Earnings In China Research Articles

Impacts of policy-related agricultural insurance on farmers’ earnings in China's major grain-producing regions

Policy-related agricultural insurance can diversify farming risks and compensate damaged farmers’ losses. This study examined the impact of policy-related agricultural insurance on farmers’ earnings in China's primary grain-producing regions. The findings indicate that policy-related agricultural insurance significantly improved farmers’ earnings. Agricultural operational scale, technological advancements, and agricultural credit played an intermediary role in policy-related agricultural insurance on farmers’ earnings. This study provides suggestions including increasing support, guiding the modernization and transformation of policy-related agricultural insurance, promoting coordinated development of agricultural insurance and agricultural credit in order to promote the high-quality development of policy-based agricultural insurance and improve farmers' income.

Heterogeneity, selection, and the policy effect of educational expansion on college graduate earnings in China, 1981–2015

This article examines the impact of social origin on the returns to college education in the context of China’s higher education expansion since 1999. Utilizing a double-treatment setting, a marginal treatment effect framework is adopted to estimate the causal effect of college education on earnings, while a difference-in-differences methodology identifies the policy effect of educational expansion on the college premium. Analysis of data from a series of nationally representative Chinese surveys reveals that the “true” college earnings premium is rather small for the post-expansion cohort, and that much of the observed earnings gap between college and high school graduates after the expansion is due to returns to unobserved abilities. Further analysis shows that the college earnings premium after the expansion declines more for rural-origin children with schooling probabilities in the top percentiles than for their urban counterparts.

Earning reduction caused by air pollution: Evidence from China

This paper investigates the effect of air pollution on employees' earnings in China. Using both instrument variable (IV) and regression discontinuity design (RDD), we find that air pollution reduces employees' yearly earnings. A one μg/m3 increase in yearly PM2.5 decreases employees' yearly earnings by 175.4 CNY. The total loss in earnings for all employees working for our sample firms amounts to about 268.59 million CNY. Our estimations are not sensitive to a battery of different robustness checks. We also find that the effect of air pollution differs based on several factors including labor intensity, ownership types and firm size. Our mechanism tests indicate that air pollution can reduce employees' earnings by lowering their unit wage and reducing their working time. The resulting increase in firms' labor costs further undermines their operating status. Notably, air pollution exerts a non-linear negative effect on employees' earnings. Overall, our findings suggest that air pollution can significantly lower employees' benefits by reducing their earnings. Our paper also provides powerful support for formulating environmental regulations in the future.

Impacts of PM2.5 on Stock’s Earnings in China

The particulate matter 2.5 (PM2.5) is a serious air-pollutant emission which has caused serious risks to public health in China. The concerns could impact the decisions of people when they are choosing which companies to work and the decisions further affect the earnings of the companies. This is because people especially the ones with high skills have more choices and would like to choose to work in a company which is located in a city with less PM2.5 concentration and the companies with more high-skill people tend to perform better. That is, the earnings should be higher. This paper studies the impacts of PM2.5 concentration on earnings per share (EPS) of stocks in China market. We find that PM2.5 has positive impacts on EPS in the entire market and the impacts are larger for stocks headquartered in the northwest of China. Also, we find that there exist heterogeneous effects of PM2.5 on EPS. That is, the impacts of PM2.5 tend to increase with EPS.

China’s on lockdown and the U.S. is free to roam…The Properties of Non-GAAP Earnings in China

China’s on lockdown and the U.S. is free to roam…The Properties of Non-GAAP Earnings in China

Hukou stratification, class structure, and earnings in transitional China

The massive economic transformation in China has triggered a vigorous scholarly debate on whether the persistent power of the state or the increasing market liberalization is the main driving force of inequality. In this article, we attempt to understand this debate through the lens of two coexisting stratification systems––the longstanding hukou (household registration) system and an emerging class structure. Using data from the Chinese General Social Survey from 2008 to 2015, we develop new typologies for hukou stratification and class structure and examine their relative contributions in determining workers’ earnings. We further investigate differences in their effects between the Inland and Coastal regions. We find that class ranks ahead of education and hukou as the strongest determinant of earnings in China as a whole. Regionally, hukou and class are strong determinants of earnings, but hukou has a relatively stronger effect in Inland China. The findings shed light on the changing stratification dynamics in transitional China and contribute to the literature on the market transition debate.

Wage premium of Communist Party membership: Evidence from China

AbstractSocial status and political connections may confer large economic benefits on an individual. Previous studies focused on China have examined the relationship between Communist Party membership and earnings and have revealed a positive correlation. However, the correlation could be partly or totally spurious. Using data from three surveys spanning three decades, we estimate the causal effect of Chinese Communist Party membership on monthly earnings in China. We find that, on average, membership in the Communist Party of China increases monthly earnings and the wage premium has grown in the last three decades. We explore potential causes and discover evidence that improvements in social networks and social rank, acquisition of job‐related qualifications and greater life satisfaction play important roles in increased earnings.

