Summary： The macro-distribution structure of national income in China has changed significantly since the ownership system reform at the end of the last century. Between 2004 and 2013, China held three large-scale national economic censuses. Data analyses show how the national distribution structures of different institutional sectors changed and how these changes influenced micro- and household income distributions during this period.
A new basic socialist economic system and various coexisting ownership components have been developed and public ownership has been established as the main body since the ownership reform. As the socialist market's economic system has gradually replaced the traditional planned economy, China's income distribution depends on not only labor, but also other production elements such as capital, land, technology, property and management. Therefore, the distribution and redistribution of national income has changed significantly and become more complicated. Furthermore, the relationships between the non-financial enterprise sector, the general government sector, financial institutions and households have changed in terms of not only content, but also structures. The new distribution system has stimulated productivity and encouraged China's economic growth and development. It has also imbalanced the national distribution, which will probably affect long-term supply-demand balance and economic development.
This thesis analyzes the structural changes, trends and characteristics of national income distribution after the new century using data from three national economic censuses. It makes some important observations and conclusions. From 2004 to 2013, the proportion of income and outlay of property of the gross national income increased from approximately 10% to approximately 18%, the proportion of employee compensation in non-state-owned sectors increased to above 85% and government income from land rent increased significantly, meaning that the contents and structures of national income in China changed significantly. In the field of national income redistribution, the proportions of disposable income in the non-financial enterprise sector and national disposable income in the general government sector decreased, but increased in the financial and household sectors. Investment in the non-financial enterprise sector maintained a high growth rate, which relied on the high saving rate of the household sector. The capital formation of the non-financial enterprise sector, especially state-owned enterprises, relied highly on the saving of the household sector. The financial institution sector was the bridge between them. The high saving rate promoted economic growth. Long-term potential financial risk gradually increased. The gaps in disposable income in the household sector increased and then decreased. The turning point occurred in 2008. Census data show that household income gaps in China between urban and rural areas, different regions or different industries are related. A lower income per capita in a region means that it has a higher proportion of rural people or of agricultural employment, a lower level of industrial structure development and a higher Gini coefficient. Low income per capita in a primary industry, which is mainly agriculture in China, is the main factor influencing income distribution in the household sector today. This induces negative impacts from the supply side to curb aggregate demand. It is important to promote urbanization to improve the transfer of the labor force from the agricultural to non-agricultural industries, especially to non-state-owned enterprises with a better capacity to absorb employment. The reform of state-owned enterprises should be deepened to strengthen their competitive power, and the gap in income per capita levels between state-owned enterprises and other enterprises should be reduced. As the proportions of both high- and low-income groups decrease, the proportion of those in the middle-income group will increase, thereby improving aggregate demand and its structure. Therefore, it is reasonable to improve macro- and micro-income distributions from the supply side to efficiently and properly increase demand.
Keywords： Supply-side Structural Reform; Macro-distribution of National Income; Structure of Income Distribution

Summary： Nowadays, how to innovate and develop Marxist political economy and further build a socialist political economy with Chinese characteristics remains a major theoretical issue for China's economic academy. How to promote the mathematization of Marxist political economy is a question worthy of further study.
Due to a lack of understanding of Marxist political economy, there has long been a misunderstanding that it rejects mathematical methods and that compared with current western economics its degree of mathematization is not high and thus lacks scientificity. Scholars engaged in Marxist political economy have two views on its mathematization. Some scholars have fully affirmed the advantages of mathematical methods and have actively promoted the mathematization of Marxist political economy. Others have demonstrated cautious attitudes toward the mathematization of Marxist political economy and advocate insisting on its essence in the process of theoretical development. They want to avoid the western economics problem of excessive mathematics. However, they are cautious of vulgarization due to the pursuit of a mathematical form. If our aim is to innovate and develop Marxist political economy, it is necessary to analyze and respond to the above views.
We take the Marxist theory of optimal economic growth as a clue, systematically reviewing the characteristics of its theoretical modeling in seven aspects: productivity, production relations, labor value theory, social reproduction, capital organic composition and profitability, economic fluctuations, and inequality between the rich and poor. Furthermore, through comparative analysis of the Marxist theory of optimal economic growth and the mathematical model of western economics, we provide a preliminary discussion of the basic principles and modeling ideas of the mathematization of Marxist political economy.
