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ID: 186211

What Drives Chinese Firms' Export Sophistication? a Perspective from the Rise of Minimum Wages / Li, Xiaoping

Li, Xiaoping	Journal Article
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This paper re-examines the driving factors behind the upgrading of China's export sophistication. Based on county-level minimum wages and firm-level export data for 2000–2013, this paper finds that the labor cost shocks caused by rising minimum wages have a significant positive impact on Chinese firms' export sophistication. Channel tests show that the positive effect of rising minimum wages on firms' export sophistication derives from the exit of less sophisticated products and the reallocation of the relative share of surviving products, rather than introducing new highly sophisticated products. Heterogeneity analysis reveals that rising minimum wages have a greater impact on export sophistication for low-wage firms, domestic firms, and labor-intensive firms. This paper has implications for developing countries regarding the transition from a low-cost labor trade model to a sophistication-driven trade model.

Key Words

Export Sophistication ; Minimum Wages ; Chinese Firm

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ID: 159030

Who determines Chinese firms' engagement in corruption: themselves or neighbors? / You, Jing

You, Jing	Journal Article
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We investigate the determinants of firm corruption and highlight contagious diffusion of firm corruption under mutual influences of firms' past corrupt history and between peers. The analysis finds that firms' decision-making on engagement in corruption can be affected vertically by their own past experience of bribing bureaucrats and horizontally by the contagion effects of neighbors' observed malfeasance, while there is substantial regional heterogeneity. Moreover, these horizontal contagion effects are nonlinear depending on the distance between neighbors. We also identify three channels underlying “osmosis” of corruption: firms' geographic networks, information exposure, and local marketization. The strongest contagion effect appears in the eastern region, indicating that petty firm corruption can develop into a systematic phenomenon. More practical anti-corruption policies call for cooperation in design and implementation across administrative areas.

Key Words

Corruption ; Spatial Model ; Copying Behavior ; Chinese Firm

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