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  5. Reallocation in Gender, Factors and Ideas and Economic Growth
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Reallocation in Gender, Factors and Ideas and Economic Growth

Paper Session

Friday, Jan. 3, 2025 8:00 AM - 10:00 AM (PST)

San Francisco Marriott Marquis
Hosted By: Chinese Economic Association in North America
  • Chair: Russell Wong, Federal Reserve Bank of Richmond

Self-Selection and the Diminishing Returns of Research

Kai-Jie Wu
,
The Pennsylvania State University
Lorenz Ekerdt
,
U.S. Census Bureau

Abstract

The downward historical trend of research productivity has been used to suggest that there are severe permanent diminishing returns of knowledge production. We argue that a substantial portion of the trend is a transitory composition effect resulting from self-selection in researchers’ ability and the expansion of the researcher sector. We quantify said effect with a Roy model of researchers’ labor supply estimated using microdata on sectoral earnings distributions. Our results suggest that the average ability of researchers has fallen substantially. We then revisit the estimation of the knowledge production function and its resulting prediction on long-run economic growth. We find that separating transitory diminishing returns from permanent ones more than doubles the long-run growth rate of per capita income predicted by a broad class of growth models.

Barriers to Structural Transformation and Employment by Gender – A Quantitative Analysis of China’s Hukou System

Rachel Ngai
,
London School of Economics
Ting Chen
,
Hong Kong Baptist University
Jiajia Gu
,
International Monetary Fund
Jin Wang
,
Hong Kong University of Science and Technology

Abstract

This paper examines how barriers to labor mobility affect migration and employment by gender during structural transformation, with a focus on China’s hukou registration system. Rural hukou holders face two main obstacles in their migration decisions: the risk of losing rural land upon migration and the lack of full urban subsidies tied to urban registration. To assess the impact of land and urban registration reforms in mitigating these barriers, we construct two county-level indices to represent each type of reform. Using comprehensive micro-level data from rural and urban surveys, our empirical analysis demonstrates that both reforms have significantly encouraged rural women to transition out of agriculture more than men and have increased joint spousal migration. Interestingly, land reform has had adverse effects on urban female employment. To understand these dynamics, we develop and calibrate a two-sector, two-region model with two hukou categories, allowing rural households to decide which members migrate from agricultural to non-agricultural sectors. The model demonstrates that the hukou system and its reforms play an important role in understanding employment and migration patterns by gender during the process of structural transformation.

Mismatch and Assimilation

Ping Wang
,
Washington University in St Louis
Tsz-Nga Wong
,
Federal Reserve Bank of Richmond
Chong Y. Yip
,
TSE and CUHK

Abstract

Income disparity across countries has been large and widening over time. We develop a tractable model where factor requirements in production technology do not necessarily match a country's factor input profile. Appropriate assimilation of frontier technologies balances such multidimensional factor input-technology mismatch, thus mitigating the efficiency loss. This yields a new measure for endogenous TFP, entailing a novel trade-off between a country's income level and income growth that depends critically on the assimilation ability and the factor input mismatch. Our baseline model accounts for 80%-92% of the global income variation over the past 50 years. The widening of mismatch and heterogeneity in the assimilation ability account for 41% and 20% of the global growth variation, whereas physical capital accounts for about one third with human capital largely inconsequential. In particular, about 30% of the output growth in miracle Asian economies comes from narrowing the gap arisen from mismatch, and 94% of the growth stagnation in trapped African economies due to the widening mismatch. A country may fall into a middle-income trap after a factor advantage reversal that changes the pattern of mismatch. These patterns (poverty trap, middle-income trap and growth miracle) arise naturally when the assimilation ability is low.

Discussant(s)
Huiyu Li
,
Federal Reserve Bank of San Francisco
Terry Cheung
,
Academia Sinica
John Fernald
,
INSEAD and Federal Reserve Bank of San Francisco
JEL Classifications
  • E0 - General
  • O0 - General