Expansion of Adult Higher Education and Its Effects on Increasing Employee's Earnings in China: A Comparative Analysis with Regular Higher Education

Expansion of Adult Higher Education and Its Effects on Increasing Employee's Earnings in China: A Comparative Analysis with Regular Higher Education

Geographic Labor Mobility of Floating Migrant Workers in China: The Impacts of Health Status and Education on Earnings

The geographic labor mobility has been ignored in the studies related to the impacts of health status or education on floating migrant workers’ earnings in China. Based on a dataset collected by the World Bank collaborated with the Chinese Academy of Social Sciences in 2010, we initiate the assessment of geographic mobility and explore the indirect impacts from health, education, and other factors on earnings through it. A relatively poor, single, educated migrant in good health with parent at home working in the manufacturing sector presents the strongest geographic mobility. The comparative results indicate that the total health impacts on earnings are generally underestimated for migrant workers at poor or fair health status and the education advancement has a greater impact on earnings for the majority of migrant workers who exhibit the “healthy migrant effect”. Our findings not only justify the ground of mixed results in the previous studies but also provide policy making implications. Given the concave relationship between health status and geographic labor mobility, the ongoing health care reform in China should provide local affordable services to attract returning migrants and enhance their earnings.

Labour Market Impacts of School Expenditure and Class Size: Evidence from China

This study is a first attempt to estimate the impact of school resources on students’ subsequent labour market earnings in China. Combining unprecedented school data from the early 1950s to the 1990s with household survey data in the 2000s, this paper documents that expenditure-per-pupil, a proxy measure of school resources (or quality) has a significant impact on the level of subsequent earnings through its influence on education returns. The positive effect calls for policy intervention aimed at improving education, to be based on the perceived economic return to the quantity as well as the quality components of education.

Can Voluntary Management Earnings Forecasts Improve Value Relevance of Earnings in China?

Managers’ voluntary disclosure of private information in advance may confirm subsequent financial reports and make them more trustworthy. However, Lennox and Park (2006) document past management earnings forecasts (MEFs) are NOT positively associated with a firm’s earnings response coefficient in USA. This paper examines whether MEFs can improve value relevance of earnings numbers in China, as a different information market environment. Based on a sample of Chinese listed firms in 2005-2012, we find that firms disclosing voluntary MEFs show significantly higher value relevance of earnings information in annual reports. The confirmation effects of voluntary MEFs also apply to normal/abnormal accruals and cash flows from operations. We do NOT find similar improvements by voluntary MEFs in value relevance of balance sheet items for most regressions. Among forecast characteristics, we find that more specific forecasts can significantly improve value relevance of earnings, indicating that the markets particularly care for the forecast specificity in China. Our results are robust to different research designs and additional tests concerning earnings news types, corporate governance effects, endogeneity considerations and sample adjustments. The findings contribute to literatures by showing how a different information market environment highlights the effects of voluntary MEFs.

The education treatment effect on the non-farm income of Chinese western rural labors

Purpose– Education plays an important role in improving Chinese rural laborers’ non-farm incomes. However, in Chinese western rural area, the level of return to education is very low due to the underdeveloped economy and the condition of the education system. For improving the schooling returns level, Chinese central government is paying great attention to the condition of education in the rural western area. To date, no research has examined what educational style is more favorable for improving western rural laborers’ non-farm incomes. To answer this question, the purpose of this paper is to compare the treatment effect of high school education and secondary vocational education on their non-farm incomes. That will provide significant evidence for the government to carry out educational policy.Design/methodology/approach– Base on the Mincer model, several methods is used to estimate the average return to a year education on western rural labors’ non-farm income, including OLS, IV and Heckman tow-steps method, to accounting for the ability endogenous and self-selection bias. And the propensity score matching method is used in estimate the treatment effects of high school education and secondary vocational education.Findings– The results from Mincer model showed that the schooling returns in Chinese western rural area were estimated to range from 2.7 to 3.9 percent, that were lower than the average levels in Chinese whole rural area that are estimated in the other recent studies. By using propensity score matching to roll out the heterogeneous bias, show that the treatment effect from high school education was higher than that from secondary vocational education, indicating that the secondary vocational education is better.Originality/value– Studies concerning the causal relationship between schooling (high school education and secondary vocational education) and non-farm earnings in the western region of China remain very limited, even empty. This paper will make an update contribution to the literature in the area of education earnings in China.

The earnings effects of health and health-related activities: a panel data approach

We investigate the effects of health and health-related habits on earnings in China using panel data to control for unobserved heterogeneity related to individual traits and job characteristics. Health-related habits include smoking cigarettes, drinking tea, frequency of drinking alcohol and physical exercising. We find a significant and large impact of health status on earnings, controlling for schooling, experience and the unobserved individual heterogeneity and job heterogeneity. We also find that smoking has a strong negative effect on earnings net of health status, while the estimated effects of other health-related activities are statistically insignificant.