Our research indicates that Marxist political economy does not exclude mathematical methods. However, the process of mathematical modeling must adhere to historical materialism as a basic principle, which means seizing the contradictory relationship between productivity and production relations and their movement to analyze the law of economic and social operation. It is a viable modeling idea to construct a dynamic model based on labor value theory, which involves two kinds of behavior subjects (workers and capitalists), distinguishes production goods and consumption goods, and includes the exploitative relationship and the characteristics of circuitous production. Specifically, at the productivity level, along with technological progress and industrial revolution, we focus on the impact of the combination of labor and means of production on the mode of production, using the dynamic changes in the number of capital goods per unit labor to examine the proportion of labor allocation and economic growth between two categories. At the level of production relations, based on the theory of labor creating value, we translate the economic production system into a value system by calculating the value per unit of goods in two categories. Furthermore, based on the specific productivity development stage (i.e., the extent to which the production of goods limits human labor in terms of physical strength, endurance, and precision in the production process), we examine the relationship between the particular ownership and the exploitation of the capitalist class to the working class. The income distribution relationship as a flow affects the ownership of production goods as a stock, which makes production relations feeding back to productivity and promotes economic and social development. As western economics mainly solves the problem of resource allocation and focuses on describing the “invisible hand” of the market mechanism, it hardly deals with the problem of production relations and the translation from a production system to a value system. Therefore, this determines the complexity and innovation of Marxist political economy modeling.
Keywords： Marxist Political Economy; Mathematical Method; Historical Materialism

Summary： Since the reform and opening-up, China's local governments at all levels have played a pragmatic and developmental role and have generally pursued economic growth as emphasized by mainstream theories. Under the framework of central fiscal and administrative decentralization, they possess considerable administrative and fiscal power to introduce and implement industrial policies. The economic independence of China's various local governments affords them the independence and possibility to develop local industries. Therefore, China's local sample can be exploited to study how governments introduce industrial policies, further assess whether industrial policies can promote industrial development and discuss the conditions needed for success.
Under the theoretical framework of development-oriented government, this paper discusses the internal logic of the introduction and function of local industrial policies. Furthermore, it emphasizes elaborating the mechanisms and conditions of governmental industrial policies for industrial structure optimization and upgrading, and empirically analyzing the degree and mechanism of industrial policies in local industrial structure optimization and upgrading.
This paper systematically collects and sorts out the industry-related local laws and government regulations issued by China's provincial governments to establish China's provincial local industry regulation dataset. It then uses industry-related local laws and government regulations as a proxy indicator of the intensity of local government industrial policies to quantitatively identify industrial policies. Furthermore, combined with provincial panel data of China's 31 provinces from 1997 to 2014, this paper empirically tests the driving functions of industrial policies in industrial structure optimization and upgrading, and investigates the synergy effects of industrial policies, market forces and government capacity on the influencing mechanisms of industrial policies.
The results show that the introduction and implementation of industrial policies significantly promote regional industrial structure optimization and upgrading. Such a promoting effect of industrial policies on industrial structure optimization and upgrading is highly dependent on the degree of local marketization and local government capacity. The degree to which industrial policies' promoting effects depend on the degree of marketization and government capacity is statistically and economically important. As a developing economic entity, China's governments at all levels can play a development-oriented role and reasonably introduce and implement industrial policies to realize industrial structure upgrading and market economy development with the help of government capacity and policies based on the adaptation to market deepening and mechanism improvement.
The main contribution of this paper is to deepen the understanding of establishing and implementing effective government policies, which is reflected in several ways. First, this paper provides a logical theoretical framework for understanding the effects of industrial policies based on the perspective of development-oriented government. Second, it measures industrial policies based on local laws and government regulations to expand the measurement perspective in the literature, the rationality and feasibility of which are demonstrated. Third, this paper not only empirically tests the possibility of industrial policies to promote industrial structure adjustment and upgrading, but also investigates how to better develop this possibility. In particular, it returns to the origin of the basic market role and emphasizes that the relationships between government industrial policy effects and market power demonstrate more complementarity. Fourth, this paper discusses both market and government failure, and uses rigorous empirical demonstration to emphasize that the effectiveness of government policy intervention inevitably depends on the administrative capacity and efficiency of the government (state capacity).
Keywords： Industrial Policies; Industrial Structure; Marketization; Government Capacity

Summary： Since 2012, when the People's Bank of China issued a report stating that the conditions of China's capital account liberalization were roughly mature, worldwide concern has aroused. There has also been heated domestic debate over the issue of capital account liberalization, with priority focused on domestic structural reforms and capital account liberalization. Due to China's role in the world economy,its capital account liberalization will be one of the most important inputs added to the international financial architecture in the coming years. China now faces the dilemma of whether to further open capital accounts. The RMB's exchange rate marketization reform has not yet been completed and the local government's debt leverage, shadow banking and asset bubbles are regarded as potential triggers of systematic financial risk in China. Therefore, accelerating the opening of capital accounts may result in speculative shock. However, the internationalization of the RMB as an invoicing currency and its inclusion in the special drawing rights basket would speed up China's capital account liberalization.
The risk assessment of capital account liberalization can be traced by its impact on China's international investment positions. Until now, the relevant empirical studies of China's capital account liberalization have been questioned for their lack of a micro-foundation or an effective solution for the dynamic stochastic general equilibrium (DSGE) model. In the traditional DSGE model, it is impossible to obtain steady-state asset allocation from the perspective of rate of return, as the return of different assets is equal in the steady state through arbitrage. As the risks of equity and bonds are different, this provides an alternative perspective to portfolio allocation. Devereux & Sutherland (2011) successfully obtain analytic solutions in this regard. Following Devereux & Sutherland(2011), we establish a DSGE model focused on the extension that constrains transactions of foreign equity investment, which includes both foreign direct investment and stock market transactions. We then apply the model to the policy simulation.
