THE ROLE OF HUMAN CAPITAL IN CHINA'S TOTAL FACTOR PRODUCTIVITY GROWTH: A CROSS‐PROVINCE ANALYSIS

This paper studies the role of human capital in China's provincial total factor productivity (TFP) growth over 1985–2004. The stochastic frontier approach is employed to measure the productivity growth of Chinese provinces. Human capital is measured both qualitatively and quantitatively. In particular, enrolment rates at various levels of schooling are used to represent human capital composition. After controlling for endogeneity, we find that human capital has significant and positive effects on the TFP growth of Chinese provinces. However, when education quality is incorporated, productivity growth appears to be significantly enhanced by quality improvements in primary education only. Regional impacts of human capital are found to differ at various levels of schooling. In the eastern region of China, productivity growth is significantly associated with secondary education. TFP growth in the central region is mainly promoted by primary and university education. Yet in the western region, primary education plays the most prominent role.     

Public Investment in University Distance Learning Programs: Some Performance-Based Evidence

An increasing proportion of public expenditures on higher education are devoted to distance learning. This provokes an obvious public policy question—How well does distance learning work? This study addresses that question by means of a large sample, control group study of undergraduate and graduate student success in university distance learning courses. Student success is measured by the grade assigned to the student by his/her faculty member. Gender, age, ethnic background, distance learning experience, experience with the institution providing the instruction and measures of academic aptitude and previous academic success are statistically significant determinants of student success. Similarly, faculty characteristics such as gender, age, ethnic background and education background are statistically significant predictors of student success, though not necessarily in the manner some might hypothesize.     

An Empirical Analysis of Provincial Productivity in China (1979–2001)

This study estimates and analyzes provincial productivity growth in China for the period 1979–2001. The Malmquist Index approach allows us to decompose productivity growth into two components, technological progress and efficiency change. Considerable productivity growth was found for most of the data period, but it was accomplished mainly through technological progress rather than efficiency improvement. Although China's capital stock has accumulated at record speed in recent years, our findings show that TFP growth slowed down significantly during 1995–2001. The study thus raises serious questions about whether China's recent growth pattern is consistent with its comparative advantages, and whether its reliance on capital accumulation can be sustained in the long run.     

REVISITING SOUTH AFRICAN EMPLOYMENT TRENDS IN THE 1990S

This article revisits South African employment trends recorded since 1995. In particular, it investigates whether the job losses and gains recorded by the October Household Survey jobs in the mid-1990s reflect the reality. This is done by comparing the different official data sets, and by exploring alternative sources of information for three sectors that substantially influenced this trend, namely formal agriculture, mining, and community, social and personal services. Potential inconsistencies within the October Household data are assessed, particularly in relation to the distribution of employees across formal and informal sectors and the categorisation of unpaid family workers. The implications of possible changes to the employment trend from 1995-2006 are considered. This article finds that the evidence is strong enough to call into question published employment trends. According to the October Household Survey, formal employment fell by 1.4 million between 1995 and 1997. The OHS and Labour Force Survey shows that formal employment then grew by 1.9 million between 1997 and 2006. According to the revised figures presented in this paper, 73,000 to 530,000 formal jobs were lost between 1995 and 1997 and 1.4 million net new jobs were created between 1997 and 2006. It is therefore possible that the plummeting and recovery of employment in the 1990s were both considerably less dramatic than that reflected in the official statistics. Further research and investigation would be required to validate these trends.     

Role of TFP in China's Growth*

This paper uses the dual approach to growth accounting to examine the role of total factor productivity (TFP) in recent Chinese growth. Most previous growth accounting studies on China have followed the primal approach, which depends heavily on the national income accounts. Unfortunately, despite efforts to rectify them, Chinese national income accounts data continue to have problems that affect primal approach growth accounting results. The dual approach, in contrast, allows independent price information to play a role. Recent research has focused on the following two questions: (i) How significant has TFP's role been in post‐reform Chinese growth? (ii) Has TFP growth rate slowed down in more recent years? This paper finds that: (i) the TFP growth rate for mainland China computed using the dual approach also proves high; and (ii) there has been some slowdown in TFP growth rate in recent years.     

Measuring Green Productivity Growth for China's Manufacturing Sectors: 1991–2000*

Over the past two decades, China has sustained rapid economic growth of 8–10 percent, part of which is attributed to the positive total factor productivity (TFP) growth. However, this extraordinary economic performance has been accompanied by severe environmental pollution and associated health damage. The conventional TFP method is biased in interpreting the progress of technology change because it does not consider non‐marketable residues, such as environmental pollution, and, hence, efficiency improvements in terms of pollution abatement technology and environmentally friendly management are ignored. This bias might direct our attention to less efficient use of environmental friendly abatement technologies or send wrong signals to policy‐makers. To address this issue, the present paper applies a modified welfare‐based green TFP approach, treating environmental damage as non‐desirable (negative) residual output. Therefore, environmental efficiency is taken into account to accurately interpret technological progress from a social welfare point of view. Based on a national time‐series input–output table, historical capital and labor input data for China and sectoral level air pollution emission data from 1991 to 2000, the empirical results suggest that with increasingly stringent environmental regulations, many pollution intensive sectors, such as electricity, primary metal and chemical industries, improved their environmental efficiency in the late 1990s. However, because of the weak environmental regulations in construction and transportation, and in sectors primarily composed of small private or township and village industrial enterprises, firms within these industries contributed to increasing environmental degradation.     