Audit quality and market pricing of earnings and earnings components in China

Purpose – The purpose of this paper is to investigate the effect of audit quality on the market pricing of earnings and earnings components in China. Design/methodology/approach – The paper measures audit quality using three tiers of audit firm designation, namely International Big 4 audit firms, local Top 10 audit firms and, finally, the local second-tier audit firms. Earnings are decomposed into accruals and cash flow components and accruals are further decomposed into discretionary and non-discretionary accruals. Findings – The paper finds that, although earnings and its components are priced positively by the Chinese stock market, Big 4 audit does not provide any incremental benefit to clients in terms of market pricing of clients’ financial numbers. The paper finds a negative impact of local Top10 audit on the pricing of earnings in China. However, the paper finds no incremental effect of local Top 10 audit on the market pricing of earnings components. Originality/value – Although prior research in China has used modified audit opinion as the audit quality matrix, the paper considers market valuation of earnings and earnings components for firms audited by different categories of auditors.

Earnings Management and the Accrual Anomaly: Evidence from China

Using the unique Chinese setting in which the “delisting regulation” is based on accounting numbers, we separate earnings management into (1) earnings management responding to regulation and (2) earnings management prompted by market pressures and further document that earnings management responding to market pressures produces the accrual anomaly (Sloan, 1996) and earnings management responding to regulation does not. Initially unable to detect the accrual anomaly in China's stock market, we were reluctant to conclude that China's market is more efficient than that in the United States. After observing a disproportionate number of “big-bath” loss firm-years in the lowest decile of accruals for our sample, we estimated the apparent earnings distortion induced by the delisting regulation. When we excluded this distortion from our analysis, we documented the presence of the accrual anomaly in China's stock market. We conclude that the delisting regulation creates an artificial distribution of firm earnings in China that affects the market pricing of accruals and masks the accrual anomaly. The results have implications for policy makers and regulators in general, and those in emerging markets in particular.

Accounting internationalization and value relevance of accounting earnings in China

Using financial reports of AB-share listed companies in China from 1996 to 2003, this paper attempts to evaluate the impact of accounting internationalization in China by comparing time serial value-relevance differences between Chinese Accounting Standards (CAS) and International Accounting Standards (IAS). Empirical evidence from relative information content test indicates that unexpected earnings reported under IAS have more information content to A-share investors than those under CAS. However, the relative value-relevance of IAS is weakened through the accounting internationalization process. Moreover, empirical evidence from incremental information content test shows that the incremental value-relevance of IAS is also weakened through the accounting harmonization process. Further empirical evidence demonstrates that CAS earnings appear to substitute for CAS earnings in the valuation process to the extent to which CAS is harmonized with IAS.

The impact of overeducation on earnings in China

The paper estimates the returns to overeducation by the Over-Required and Undereducation (ORU) model. The estimated results indicate that the returns to overeducation are positive, but lower than the returns to required education, which suggests that while overeducated employees’ earnings are diminished, they still can benefit from it. The paper also attempts to estimate the returns to overeducation by occupations, industries and regions. The result shows that in the field where educational level has much to do with the skills required by employers, education-job match has a greater effect on one’s earnings, such as professionals and skilled persons. On the contrary, education-job mismatch has little effect on one’s earnings, such as non-skilled employees, administrative and clerical employees. In addition, the returns to overeducation are lower or insignificant for those working in competitive but lower paid industries and areas. Conversely, the returns to overeducation are higher for those working in the highly monopolized and highly paid industry and area. It can be argued that regardless of the incidence of overeducation, those with higher level of education prefer to choose the lower level of job in these industries and areas.

A research on impairment of assets in listed firms with negative earnings in China

Economic factors, such as the adverse change of the industry and performance of firms, are associated with the impairment of assets reported by these firms. Listed firms with negative earnings were more likely to write off substantial assets in consecutive years, but not in the initial years of loss. However, the relationship between the impairment of assets and economic factors is insignificant after the individual effect of the firms is taken into consideration, while earnings management factors still have a significant effect on the impairment of assets, yet the difference between loss years and profitable years is insignificant.

Levels of computer self-efficacy, computer use and earnings in China

Levels of self-efficacy in computer use were found to be positively related to computer use at work among a sample of workers in Shanghai. The simultaneous estimation of computer use and earnings indicated that an earnings premium for computer use accrues only to females, not to males.

Economic transition, gender bias, and the distribution of earnings in China*

AbstractMarket‐oriented economic reform, which accelerated after 1992, has brought substantial changes to the Chinese economy. This dramatic economic transition was raised two important questions: ‘How are women faring in the transition from a planned economy to a market economy?’ and ‘Are some women faring relatively better than other women’? We use data from the Chinese Household Income Projects for the years 1988 and 1995, a standard earnings equation, and quantile regressions to estimate and decompose the earnings gap. Our findings suggest that while the earnings gap has increased, the fraction of the gap ‘unexplained’ by differences in human capital variables such as education and experience has declined over time. This result is particularly pronounced for low earning women.