In the two-country DSGE model, we introduce adjustment costs to reflect the degree of capital control on foreign equity investment and remove the instability of the model compared with He & Luk(2013). Based on the GDPs and capital stocks of China and the United States, the parameters are calibrated using Bayesian estimation. To address the potential risks of China's capital account liberalization, three scenarios are simulated: completely opening, completely closing and doing nothing (status quo). We try to identify the effects of four key variables on China's international investment position (loosening capital control, narrowing the total factor productivity gap between China and the United States, lowering China's capital income ratio and the risk aversion coefficient). The simulation suggests that (1) along with opening China's foreign equity investment and decreasing the capital income ratio, China's counterpart has the motivation to reduce its holdings of its equity assets, meaning that China faces a gigantic capital outflow pressure; (2) regardless of the scenario, along with the relaxation of capital controls, China's counterpart is always inclined to reduce its holdings of China's equity assets;(3) reducing the risk aversion coefficient of Chinese residents eases the pressure of capital outflow; and (4) the effect of foreign equity investment on home countries (China and its counterpart) is asymmetric. The main reason behind this asymmetry is the USD's exorbitant privileges. In other words, the United States' net foreign assets (assets minus liability) enjoy positive excess return.
We conclude that economic structural reform should lead capital account liberalization and that strengthening domestic financial systems through reform would help ease the pressure of capital outflows. Especially in the circumstance of capital outflows and under the depreciation expectation of the RMB, China should be very prudent in loosening its control of capital outflows.
Keywords： Policy Simulation; Capital Outflows; Foreign Reserves; Foreign Equity Investment

Summary： The Chinese economy has long suffered from solving the financing problems of small-and-medium enterprises (SMEs), attracting the attention of policy makers and industry. The literature on the financial constraints of SMEs is still growing. Theoretical research has praised the advantages of large banks in collecting “hard information” (e.g., enterprises' economic and credit status and audit information) due to their economies of scale, although they perform poorly in collecting “soft information” (e.g., relationships) and delivering information due to their complex internal structures (Stein, 2002; Berger et al., 2005; Berger and Udell, 2006; De la Torre, 2010; Berger et al., 2014). In a highly influential Chinese work, Lin & Li (2001) propose the “Hypothesis on the Comparative Advantages of Small-and-medium Banks (SMBs)” based on China's financial institutional background. However, the evidence (especially micro-evidence from a large representative sample throughout China) is still too inadequate to make a conclusion on this hypothesis.
We use county-level data on China's financial bank branches from the China Banking Regulatory Commission (CBRC) from 2006 to 2011. We focus on four main types of banks: large state-owned commercial banks, joint-equity commercial banks, city commercial banks and rural financial institutions. We exclude the sample from Tibet due to its extreme economic and social conditions. The Agricultural Bank of China notably stripped off non-performing loans of approximately RMB750 billion in November 2007 before entering the stock market. Therefore, we exclude all branches of the Agricultural Bank of China in each county for comparability across years.
Our empirical findings suggest that an increase of RMB1 for a large state-owned commercial bank loan is associated with an increase of RMB0.0568 for an SME loan, which starkly contrasts with the increases of RMB0.1, RMB0.199 and RMB0.248 for joint-equity commercial banks, city commercial banks and rural financial institutions, respectively. These findings are highly consistent with a battery of robustness checks. To deal with potential endogeneity concerns, we utilize the number of newly established branches of specific categories of banks as an instrumental variable (IV). The IV results resemble our baseline ordinary least squares results. We further use the plausible exogenous IV approach proposed by Conley et al. (2012) to strengthen confidence in our IV estimations.
We contribute to the literature in two ways. First, with detailed county-level data, we provide solid empirical evidence for Lin & Li's (2001) “Hypothesis on the Comparative Advantages of SMBs” that SMBs reveal unparalleled advantages in terms of providing SME loans. Second, our analysis documents the correlation between the increase in banking depository financial institutions' loans and the increase in their non-performing loans. A simple back-of-the-envelope calculation suggests that SMBs can cover up their excess non-performing loans stemming from more SME lending using higher interest rates.
Our findings yield important policy implications. First, the Chinese government should encourage the development of SMBs to support the real economy. Second, in accordance with Wang (2004), we recommend that policymakers not urge large state-owned commercial banks to increase their lending to SMEs through administrative means, as this would run counter to their comparative advantages. Such an administrative command may lead to an increase in non-performing loans and induce a financial crisis. Our findings offer insights encouraging policy makers to rely on SMBs to serve SMEs' financing. Third, China's initially completed interest rate marketization reform should further raise SMBs' risk pricing capability and contribute to relieving SMEs' financial constraints. Branch-level micro-data should be collected to better reveal the micro-foundation of the “Hypothesis on the Comparative Advantages of SMBs” that underlie lending technologies and internal organization structures.
