Abstract:Since China’s tax sharing reform in 1994, the trend of after\|tax factor income distribution shows that the labor factor share is rapidly declining and the capital factor share is gradually increasing. Under the background of rapid growth of China’s tax revenue, the tax system has deeply influenced the factors’ income distribution. The influence mechanism of tax on factor income distribution is factor substitute effect and factor income effect: the former changes the relative rate of factors on the production process, so it changes the factor return level; the latter is that direct tax changes the after\|tax factor return level. This article finds that China’s tax has great influence on factor income distribution by system GMM estimate: In terms of direct taxes, corporate income tax reduces the share of capital allocation, personal income tax in the right part of the labor tax reduces the share of labor allocation; In terms of indirect taxes, the value\|added tax significantly reduces the share of labor allocation but has no obvious influence on capital; The business tax significantly reduces the share of capital allocation, while reducing the allocation of share of labor is not obvious.
Key Words:Tax System; Factor Income Distribution; Average Tax Rate

Abstract:This paper sheds light on how to test social preferences behind the responders’ rejection in the ultimatum game when the proposers offer a positive allocation. Employing a set of ultimatum game experiments and gathering the experimental data from Zhejiang and Beijing respectively, we make an investgation about the impact of intention based reciprocity preferences and outcomes\|based inequality aversion to human behavior’s decision. Through a mini ultimatum game in which the responder can signal different information about the intentions of the proposer, we found that the identical offers in an ultimatum game generate systematically different rejection rates depending on the other offers that are available to the proposer. The result shows that the reciprocity preferences play an important role in people’s decision. Meanwhile we investigate the mechanism of the inequality aversion through a set of modified ultimatum games. We found that there are 38% and 89% responders’ behavior in guarantor game and impunity game respectively can not be explained by the inequality aversion theory. The result shows that people prefer the intention of allocation more than the outcomes of allocation, which also means that the fairness of allocation process is more important than the fairness of allocation outcomes.
Key Words:Inequality Aversion; Reciprocity; Ultimatum Game

Abstract:This paper examines gender wage gap in urban China using a counterfactual analysis based on quantile regression. We have three main findings in this paper. First, the degree of gender wage gap varies with the positions of wage distribution. The gap is big in lower positions and small in higher positions of the wage distribution. The trend of the gap varies with the positions too. The gap is bigger and bigger in lower positions and the opposite occurs in higher positions. Second, female workers in lower positions suffer more discrimination and those in higher positions suffer less discrimination, which can account for why the gap is big in lower positions and small in higher positions. Third, the reason why the gap is bigger and bigger in lower positions is that female workers there face more and more discrimination. The reason why the gap is smaller and smaller in higher positions is that the difference of productivity characteristics (such like education) between male and female workers gets smaller and smaller in higher positions. 
Key Words:Wage Distribution; Gender Wage Gap; Quantile Regression

Abstract:There is an “erosion effect” of R&D on human capital accumulation. This paper develops an economic growth model with endogenous technological progress and human capital accumulation to characterize the “erosion effect” which implies a negative externality of R&D in human capital accumulation. This paper solves the steady\|state economic growth rate in decentralized economy and centralized economy separately, and draws a conclusion that monopoly markup, negative effect of learning by doing, “erosion effect” and overinvestment of physical capital and human capital would decrease human capital accumulation rate and economic growth rate.
Key Words:Human Capital; Technological Progress; “Erosion Effect”; Endogenous Growth

Abstract:We construct a simple two\|stage model of location\|price competition with mixed performance evaluation in which each firm’s de facto benefit increases in its own profit but decreases in its opponent’s. Depending on relative\|performance evaluation weight, our model yields many interesting theoretical results obtained in the existing literature, including the principles of minimum (maximum) differentiation. Our analysis can also shed light on the pervasive and prolonged phenomena of duplicative investment in China. 
Key Words:Mixed Performance Evaluation; Location\|Price Competition; Principle of Minimum (Maximum) Differentiation; Duplicative Investment

Abstract:In this paper we use China industrial corporate data to study the influence of group structure, a popular economic form of firm in emerging market, upon one firm’s R&D investment. We find that group affiliation can increase firm motivation in R&D through increasing the multiplier effect of R&D investment and decreasing financing cost. This conclusion is strongly evidenced in weaker property protection areas. Further, our analysis supports that R&D activity of business group has a spillover effect. That is, the technology improvement of group firm is not only attributed to its own R&D investment, but to R&D investment of other group members. Finally, R&D expenditure by group firm is positively correlated with cash flow of other group members through the internal capital market.