Migration constraints and development: Hukou and capital accumulation in China

Rural–urban migration flows are a crucial corollary of economic development. The adverse or beneficial effects of internal migration, for sending as well as receiving areas, and the definition of optimal migration policies, have remained much discussed issues since the seminal works of Harris and Todaro (1970). This debate is especially acute in China where the “household registration system” (hukou) acts as a strong constraint on individual migration. This paper aims to assess the consequences of hukou through a simple model of a developing dual economy with overlapping generations. Contrary to existing studies focused on the contemporaneous allocation of economic resources, it deals with the dynamic consequences of migration flows and migration policies. It shows that, in fairly general circumstances, hukou-related migration constraints can actually hasten development, understood as the transfer of the labor force to the modern sector, driven by capital accumulation. The hukou system could thus be one of the causes of the extremely high Chinese saving rate and of the high pace of Chinese development. Insights from the model are confronted with stylized facts from the Chinese development, and theoretical results are especially consistent with the effects of the 2001 “towns and small cities” reform.     

FIRM PRODUCTIVITY AND INVESTMENT CLIMATE IN DEVELOPING COUNTRIES: HOW DOES MIDDLE EAST AND NORTH AFRICA MANUFACTURING PERFORM?

Firm productive performances in five Middle East and North African (MENA) economies and eight manufacturing industries are compared to those in 17 other developing countries. Although the broad picture hides some heterogeneity, enterprises in MENA often performed inadequately given the middle‐income status of the MENA economies, with the exception of Morocco and, to some extent, Saudi Arabia. Firm competitiveness is a more constant constraint, with a unit labor cost higher than in most competitor countries, as well as investment climate (IC) deficiencies. The empirical analysis also points out how IC matters for firm productivity through the quality of infrastructure, the experience and education of the labor force, the cost and access to financing, and different dimensions of the government–business relationship. These findings bear important policy implications by showing which dimensions of the IC, in which industry, could help manufacturing in MENA to be more competitive in the globalization context.     

REMITTANCES AND AGGREGATE LABOR SUPPLY: EVIDENCE FROM SIXTY‐SIX DEVELOPING NATIONS

Do remittances reduce labor supply in recipient economies? This paper addresses this question with aggregate level data for a panel of sixty‐six developing countries from the Middle East and Africa, Asia and the Pacific, and Latin America and the Caribbean over the period 1985 to 2005. The results exhibit a positive and significant relationship between remittances and aggregate labor supply. The effect is clearly driven by men in each of the three regions. Three potential explanations are put forward to explain these empirical findings: (1) non‐migrating household members are likely to increase their labor supply in order to defray migration‐related expenses; (2) neighboring households increase their labor supply to help family members migrate after they become more aware of the benefits of remittances; and (3) remittances overcome credit constraints, thus generating employment.     

THE CONTRIBUTIONS OF MANUFACTURING AND SERVICES TO EMPLOYMENT CREATION AND GROWTH IN SOUTH AFRICA

This study examines the linkages between the manufacturing and services sectors, and between each of them and the rest of the domestic economy, based on analysis of input-output tables and employment trends. This reveals that manufacturing is particularly important as a source of demand for the services sector as well as the rest of the economy through its strong backward linkages, which suggests that in this respect a decline in manufacturing could negatively affect future growth. Services are especially important in terms of employment creation, both direct and indirect.     

ON THE MOTHER AND CHILD LABOR NEXUS UNDER CREDIT CONSTRAINTS: FINDINGS FROM RURAL INDIA

There is an emerging consensus that lack of credit is a major cause of child labor and inequality in the intrahousehold distribution of resources. At the same time, patterns in how children spend their time appear to be strongly influenced by maternal employment decisions. This paper includes an assessment of the effect of credit constraints on maternal employment and that of maternal employment on the intrahousehold allocation of labor, a nexus which has been left unexplored by existing studies. Three findings emerge: (1) a mother is more likely to work outside when a household lacks resources, and her domestic labor can be easily replaced by other members, (2) credit market accessibility is one of the major determinants of maternal labor, and (3) elder daughters assume a large part of the burden of maternal employment by providing domestic labor. Under binding credit constraints, results of this study support the collective as opposed to the unitary model of households.     

Monetary and Nonmonetary Returns to Education in Indonesia

Some important aspects of returns to education in Indonesia have been neglected. This paper draws on the Indonesia Family Life Survey, a longitudinal survey, to shed some light on these aspects. This paper finds in a Mincerian specification that a more recent rate of return is in line with the rates found in previous research. A quantile regression is applied to show that the rate varies little in the conditional distribution of earnings, which stands in stark contrast to findings from some developed countries. In addition, the rate of return in self‐employment is estimated to be lower than that in paid employment for person‐ and sector‐specific reasons. In addition to monetary returns to education, happiness returns to education are considered. This paper advances evidence that education has important and robust implications for happiness above and beyond absolute and relative levels of income.     

CHILD LABOR AND SCHOOL ENROLLMENT IN RURAL INDIA: WHOSE EDUCATION MATTERS?

This paper empirically analyzes the determinants of child labor and school enrollment in rural Andhra Pradesh, India. A village fixed‐effect logit model for each child is estimated with the incidence of child labor or school enrollment as the dependent variable, in order to investigate individual and household characteristics associated with the incidence. Among the determinants, this paper focuses on whose education matters most in deciding the status of each child, an issue not previously investigated in the context of the joint family system. The regression results show that the education of the child's mother is more important in reducing child labor and in increasing school enrollment than that of the child's father, the household head, or the spouse of the head. The effect of the child's mother is similar on boys and girls while that of the child's father is more favorable on boys.