Keywords： Small-and-medium Bank; Small-and-medium Enterprise Loan; Non-performing Loan

Summary： Whether the transmission channels of monetary policy are smooth determines the effect of monetary policy. To reveal the specific transmission channels through which monetary policy affects the real economy, a significant volume of literature has evolved in recent years. Such literature has focused on the formal financial market represented by the banking system without systematically accounting for the role of informal financial markets. This framework does not fully apply to China's financial environment, which is characterized by a dual financial structure and a dual-track interest rate system.
Given the limited literature on the effect of monetary policy on the informal financial sector, we try to theoretically analyze this issue and expand the research boundary of the monetary policy transmission mechanism to opportunity cost, asset substitute, balance sheet and adverse selection channels. On this basis, we empirically examine the effect of monetary policy on the interest rate of informal finance via the “the implementation of monetary policy—change of credit market—adjustment of interest rate of informal finance” route using the regression analysis model, principal component analysis method and intermediary test method.
Using statistical data on China's macro-economy and survey data from the People's Bank of China from 2005Q1 to 2015Q4, we investigate how monetary policy affects the interest rate of informal finance by accounting for the specific role of the credit lending market and controlling China's macroeconomic condition and interest rate liberalization reform. We find that the effect of monetary policy on the interest rate of informal finance is consistent with theoretical expectations. A tightened monetary policy shifts the interest rate of informal finance upward. Furthermore, the effectiveness of price-based policy instruments is different from that of quantity-based policy instruments. Although the reserve-deposit ratio significantly changes the interest rate of informal finance, the interest rate policy does not. We address this issue from the perspective of “hidden cost”. Further study has found a significant intermediary effect in the transmission mechanism, such that monetary policy stance affects the interest rate of informal finance by influencing the credit lending rate, credit amount and bank risk taking. This indicates that the credit market exerts a significant intermediary effect through the opportunity cost, asset substitute and adverse selection channels.
We make two main contributions. First, we try to open the black box of the transmission mechanism of monetary policy in the informal financial market by theoretically analyzing this issue through four different channels. Second, we empirically test the total effects and intermediary effects of monetary policy on the interest rate of informal finance. We conclude that there exist direct and indirect effects of quantity regulation, price regulation and risk regulation on the interest rate of informal finance from monetary policy via the credit market.
We suggest that a series of financial market reforms, such as industry transformation and upgrading dominated by the banking system, be steadily promoted to stop the interest rate of informal finance from substantially deviating from the nominal credit lending rate. Furthermore, under the main tone of the current supply-side structural reform, China's government should implement total volume regulation in coordination with structural adjustment by considering the fund raising difference between the internal and external institutional systems.
Keywords： Interest Rate of Informal Finance；Monetary Policy；Intermediary Effects

Summary： By relaxing the complete rationality assumption imposed in the Lucas (1978) consumption-based asset pricing (CAPM) model, we study a new CAPM model in an endowment economy, which incorporates investors' distorted beliefs in economic fundamentals. When there exists discrepancy between investors' subjective beliefs and the market objective operating mechanism, our model can capture many well-documented economic anomalies, such as the United States equity premium puzzle and accumulative excess returns. In addition, our paper addresses the low correlation between China's consumption growth rate and its equity premiums. This paper further establishes a new GMM estimation method, which works with non-mathematical expectations. As current GMM estimation methods can only deliver correct estimations under mathematical expectations, our new estimation method overcomes one of the biggest challenges faced by the current GMM literature. Based on our new model and robust estimation procedure, we find that investors in China have significantly low sensitivity to changes in mean levels of economics fundamentals than those in the United States. Investors in China are prone to react to changes in the volatilities of economic fundamentals. The results of our paper help to explain a well-known confusing phenomenon in China: that the stock market's performance has been deviating from its real economy for a long time.
Numerous studies have explored the United States stock market and found a strong equilibrium between the stock market and real economy (Fama, 1990; Schwert, 1990; Cheung & Ng, 1998). Since 1990, China has been experiencing rapid development in many aspects. Unfortunately, the performance of its stock market has been contradicting investor performance and the government's expectations, while deviating from the real economy (Han & Hong, 2014).
China's quarterly average consumption growth rate per capita was about 1.81% from 2002 to 2015, about six times as large as that in the United States. Although the United States has experienced low and smooth consumption growth for many years, the correlation between equity premiums and its consumption growth is about 50%, about four times larger than in China. This paper aims to address this puzzling phenomenon in China, that is, why China's stock market does not react positively to its real economy.
As reported in the literature, investors are not rational in all aspects in China (Chen & Zhou, 2004; Chen, 2005a). A well-known survey conducted by Greenwood & Shleifer (2014) reports that investors act on their distorted beliefs, even in the United States, where the stock market is relatively mature. Traditional assumptions on investor behaviors assume that investors are rational in all aspects and that they can correctly perceive all relevant operating mechanisms in the stock market. This survey's results cast serious doubt on such fully rational assumptions widely imposed in CAPM models. We study the stock markets of the United States and China from 2002 to 2015, which enables us to explore this possibility by allowing extrapolation biases on economic fundamentals. Such extrapolation helps to explain several economic anomalies, especially the low correlation between China's consumption growth and economic fundamentals.