Key Words:Business Group; R&D Investment; Property Rights; Knowledge Spillover

Abstract：In this study, we investigate the relationship between business group affiliation and two types of agency problem in the state owned enterprises in China to show the effectiveness of group control as a measure of SOE reform. Drawing on a sample of listed SOEs in the period of 2004—2008, we find that (1) business group affiliation is useful in mitigating the traditional principal—agent conflicts within SOEs; (2) If the external monitoring mechanism is strong and effective, the business group affiliation would not aggravate so called principal—principal conflicts among shareholders in the SOEs; however, if such mechanism is weak, group affiliation does aggravate such principal—principal conflicts in SOEs. Our results suggest that the business group affiliation is a kind of effective governance structure to mitigate agency problem between managers and shareholders in SOEs while its side effect in aggravating principal-principal conflicts can be controlled by the external monitor from legal system. This study contributes to the business group literature and corporate governance literature; it also carries implications for the SOE reform practices.
Key Words：Business Group; SOE Reform; Agency Problem; Principal-Agent Conflict

Abstract：Investment-cash flow sensitivity is one of the main topics in investment theory research. Currently, the hottest debates are how to measure the financial constraint and what the relationship between financial constraint and cash flow sensitivity is. We use PIN, which is a direct measurement for information asymmetry, as the measurement of financial constraint. This measurement is based on microstructure theory and calculated by using high-frequency data from capital market. Our analyses prove that the higher the information asymmetry is, the lower firm investment will be. Further, we also find the higher the information asymmetry is, the higher investment-cash flow sensitivity will be, namely higher financial constraint would bring higher investment-cash flow sensitivity. We also exam the monotonicity between investment cash flow sensitivity and financial constraint, which shows that there is an unmonotonicity relationship between financial constraint and investment cash flow sensitivity.
Key Words：Investment;cash Flow Sensitivity; Information Asymmetry; Microstructure

Abstract：This paper studied VCs’ investment tactics, IPO underpricing, post IPO performance and corporate governance from the VCs’ backgrounds: Foreign, Government, Private and Mix. The results indicate: foreign and mix VCs implement more prudential investment tactics than government and private；firms financed by foreign VCs experience lower underpricing and yield higher returns than those financed by government sponsored VCs or private VCs；firms financed by foreign VCs experience higher governance quality with regard to board scale, composition and ownership structure than those firms backed by government or private VCs. All evidences argue that foreign venture capitalists own more special experience, monitoring skills and other knowledge related to VC investment than government and private venture capitalists. And we failed to find the significant difference between government-sponsored VCs and domestic private VCs, except that firms financed by government sponsored VCs exhibit larger scale board than firms backed by private VCs.
Key Words： Venture Capital; Underpricing; Abnormal Return; Foreign Capital; Fama-French

Abstract：This paper is concerned with testing the hypothesized fact whether Chinese municipal governments have the incentives to strategically reduce their environmental stringency in receiving foreign capitals. We present a new empirical framework that accounts for both unobservability of environmental stringency and strategic interaction among local government. The instrumental variable quantile regression method is employed to estimate the model using the panel data consisting of 277 municipalities in China from 2003 to 2008 Our analysis suggests that local governments do incorporate the environmental policy in neighboring municipalities into their own decision calculus in competition for FDI. This effect is stronger for municipalities with higher level of FDI than with lower FDI. The deterrent effect of environmental stringency upon FDI inflow is significant only when the municipality receives FDI from moderate to high level, implying that the “race to the bottom” may be absent in the regions with low or highest level of FDI.
Key Words： Foreign Direct Investment; Environmental Regulation; Spatial Panel Data Models; Quantile Regression

Abstract：Coal mine accidents have been the severest problem of public governance in China. Using the panel data of mortality of key state owned coal mines at provincial level in 1995—2005, for the first time this paper investigates the impact of collusion between local governments and coal mining firms and other factors on coal mining accident mortality. Specially, three variables are designed to indicate collusive actions: whether the vice governor who is charge of safety production is native, whether the vice governor is in his fifth tenure, and whether the vice governor is more than 50 years old. It is found that the collusion between local governments and coal mining firms has no significant effect on coal\|mining accident mortality when key state\|owned coal mines were under the supervision of central government in 1995—1997 and in 2003—2005; the collusion has significant effect on mortality when key state owned coal mines were under the supervision of provincial governments in 1998—2002. It is suggested that non native and mobile officials in charge and independence of the supervision institute of safety production are beneficial to low coal mining accident mortality.
Key Words： Coal Mine Accident; Safety Production; Mortality; Collusion