotension control (via MAP increases) for patients with sepsis in the ICU is associated with lower hospitalization cost.     

UNITED STATES-CHINA TRADE AT THE COMMODITY LEVEL AND THE YUAN-DOLLAR EXCHANGE RATE

In 1978 when China began her economic reforms of moving toward a free market economy and trade liberalization, the trade balance between China and the United States was in favor of the United States in the magnitude of 600 million dollars. Over the 1978–2002 period, however, it has changed in favor of China such that in 2002 China had a surplus of 120 billion dollars against the United States. Over the same period, the Chinese yuan has depreciated almost fourfold. Is real depreciation of the yuan against the dollar a factor in the trade between the two countries? In this article, we employ data at the industry level (88 two‐ and three‐digit industries) and recent advances in error‐correction modeling to show that indeed the real yuan‐dollar rate has played a significant role. This contradicts most previous research that used trade data at the aggregate level. (JEL F31, F32, F14)     

Are children an incentive or a disincentive for migration? Evidence from Vietnam

This study analyzes the influence of children on household migration decisions using data on current internal movement in Vietnam a country that has experienced significant rural–urban migration in the recent years. Families with children usually have three migration choices: move together, stay together or send only one parent to work afar. Using an instrumental variable approach, we show that having an additional child reduces the probability of household migration by 0.0115, while it increases the likelihood of fathers’ migration by 0.0121. These effects suggest that households with more children may be less mobile but may have a greater economic need for migration.     

PUBLIC ENTERPRISE IN THE MODERN WESTERN WORLD: AN HISTORICAL ANALYSIS

ABSTRACT: The aim of this article is to explain the pattern of public enterprise in Western Europe, Japan and the USA in the late 20th century, just before the onset of privatization. This requires an examination of the origins which date from the early 19th century. A common misconception is that public enterprise was a device for overcoming problems of natural monopoly and/or a socialist instrument for mitigating worker exploitation. It is argued that the former was mainly dealt with by arms’ length regulation and that socialist forces were limited. Public enterprise was common in grid networks everywhere and, in manufacturing, more common in Germany, Spain, Italy than elsewhere. Why also were the USA and UK (up to 1939) different and what does the privatization experience tell us about public enterprise? The answer is that public enterprise was often an instrument for promoting social and political unification, securing national defence and related strategic considerations, increasingly in the 20th century for promoting economic growth, with regulatory failures and socialist pressures playing a more subsidiary and/or occasional role.     

The impact of rheumatoid arthritis on the burden of disease in urban China

Abstract

Objectives:

The aim of this study is to assess the burden of disease associated with the impact of rheumatoid arthritis in urban China. Burden of disease is considered from four perspectives: (i) health-related quality-of-life (HRQoL); (ii) health status; (iii) employment status; and (iv) absenteeism and presenteeism.

Methods:

Data are from the 2009 National Health and Wellness Survey (NHWS) of urban China. This is an internet-based survey and details the health experience of 13,007 respondents. The survey is representative of the urban China population at 18 years of age and over (18.1% of the total population). Of those responding to the survey, a total of 353 reported that they had been diagnosed with rheumatoid arthritis – an unweighted estimate of 2.65%. The sample design allows a comparison of those reporting rheumatoid arthritis with those not reporting this disease and, hence, a quantitative assessment of the burden of disease. Estimates of the quantitative impact of the presence of rheumatoid arthritis are through a series of generalized linear regression models. HRQoL is evaluated through the SF-12 instrument together with responses to the first item of the SF-12, self-reported health status. The SF-12 instrument generates three measures of HRQoL: the physical component summary (PCS), the mental component summary (MCS) and SF-6D utilities. Health status is captured as a self-report on a 5-point scale. Employment status is considered in terms of self-reported labor force participation, while absenteeism and presenteeism are estimated from the Work Productivity Activity Index (WPAI). Apart from a binary variable capturing the presence or absence of rheumatoid arthritis, control variables were included to capture the impact of other potential determinants of HRQoL and health status.