The subjective beliefs of investors deviate from the objective beliefs because investors hold extrapolation biases on economic fundamentals, which leads to subjective expectations in Euler equations. In our study, we propose a method for adopting GMM in a framework with non-mathematical expectations. This approach enables future relevant studies to conduct estimations and statistical inference by incorporating additional psychological evidence into the asset pricing literature. Based on our robust estimation method, our paper provides some constructive suggestions on how to better regulate China's stock market, and sheds some light on how to let the stock market lend stronger support to the real economy.
Keywords： Economic Fundamentals; Complete Rationality; Distorted Beliefs; Equity Premium; Accumulative Excess Returns

Summary： At the end of 2016, Professors Weiying Zhang and Justin Yifu Lin launched a heated debate about whether the government should adopt industrial policy. Although Professor Zhang emphasized the market's role as the “invisible hand”， Professor Lin argued for the active role of the government. Considering that R&D investment is of great importance to economic growth and the potential risks of corporate R&D activities, the government often provides tax incentives to enhance R&D investment. Thus, this paper attempts to shed light on industrial policy disputes from the perspective of R&D stimulus policies. In China, to encourage companies to invest in R&D, the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation jointly issued the Administrative Measures for the Identification of High-tech Enterprises (hereafter referred to as Administrative Measures) on April 14, 2008.
As Krugman (1983) suggests, industrial policies supporting specific firms often require certain selection criteria. The Administrative Measures use a nearly one-size-fits-all R&D intensity standard to classify a firm as a high-tech enterprise: if a firm's sales in the preceding year are less than RMB50 million, the ratio of R&D investment to sales must not be less than 6%; if a firm's sales in the preceding year are between RMB50 million and RMB200 million, the ratio of R&D investment to sales must not be less than 4%; and if a firm's sales in the preceding year are more than RMB200 million, the ratio of R&D investment to sales must not be less than 3%. Thus, the ratio of R&D investment to sales is an important threshold. Only when R&D intensity exceeds a threshold may a company be referred to as a high-tech enterprise and thus enjoy a 15% corporate tax rate, compared with the 25% tax rate for non-high-tech companies, along with a wide range of government subsidies. This paper studies whether companies manipulate R&D to meet the relevant standards using firm-level data.
Following Burgstahler & Dichev (1997), this paper identifies companies that may engage in R&D manipulation, as their R&D intensities just meet or beat the threshold defined by the Administrative Measures. Its sample includes companies listed on the Chinese A-share market after excluding financial companies, companies that demonstrate abnormal conditions, and companies with missing values from 2008 to 2014. This paper applies the methodology proposed by Beaver et al. (2007) to test R&D intensity discontinuity around the threshold. It finds that the distribution of R&D income ratio is discontinued near the regulatory threshold, which confirms the existence of corporate R&D manipulation. R&D manipulation is positively correlated with the tax benefits and government subsidies received by a firm. In addition, it is more pronounced for private firms, profit-making firms, and firms located in weak tax enforcement provinces. Furthermore, if a firm's R&D intensity just meets or beats the threshold specified by the Administrative Measures, the positive relationship between R&D investment and the number of patent applications or patents granted decreases.
This paper may contribute to the following strands of literature. First, it provides micro-evidence for the “industrial policy dispute”. As there is information asymmetry in the process of industrial policy implementation and the cost of violating regulation is relatively low in China, companies may engage in opportunistic behavior to meet the “threshold”， making industrial policies less effective. Second, in contrast to research that has mainly focused on companies' earnings thresholds, this paper studies the threshold of a specific accounting item (i.e., the R&D intensity threshold). Third, this paper studies the relationship between R&D investment and R&D output from the perspective of R&D manipulation. It has long been recognized that R&D investment may improve innovation levels. However, this paper emphasizes that R&D investment may not increase a company's innovation output due to R&D manipulation. This paper's findings may also shed light on the construction of selection criteria for implementing R&D stimulus policies.
Keywords： Identification of High-tech Enterprises; Industrial Policy; Threshold of Regulation; R&D Manipulation; R&D Performance

Summary： The role of the media as an external governance mechanism in the capital market has been verified by empirical evidence and is increasingly given public attention. However, similar to active stock markets and close analyst followings, negative media reports may pressure firms and their management, resulting in the avoidance of risky but valuable innovation projects (market pressure hypothesis). This tendency is more apparent when the media industry as a whole is crazy for sensational news. The current media ecology in China is rightly featured as epidemic, scandalized, sentimentalized, tabloid news and even false news (Xiong et al., 2011), which is greatly alien to the institutional environment required by “mass innovation” and the “spirit of craftsman” advocated by the central government. Therefore, exploring the effect of media pressure on corporate innovation in China's context should generate more implications for theoretical research and reality.
