After the crisis: New economic and social challenges in a new world

May 26, 2013, Shanghai

The 5th Annual Joint Workshop on Socio-Economics organized by Ferdi, Fudan University and Paris 1 University

The workshop took place at the School of Economics of Fudan University.

This year, discussions focused on new economic and social challenges in an expected post-crisis world. Indeed, many indicators suggest that the world crisis, which has begun in 2008, could start to end. The world has deeply changed over the last six years. Emerging countries, especially China, have become economic superpowers with a leading role and major responsibilities in a globalized world. These countries have to adjust the organization of their production to their new role, and adapt their social systems and policies to obtain an equitable sharing of their new wealth. Europe has been learning to control its big government deficits and debts, but has still to design and implement most of the reforms.

This seminar was the opportunity to have a rich exchange between Chinese and French economists, and allowed each side to benefit from the experience and knowledge of the other, on the policies and institutions aiming at solving the problems of their respective countries.

12 research papers dealing with the new economic and social challenges facing China and Europe, and with the economic and social reforms and policies that these countries must implement have been presented; 6 by economists from Chinese universities and 6 by economists from French universities.


 Morning Session
Chair: Jean-Pierre LAFFARGUE, University of Paris 1 
Welcome remarks by Prof. YUAN Zhigang, Dean, School of Economics, Fudan University

► The post-2015 agenda: the challenges ahead, Matthieu BOUSSICHAS, Ferdi

Abstract :
Since 2000, the Millennium Development Goals (MDGs) have provided a roadmap for development, with the year 2015 as the first waypoint. With this date soon upon us, it is time to redefine the objectives. Meanwhile, the states present at the last Earth Summit in Rio have laid the foundations for a sustainable development agenda based on the principle of quantitative targets inspired by the MDGs (future sustainable development goals (SDGs)). Through these two processes, a vision of development for the next twenty years will emerge. The design of such a new agenda involves an analysis of current and future needs, of the possible responses, their relevance and means of implementation. Stakeholder responsibilities and the post-2015 development process must also be clarified as soon as possible. The scope and diversity of the problems now facing the international community demands the adjustment of the goals that were defined in 2000. Some targets are now obsolete, while some issues, such as environmental protection and employment, have now acquired "urgent priority" status at the international level. Furthermore, the current goals largely neglect matters such as peace and security. It is necessary therefore to conduct a thorough analysis of the problems that must now be addressed, and how these problems could be translated into goals. The thought process initiated by the proposal of SDGs has enabled the first outlines of a future agenda to be envisaged; it has also raised a set of questions that require urgent responses. How can the process of redefining the MDGs be linked with the universal development of SDGs? How can we combine the objectives that are relevant and specific to developing countries with universal goals that are also relevant to developed countries? This paper tries to clarify current debates and provide food for thought about what could be the face of the future development agenda.

Discussant: CHEN Zhao, Fudan University

► Identifying executive turnover for cash-out: Evidence from China's growth enterprise markets, CHEN Zhao, China Center for Economic Studies, Fudan University

Discussant: HE Yong, Cerdi-CNRS

► Structural changes and the impacts of global energy price on China’s urban food price, CHEN Wei, College of Public Economics and Administration,Shanghai University of Finance and Economics

Discussant: Angelo SECCHI, University of Paris 1

► Financial constraints and export prices, Angelo SECCHI, University of Paris 1

Abstract :
Using data on cross border transactions together with an informative measure of financing constraints this paper provides new evidence that constrained firms sell their products at higher prices as compared to unconstrained firms.

Discussant: CHEN Wei, Shanghai University of Finance and Economics

► Is revealed comparative advantage the curse to Chinese products suffering from US antidumping actions?, SHEN Guobing, Fudan University

Abstract :
Is the revealed comparative advantage (RCA) the curse to Chinese products suffering from US antidumping (AD) actions? This paper carries out studies by sampling 97 products involved in US AD cases against China and 395 kinds of 10-digit products uninvolved in cases. The findings are that: (1) Statistical analysis of case-involved samples indicates that the US AD actions against China mostly focus on Chinese products possessing strong RCA in the US market; inflicted by US AD actions, 35 case-involved Chinese products still maintain strong RCA, whereas 27 ones lose the advantage in the US market. (2) After extending the samples by introducing 395 kinds of products uninvolved in AD cases, two estimation methods verify that the impacts of all factors influencing the probability of US AD actions against China become smaller, showing that the bias in selecting samples is avoided. Relatively, the US trade deficit with China accrued through Chinese products is the most important determinant and the direct reason for the award of industry injury and the issuing of AD orders by the US International Trade Commission (ITC). RCA is only one of the influencing factors but not the curse to Chinese products suffering from US AD actions. Other influencing factors include slower industrial production growth and rising unemployment in the US. The US subprime crisis is another important influencing factor.

Discussant: Jean-Pierre LAFFARGUE, University of Paris 1 

Afternoon Session

Chair: FENG Jin, Fudan University 

► Consumption elasticity as an indicator of intergenerational persistence: evidence from China,CHEN Lin, Fudan University

Abstract :
This article studies intergenerational persistence in China. We use data from the China Health and Nutrition Survey to estimate the intergenerational food consumption and intergenerational income elasticities in China (IFCE and IIE). We find a particularly high IFCE (0.878) and a less important IIE (0.425), which is close to the one (0.47) estimated by Deng, Gustafsson and Li (2012). Parental food consumption greatly affects offspring food consumption. Consumption persistence is homogeneous across individuals having different levels of education or who live in urban or rural areas. We also show that intergenerational linkages in consumption do not mainly result from the transmission of parental income but rather from the transmission of personal taste. Finally, we demonstrate that IFCE is a good indicator of intergenerational persistence when income data is insufficient to compute an accurate measure of permanent income.