Results:

The presence of rheumatoid arthritis in urban China has a significant deficit impact on HRQoL as measured by the PCS and MCS components of the SF-12, SF-6D absolute utilities and on self-assessed health status. In the case of PCS, the deficit impact of rheumatoid arthritis is ?2.289 (95%CI: ?3.042 to ?1.536); for MCS ?1.472 (95%CI: ?2.338 to ?0.605) and for utilities ?0.025 (95% CI: ?0.036 to ?0.014). In the case of health status the odds ratio for the presence of rheumatoid arthritis is 1.275 (95%CI 1.031–1.576). The presence of rheumatoid arthritis has a marked negative effect, just under 8%, on the likelihood of workforce participation. Finally, the presence of rheumatoid arthritis is associated with an increased likelihood of absenteeism and presenteeism.

Limitations:

The NHWS survey has a number of limitations. As the NHWS is an internet-based survey, biases may be present due to the lack of internet penetration in the urban China population. The extent to which individuals and households have internet access is unknown. In addition, the NHWS relies upon respondents reporting they have been diagnosed with one or more specific disease states. These are not, given the nature of the survey, clinically verified. This also introduces a degree of uncertainty. Care should be taken in uncritically generalizing these results to the wider China population.

Conclusions:

The burden of disease associated with self-reported, diagnosed rheumatoid arthritis in urban China is substantial. Utilizing a series of multivariate models, substantial deficits are associated not only in reported HRQoL and health status but also in respect of employment status and, for those in employment, rates of absenteeism and presenteeism.     

Error cascades in observational learning: An experiment on the Chinos game

The paper reports an experimental study based on a variant of the popular Chinos game, which is used as a simple but paradigmatic instance of observational learning. There are three players, arranged in sequence,each of which wins a fixed price if she manages to guess the total number of coins lying in everybody?s hands. Our evidence shows that, despite the remarkable frequency of equilibrium outcomes, deviations from optimal play are also significant. And when such deviations occur, we find that, for any given player position, the probability of a mistake is increasing in the probability of a mistake of her predecessors. This is what we call an error cascade, which we measure by evaluating the (heterogeneous) Quantal Response Equilibrium which better suits our data. We also check the robustness of our findings when we allow for belief heterogeneity by applying Kübler and Weizsäcker?s (2004) cognitive frame of limited depth of reasoning.     

MIGRATION, UNEMPLOYMENT, AND WAGES: THE CASE OF THE CALIFORNIA SAN JOAQUIN VALLEY

The California San Joaquin Valley labor market appears to be at odds with basic economic principles in the sense that despite higher unemployment rates and lower wages, it has continually attracted an influx of in‐migrants, domestic and international. By examining county‐level data for the last two decades, the analysis in this paper is built around two main questions. First, in what proportion does local employment growth reduce local unemployment, increase labor force participation and attract outsiders who will likely take the newly created jobs? Second, to what extent regional migration rates respond to regional relative wages and unemployment differentials? Both questions aim to gain a better understanding of the San Joanquin Valley labor market and the migrants’ decisions to move there, which might shed light in the design and implementation of development policies aimed at reducing unemployment. Results provide evidence that market forces alone are insufficient to correct regional unemployment disparities. Three main findings are offered. First, in‐migrants workers fill most of the newly created jobs. Second, migration seems unresponsive to the unemployment level but responsive to changes in farm income. Third, migration is sensitive to government‐based benefits, property crime rates and housing prices. (JEL R11, R23, R58)     

You Don't Always Get What You Pay For: Bonuses,Perceived Income and Effort

Abstract. Consider a principal–agent relationship in which more effort by the agent raises the likelihood of success. This paper provides conditions such that no success bonus induces the agent to exert more effort and the optimal contract is independent of success. Moreover, success bonuses may even reduce effort and thus the probability of success. The reason is that bonuses increase the perceived income of the agent and can hence reduce his willingness to exert effort. This perceived income effect has to be weighed against the incentive effect of the bonus. The tradeoff is determined by the marginal effect of effort on the success probability in relation to this probability itself (success hazard‐rate of effort). The paper also discusses practical implications of the finding.     