By measuring media pressure and corporate innovation as the number of negative media reports and patents, we test this hypothesis. Original data on media reports are obtained from the Chinese Economic News Database and data on patents are manually collected from the website of the State Intellectual Property Office. The results show that the number of negative media reports is significantly and negatively associated with corporate innovation, consistent with the market pressure hypothesis. This remains unchanged after controlling for the bias induced by endogeneity and conducting a series of robustness tests. Furthermore, after differentiating media reports by content, source, severity, and depth, we find that only accounting-related negative media reports are negatively related to corporate innovation with statistical significance, supporting that short-term performance pressure impedes corporate innovation; more authoritative and severe negative media reports are more likely to reduce corporate innovation, suggesting that more negative reports lead to more negative effects; and deeper negative media reports are more likely to inhibit corporate innovation, whereas those from business journals, which can restore entire events, promote innovation, indicating the importance of responsible, objective, and comprehensive media reporting. Finally, the numbers of all media and non-negative media reports are positively related to corporate innovation.
We make three important contributions. First, we verify the market pressure hypothesis using corporate innovation as an example in China's current media ecology. The literature supports the corporate governance role of the media (e.g., Dyck et al., 2008; Li & Shen, 2010). However, the potential negative effect of media pressure on firms has been overlooked. Second, we broaden the literature by contributing a more comprehensive and deep understanding of the role of media in the capital market. Different from Dai et al. (2015), we find more profound and interesting results after manually collecting all media reports on firms and then differentiating their nature. The number of negative media reports is negatively related to corporate innovation, whereas the number of total and non-negative media reports demonstrates the contrary, challenging the findings of Dai et al. (2015). Finally, we make some evocative and enlightening findings. For example, non-deep negative media reports curb corporate innovation, whereas negative reports that can restore events suggest that only responsible, objective, and deep media reports can function as good corporate governance mechanisms.
This study also has real-world implications. Our results do not necessarily indicate that the capital market does not need monitoring or negative reporting from the media. On the contrary, it detects a lot of corporate fraud (e.g., Miller, 2006). We encourage the media to restore events based on careful verification and thorough investigation with authenticity and objectivity in mind, rather than releasing news solely to attract an audience. Thus, it is compelling for the government to develop a sound media ecology by strengthening self-regulation from the industry, improving the litigation and indemnity system, and increasing punishments for illegal media and actions.
Keywords： Media; Negative Media Reports; Corporate Innovation; Market Pressure; Risk Taking

Summary： “Creative destruction” drives economic growth (Schumpeter, 1934). However, such destruction also brings huge risk. Enterprises play a major role in the process of creative destruction. Enterprises' risk-taking ability is quite important for the improvement of total factor productivity, asset value and economic growth. Given that marketization reform is essentially the adjustment of the interest structure, the number of conflicts of interest simultaneously increases as marketization develops, which inevitably exacerbates uncertainty and decreases enterprises' risk-taking ability. Thus, it is significant to know how to reduce the negative effect of social conflict to increase the innovation and investment energy of enterprises. Does an increase in social conflict reduce the risk-taking capacity of enterprises in a transition economy, such as China? How can we minimize the effect of social conflict on risk-taking ability, either through better institutions or more stability maintenance? If institutions can help lessen the negative effect of social conflict, which institutions play a more important role—property right institutions or contractual institutions? We aim to answer these questions. We explore how social conflict affects the risk-taking ability of small and medium enterprises, focusing especially on how institutions help to reduce the negative effect of social conflict.
We build a dataset that matches the financial data of enterprises listed in the Shenzhen Small and Medium Enterprise Board, city-level social conflict data and the marketization index from 2005 to 2013. We use the fixed-effects model and instrumental variable regression to empirically verify the preceding questions. We find that social conflict has a negative effect on the risk-taking ability of enterprises, whereas institutions alone have positive effects and lessen the negative effect of social conflict via the interaction effect. Furthermore, since 2008, the effect of social conflict and the interaction effect of institutions and social conflict have both been lower in magnitude, whereas institutions themselves have shown no significant effects. To evaluate the value of institutions in detail, we divide institutions into property right institutions and contractual institutions. We find that property right institutions have larger positive effects on the risk-taking ability of enterprises than contractual institutions, but smaller effects on reducing social conflict's negative effect on risk-taking ability. Finally, we find that institutions can reduce the negative effect of social conflict on the risk-taking ability of private enterprises rather than state-owned enterprises.
We make two theoretical contributions. First, we use social conflict data for the first time, empirically studying how institutions perform at reducing the negative effect of social conflict and quantifying the value of the market system. This adds to the literature that analyzes the risk-taking ability of enterprises from the perspective of macroeconomics and social environment. Second, the analysis in this paper focuses on small and medium enterprises, which are innovative. Despite research regarding the risk-taking of new enterprises, no study has considered innovative enterprises. However, risky investment is what innovative small and medium enterprises need during their development.