Discussant: Matthieu BOUSSICHAS, Ferdi

► Legal status and consumption behavior of immigrant households, Biagio SPECIALE, University of Paris 1 (joint paper with Christian DUSTMANN and Francesco FASANI)

Abstract :
We analyze the effect of immigrants’ legal status on their consumption behaviour using unique survey data that samples both documented and undocumented immigrants. To address the problem of sorting into legal status, we propose an estimation strategy that uses information on rainfall shocks in the origin country at the time of emigration as an exogenous source of variation for current legal status. Our estimates show that undocumented immigrants consume about 41 percent less than documented immigrants, conditional on background characteristics. Roughly 40 percent of this decrease is explained by undocumented immigrants having lower incomes than documented immigrants. Given the higher exposure to uncertainty of undocumented immigrants, we hypothesize that the remaining difference in consumption behavior is due to precautionary motives. We provide further support for this conjecture using variations in deportation risk as an alternative source of variation in uncertainty within the illegal immigrant population. Our findings imply that legalization programs have a potentially important effect on immigrants’ consumption behavior, with consequences for both the source and host countries.

Discussant: LIU Derek Tai-wei, Shanghai University of Finance and Economics

► A two-period comparison of health care demand with income growth and aging in Rural China: Implications for the adjustment of healthcare supply in developing countries, HE Yong, Cerdi-CNRS (joint paper with Marine Audibert and Jacky Mathonnat)

Abstract :
With two samples of patients surveyed in the same region but of an interval of 18 years in rural China, and with mixed logit to deal with heterogeneity, we estimate the evolution of healthcare demand under the influence of income growth and population aging. It is found that, in accordance with theoretical and inductive inferences, healthcare price effect decreased and became more heterogeneous, and aging impact overweighting income growth impact resulted in decreasing distance effect and, hence, patients’ preference to proximity. In the face of this demand change, the adjustment of governmental supply should be to promote small and middle healthcare providers. During this period, however, to cope with urbanization, the Chinese policy consisted of privileging large hospitals. This has led to a higher share of patients, especially the aging patients, to choose self-care, and also, a higher share of poorer patients to suffer from catastrophic health expenditure. This finding carries broad implications for rural health policy-making in developing countries where the trade-off between income growth, population aging and urbanization is an increasing common concern.

Discussant: CHEN Lin, Fudan University

► Economic and political challenges in view of demographic changes in developed countries, Angela LUCI-GREULICH, University of Paris 1

Abstract :
Several macroeconomic studies suggest that fertility starts to re-increase with income in highly developed countries. We propose a deeper insight in the mechanisms behind income and fertility on both the macro and the micro level in order to find out more about the driving motor of the fertility rebound in highly developed OECD countries First, we analyze the impact of several decomposition variables of GDP per capita on total fertility rates Second, we analyze the impact of aggregated measures of family policy instruments on total fertility in OECD countries (OECD Family Data Base). In a third step, we propose an insight in the microeconomic mechanisms behind the pattern between income/education and fertility by focusing on individual fertility decisions (EU SILC Data Base). Finally, we discuss policy implications of our results.

Discussant: CHEN Shuo, Fudan University

► Helping poor and beautiful regions: How tourism affects the theory of transfers, Jean-Pierre LAFFARGUE, University of Paris 1

Abstract :
China has wide and poor areas, which deserve and get public transfer to support their production and income. However, these transfers change prices and the structure of production and trade, in ways that make the computation of their effects on the welfare of residents, non-trivial. This paper complements the theory of transfers, which deals with this problem, by taking into account that poor regions often have beautiful scenic areas and other high-quality tourism resources, from which they draw, or could draw, important income. The paper evaluates and compares in this context, the effects of transfers financing consumption and private and public capital in sectors open or closed to competition from outside.

Discussant: SHEN Guobing, Fudan University

► Artificial landscape: Local official's incentive and urbanization in China, CHEN Shuo, Fudan University

Discussant: Angela LUCI-GREULICH, University of Paris 1

► Institutions matter: Evidence from the lame-duck status in China, LIU Derek Tai-wei, College of Public Economics and Administration, Shanghai University of Finance and Economics

This study takes advantage of a “natural experiment” to show how changes in political institutions shape politicians’ incentives, and in turn affect important policy outcomes in China. Beijing introduced the mandatory retirement age for provincial leaders in the 1980s, but it did not fully institutionalize the new rule across all provinces until 2000. I therefore use this window to construct a difference-in-differences research design. Based on data from 1978 to 2005, I find that the enforcement of mandatory retirement rule does lead to better development outcomes. Provincial leaders who are eligible for promotion are now motivated to perform better on growth and social welfare provision in order to succeed under the performance-based promotion system. But the evidence also suggests that the mandatory retirement rule results in poorer performances among lame-duck leaders who have no chance for further promotion but to retire soon due to the age restriction. I also find that, contrary to what we expect, provincial leaders with central connection tend to have worse performances on growth. This finding shows that when politicians have connection with the center, they hold the key to promotion already. As a result, they do not need to worry about competing with others under the Chinese model of yardstick competition.

Discussant: Biagio SPECIALE, University of Paris 1