DETERMINANTS AND EFFECTS ON PROPERTY VALUES OF PARTICIPATION IN VOLUNTARY CLEANUP PROGRAMS: THE CASE OF COLORADO

State voluntary cleanup programs (VCPs) were established in the 1990s to encourage cleanup and redevelopment of contaminated properties. I ask three questions: First, what properties are attracted to VCPs? Second, is there an interaction between VCP incentives and enterprise or brownfield zone incentives? Third, does participation in VCPs affect property values? Data from Colorado’s VCP suggest that (a) the main determinants of participation are the size of the parcel and the surrounding land use, (b) other incentives have little effect, (c) properties with confirmed contamination sell at a 43%–56% discount, and (d) participation does tend to raise the property price. (JEL R14, Q58, K32)     

Migration,self‐selection and income distributions

Self‐selection in rural–urban migration is examined using three datasets from rural and urban China in 2002. We construct a migrant sample including both migrants who converted their hukou status from rural to urban (permanent migrants) and those who did not (temporary migrants). We find a strong positive selection for permanent migrants, but the selection for temporary migrants is ambiguous. We reach these conclusions by comparing migrants' counterfactual wage densities, assuming they are paid as rural local workers, to actual wage densities of rural local workers. Our results imply that permanent migration has negative effects on rural human capital accumulation and income levels.     

PPPs in China: Does the Growth in Chinese PPPs Signal a Liberalising Economy?

ABSTRACT

This study provides insight into the nature of public-private partnerships (PPPs) in China, a country that has invested more in PPPs than any other over the last two decades. It is puzzling that China, as a state-led economy, has turned to embrace PPPs. Pundits have taken this as evidence of a liberalising Chinese economy. However, our findings suggest that PPPs in China do not reflect a break from earlier, state-centric modes of governance; rather, the state essentially uses such partnerships as a mechanism to strengthen its own hand. We argue that the difference between how PPPs are being implemented in China compared to the West reflects differences in political economic contexts, both materially and ideologically. In both cases, the ambiguity surrounding the PPP model has been used to advance particular interests, serving as a reminder of both the ways in which power shapes the character of such policy tools and the differences in the relative power underpinning state-market relations in each context. By challenging mainstream interpretations of what PPPs are and what their proliferation means, studying the political economy of PPPs in a rising China further exposes the Western-centric nature of prevailing wisdom in political economy scholarship.     

A cross-cultural study of guanxi and auditor independence in two economies: evidence from China and the United States

This study examines the impact of guanxi on auditor independence in China and the U.S. Using panel data from 2012–2015 surveys, fixed-effects regression models are used to analyse survey data with observations drawn from a total of 1076 Big 4 and 1044 non-Big 4 auditor-years for Chinese auditors, and 1168 Big 4 and 1140 non-Big 4 auditor-years for the U.S. auditors. The results indicate that ‘guanxi with clients’ has a negative influence on perceptions of auditor independence for Chinese auditors, but not for the U.S. auditors. According to our findings, both groups agree that imposing regulations/code has a positive influence on perceptions of auditor independence. Gender has no influence on the perceived independence of either group. After controlling for social desirability bias, our results remain robust. Sensitivity analysis further increases the robustness of the findings. Our results provide empirical support for public interest theory and pose implications for Western multinational companies contemplating doing business in the Chinese economy. This investigation is particularly relevant in the wake of the rise of China as a global power. Regulators should consider the implications of this study when setting auditing guidelines and codes of ethics.     

Initial treatment failure in non-ICU community-acquired pneumonia: risk factors and association with length of stay,total hospital charges,and mortality

Abstract

Objectives:

To identify risk factors for initial treatment failure in patients with community-acquired pneumonia (CAP) in non-intensive care unit (non-ICU) settings, and to characterize the association between initial treatment failure and length of stay, total hospital charges, and mortality.