This paper has important policy implications. Deepening reforms lead to interest restructuring and marketization results in some conflicts. Despite the negative effect of social conflict, building contractual relationships between economic agents effectively protects enterprises from the risk of uncertainty on investment. The marketization process also requires a sound contractual system. Building good relationships between enterprises and the government and ameliorating property right institutions are important in improving the risk-taking ability of innovative enterprises. Finally, small and medium enterprises are main contributors to technology advancement. Whether these innovative enterprises can bear the risk is key to not only improvements in innovativeness, but also the cultivation of a new growth engine.
Keywords： Property Right Institution; Contractual Institution; Social Conflict; Small and Medium Enterprises' Risk-taking Ability

Summary： From 1998 to 2015, Chinese commercial residential buildings experienced skyrocketing housing prices, which increased by 2.3 times. The average annual housing prices of four metropolises, including Beijing, Shanghai, Guangzhou, and Shenzhen, have increased by more than 20% since 2010, resulting in wide discussion of fleeing urban life. Urban growth results in the accumulation of human capital from the labor force. Nowadays, China emphasizes innovation, entrepreneurship, and talent introduction, aiming for highly skilled laborers to consolidate the internal driving force of urban development. However, laborers must inevitably consider housing when they choose a city, and the effects of housing prices should not be overlooked.
Theoretically, high housing prices have both positive and negative effects on labor migration. High housing prices in one city mean better economic development, better job opportunities, greater probability of wealth accumulation, and better amenities. Thus, people often choose cities that have high housing prices. However, the rapid increase of housing prices significantly increases the living costs of migrant laborers. In this paper, we find a U-shaped trend in labor migration using China Labor-force Dynamics Survey (CLDS) data from 2012 and 2014 and the housing prices of 250 prefecture-level cities using conditional logistic regression. The results are robust when controlling for the measurement error of housing price effect on individual migration choice; outflow place characteristics, such as distance to inflow places; and personal characteristics, such as individual motivation to migrate to outflow places.
We focus on analyzing the effects of different types of labor on housing price. Heterogeneous labor forces with different educational levels, certificate ownership, and family backgrounds react differently to housing price. Highly skilled workers with advantages in these three factors are more sensitive to their settled housing prices due to their willingness to purchase, whereas low-skilled workers prefer to rent. Furthermore, we find that individuals who became residents in settled cities are relatively more sensitive to housing prices. In addition, the inverted U effect is more significant in coastal metropolises.
This paper's major contribution can be broken down into three aspects. First, we develop a model that demonstrates the effect of housing price on labor migration. We treat housing price as not only the living cost, but also the signal of migrant laborers' settling choices. Second, CLDS data track individuals' migration routes and include information on the cities to which they migrate. We create a novel database by matching CLDS and housing price data from 2000 to 2012 for 250 prefecture-level cities. We provide reliable empirical evidence of the effect of housing price on labor migration. Third, we illustrate the importance of heterogeneous labor forces and migrating city features. Our study provides policy implications and a new angle from which to research similar topics in the future.
Based on our findings, housing price significantly influences labor migration, and housing price policy should be adjusted according to a city's housing price level. In metropolises that outweigh the breakpoint, the local government should increase the supply of residential land to attract and retain highly skilled laborers. Moreover, as high housing prices have larger inhibiting effects on highly skilled laborers than on low-skilled laborers, some policies aimed at driving away low-skilled laborers by limiting land supply to improve housing prices may have opposite effects. Specifically, metropolises should increase land and housing supplies to attract the immigration of more highly skilled laborers and to promote innovation, business starting, and industrial upgrading. In addition, the breakpoint of inland cities is much lower than that of eastern coastal cities. From this aspect, perhaps more alarmingly, the negative effect of increased housing prices on laborer migration to inland cities may influence the endogenous urban growth capacity.
Keywords： Labor Migration; Housing Price; CLDS; Conditional Logit

Summary： The transfer of rural surplus labor is associated with China's economic growth. Furthermore, labor reconfiguration makes a great contribution to economic growth. Rural migrant workers have been an important part of China's labor market. China's urban labor market has experienced great change. Labor market supply and demand changes may affect employment, wages and discrimination. Therefore, the aim of this paper is to analyze the change in the decision mechanism of employment and wages for rural migrant workers in China's urban labor market.
Although numerous studies have analyzed the discrimination of rural migrant workers in China's urban labor market, most of them have used cross-sectional data, with little emphasis on comparative studies. These studies can be classified into two groups. Studies conducted before 2002 generally found the ratio of discrimination on wage gap between urban local workers and rural migrant workers to be approximately 50%. Those conducted after 2002 have found the ratio of discrimination to be much lower. However, it is worth noting that comparing these results cannot directly show the change in discrimination in China's urban labor market, as the methods and data used in these studies have differed. We find that few studies have discussed the change in discrimination and that employment segregation has not been considered. Nevertheless, some researchers have found that system segregation and occupation segregation still exist when rural migrant workers enter the urban labor market. Therefore, we analyze the discrimination faced by rural migrant workers in two parts using the dual labor market and crowding effect theories: (1) whether workers can enter the labor market and (2) whether discrimination exists after workers enter the market and how wages are determined. To address the first issue, we analyze factors of employment for urban local workers and rural migrant workers using the multinomial logit model and the 2001 and 2010 Chinese Urban Labor Survey. We then discuss the employment distribution of rural migrant workers in the self-employment, non-public and public sectors, in which they are considered urban local workers by counterfactual analysis.
For the second part, we discuss the change in the wage decision mechanism and wage discrimination in each sector. Based on the Mincer function, we analyze the effects of several factors on wage in each sector for urban local workers and rural migrant workers using unconditional quantile regression. Furthermore, we pay more attention to the effect of education on wage and the change in return to education from 2001 to 2010. We then decompose the wage gap between urban local and rural migrant workers into two parts using Firpo, Fortin and Lemieux decomposition, proposed by Firpo et al.(2007), and compare the change in discrimination faced by rural migrant workers in each sector from 2001 to 2010.
The main conclusions are as follows. First, the discrimination of employment segregation faced by rural migrant workers decreased in 2010 compared with 2001. The education of rural migrant workers had a significant effect on the possibility of entering the public sector in 2010, but this effect did not exist in 2001. Furthermore, the effect of age on employment decreases in both significance and degree. Second, the results of decomposing the wage gap between urban local workers and rural migrant workers in each sector show that the wage discrimination faced by rural migrant workers decreased in 2010 compared with 2001. They also indicate that the wage gap is mainly affected by differences in individual characteristics, not by discrimination. Combining employment segregation and wage discrimination, we conclude that employment segregation still exists when rural migrant workers enter the public sector. However, once they entered the public sector in 2010, wage discrimination sharply decreased. Given these findings, we suggest that policymakers further enhance recruiting and hiring norms to change the dual labor market between urban local workers and rural migrant workers into a fairer, more normative and more uniform labor market.
Keywords： China's Urban Labor Market; Rural Migrant Workers; Employment and Wage; Discrimination Change

Summary： As a national development strategy, civil-military integration (CMI) policies have been vigorously and unprecedentedly implemented in China to coordinate the development of military and civilian sectors, and thus enrich the country and strengthen its armed forces. However, many important theoretical issues have not yet been interpreted, such as why and how CMI can synchronize both economy and defense development, what the suitable social and economic conditions are for CMI policy implementation, and what the limitations are for the deep development of CMI policy. Most of the literature emphasizes the significance of CMI policy or descriptively discusses the experience of CMI. Much less literature provides serious empirical analysis. Furthermore, most analyses have been based on the theory of neoclassical economics, focused on resource allocation, put particular stress on breaking down the barriers that separate defense industries from civilian economic and research systems, and enhanced the flow of economical factors. One latent issue is that these analyses have neglected the role that industrial structure and organization play in reducing the relative scarcity of resources.
In this paper, we build a model based on the theory of division of labor to study the CMI performance of industrial organizations, especially the condition that CMI policy raises the probability of increasing return. We make several findings. First, the process of CMI is the same as that of deepening the division of labor between civil and defense sectors, which can enhance the total social production and exchange network and ultimately promote economic development and defense construction. Thus, we provide a theoretical foundation for the significance of CMI as a national strategy. Second, we explore the specific mechanism of the CMI function. The economic and defense performance of CMI is derived from the increasing returns from specialized economies, diversified economies, and roundabout production. Under different division of labor modes, the economic sources of increasing return are different. Third, given other technical parameters, such as the elasticity of intermediary goods and the defense expenditure ratio, the evolution of CMI is subject to transaction efficiency and depends on the tradeoff between returns on the division of labor and coordination costs. The visible hands of the government and the market should join to enhance transaction efficiency and promote CMI.
Compared with most of the relevant literature, we use new classical economics of division of labor theory to study the potential effects of CMI on economic organization and economic performance. Our model can not only interpret the potential sources of increasing CMI returns and give the conditions in which it happens and its limitations, but also explain why the boundary between the defense and civil sectors tends to lose as the extent of CMI grows. An important implication for CMI is that we should focus on not only resource allocation, but also the organization model and the level of division of labor, as the latter also has positive impacts on reducing the relative scarcity of resources despite being neglected in the literature.
Our study has several important policy implications. As trade efficiency is an important factor in the level of CMI division, policymakers should follow market principles and strengthen top-level coordination to promote standardization and thus increase trade efficiency. Furthermore, the market system should be cultivated and improved and the role of the market mechanism in the individual free choice of specialization model and in the guidance of the social division of labor should be given full attention. Policymakers should remain committed to consolidating and increasing the unity between the government and armed forces to eliminate barriers to market access, protect property rights, and guarantee fair and open markets that work at a low cost.
Keywords： Civil-Military Integration; Enriching Country and Strengthening Armed Forces; Economy of the Division of Labor; Increasing Returns; Transaction Efficiency