Methods:

Retrospective cohort study. Using data from >100 US hospitals, this study identified all adults (age ≥18 years) hospitalized for pneumonia between January 1, 2000 and June 30, 2009 who began antibiotic therapy within 24?h of admission and were treated for at least 48?h if alive; patients admitted to intensive care within the first 24?h in hospital were excluded. Initial therapy was defined as all parenteral antibiotics administered within the first 24?h in hospital. Treatment failure was assessed based on subsequent receipt of new antibiotic(s), excluding agents of similar/narrower spectrum and those begun at discharge. Multivariate logistic regression was used to identify risk factors for treatment failure, and multivariate linear and logistic regression to compare length of stay, total hospital charges, and in-hospital mortality between patients experiencing initial treatment failure and those who did not.

Results:

Among 32,324 patients with non-ICU CAP, 4695 (14.6%) experienced initial treatment failure, most often within 72?h of hospital admission. Significant predictors of initial treatment failure included malnourishment (OR?=?1.87; 95% CI?=?1.60–2.18), receipt of vasoactive medications within 24?h of admission (1.51 [1.17–1.94]), and renal failure (1.45 [1.32–1.59]). Treatment failure was associated with higher case fatality (8.5% vs 3.3%), longer hospital stays (mean [SD]?=?10.1 [8.1] days vs 4.9 [3.3] days), and higher total hospital charges ($37,602 [$71,876] vs $14,371 [$21,633]) (all comparisons, p?<?0.01). Study limitations include possible inclusion of patients with healthcare-associated pneumonia (HCAP) in the study sample, our focus on the 40 most commonly used antibiotic regimens, and indirect measurement of treatment failure.

Conclusions:

Approximately one in seven non-ICU CAP patients experience failure of initial antibiotic therapy. Risk of failure is higher for patients with significant comorbidities and/or severe infections. Non-ICU patients who experience initial treatment failure have significantly longer hospital stays, higher total hospital charges, and higher rates of mortality.     

What factors inspire the high entry flow in Taiwan's manufacturing industries–A count entry model approach

Why is the entry flow of the manufacturing sector extremely high in Taiwan, and does it contribute to the prevailing entrepreneurship? This article aims to explore what factors inspire potential entrants to go into an industry. Based on a theoretical formulation of the Poisson probability entry model, a count data model is employed to investigate the determinants of entry flows. The empirical results reveal that traditional entry barriers indeed lower the entry flow. The entry incentives, including price cost margin and industry growth, play a lesser role at attracting new firms, while alternatively the market size acts as a better proxy of an entry incentive in explaining entry flows. Incumbents’ responses to entry, R&;D and advertising intensity are found to be associated with a significant negative impact on entry flows. This article also finds that there is a higher bound of covariate of entry, about 10%, that can be attributed to the immeasurable personality of entrepreneurs–entrepreneurship.

Rather be the chicken's beak than be the cow's behind. 1 ¹?This proverb explains in terms the concept of choosing jobs as how one would like to be a leader of a small firm rather than an employee in a large enterprise.

The trade that might cause life hazard will be dealt, while the trade that might cause a loss will not be dealt.

Two traditional Chinese proverbs     

States and Caliphates

ABSTRACT

At the end of June 2014, Abu Baqr al-Baghdadi, the leader of what was to become Da’ish or the Islamic State, announced at the main mosque in Mosul the creation of an ‘Islamic caliphate’ with himself as caliph. With its creation, he announced, the division of the Middle East, forced upon the region by the 1916 Sykes–Picot agreement, was ended, to be replaced by a territorially limitless caliphate for all Muslims. Despite the obvious political rhetoric that the announcement involved, al-Baghdadi’s aspirations raised interesting questions of historical and legal interpretation. Quite apart from what the Sykes–Picot agreement actually established, to what extent, for instance, is there an innate contradiction between visions of state and boundary in international law and the Islamic concept of the caliphate? How have those concepts evolved over the past century and how inimical are contemporary views of ‘the caliphate’ to established principles of territorial delimitation? And, to what extent do the actual territorial delimitations of Middle Eastern states reflect pre-colonial patterns of spatial division rather than simply the consequences of colonial imposition? How distinct, in short, are the apparently opposed concepts of state and caliphate in the contemporary world? This article will attempt to show that the points of similarity between them are probably far greater than is usually recognised.