Chronic Diseases, Labor Supply and Medical Expenditure at Older Age： Evidence from China

China has undergone a rapid epidemiological transition from infectious diseases to chronic diseases. Using data from the China Health and Retirement Longitudinal Study （CHARLS）, this paper documents the profile of chronic diseases among older Chinese people, estimates the impact of the onset of chronic diseases on the labor supply, and examines the correlation between the prevalence of chronic diseases, a household＇s medical expenditure and the role of health insurance in reducing medical costs. Empirical results show that the prevalence of chronic diseases is extremely high among older Chinese people and increases sharply with age. We find significant negative effects from the onset of chronic diseases on an individual＇s livelihood at work. The estimation results by age and education suggest that the labor supply of the older and more highly educated people is more sensitive to the onset of chronic diseases. We also show that there can be a substantial indirect loss of individual and household income due to the onset of chronic diseases by limiting the labor supply. We find that the prevalence of chronic diseases is significantly associated with higher out-of-pocket medical expenditure. The reduced-form estimation results suggest that people with insurance have lower medical expenditure caused by minor chronic diseases, but this is only the case for women and urban residents. However, health insurance contributes little in reducing medical expenditure caused by major chronic diseases.

China's Growth Slowdown:Labor Supply,Productivity,or What?

There has been much discussion of the sources of China's growth slowdown but little formal econometric analysis of this question.Chen and Groenewold(2019)show that the slowdown was primarily supply-driven,but they stopped short of identifying specific supply variables.This paper extends their analysis and distinguishes several potential supply components:labor supply,productivity,and capital accumulation.Our results confirm their main conclusion that supply dominates the explanation of the slowdown.A model with two supply factors(labor supply and productivity)reveals that both components contribute to the slowdown,although productivity makes the greater contribution.However,when capital stock is added to the model,the decline in the capital accumulation rate becomes an important factor in the growth slowdown,to some extent replacing the effects of both labor supply and productivity.

Insufficient Labor Supply and Wage Rises under Conditions of Labor Surplus:From the Perspective of the Intra-household Division of Labo

On the basis of Becker＇s family economics and the theory of time allocation, it can be shown that labor supply under labor surplus conditions is not unlimited. Under the constraints of intra-household labor division, the supply curve takes on a special staircase form： as labor supply increases, the reservation wage of rural labor rises by an ever larger margin. The response of labor supply to wages is discontinuous. Labor supply will increase only when wages reach the new level of the reservation wage; otherwise, wage increases do not lead to an increase in labor supply. Corresponding to this special form of supply, the major driving force behind wage increases becomes industrial labor demand rather than agricultural income. The data from a survey of about 1,500 rural households in Gansu and Inner Mongolia bear out the above proposition. When labor demand rises, slight wage adjustments will not bring a corresponding increase in labor supply and labor market clearing will not occur for a long time. This reminds us that the present coexistence of a shortage of labor with wage rises for migrant workers may well derive from insufficient labor supply under labor surplus conditions. It does not necessarily imply the exhaustion of the labor surplus and cannot serve to prove the arrival of the Lewis turning point.

China’s Labor Market in Seven Decades

Soon after its founding in 1949,the People’s Republic of China established an all-round planned economic system,abolished the labor market,put labor authorities in charge of urban employment planning and placements,and assigned rural workforce as members of the People’s Communes.This planned labor system lasted until the reform and opening up program was launched in 1978.In the face of great employment pressures as educated youth returned from the countryside to cities,the government took a series of policies to bring the educated youth into the workforce through referral by labor authorities,voluntarily organized employment,and self-employment.With the abolition of the centralized job placement system,China’s labor market started to develop,giving play to the comparative advantage of abundant labor force,and the dual economic structure started to integrate.After decades of rapid growth and job creation,China’s labor market have turned from oversupply to undersupply since 2003,and labor remuneration increased sharply.China’s changing resource endowment structure was accompanied by a shift in its labor market policy from employment to the labor market.Over the past four decades of reform and opening up,the Chinese government enacted wise labor market policies in each critical stage.

Examining the Impacts of China＇s Aging Population on Its Labor Suppl.y from the Labor Quality Perspective

On the basis of sufficient considerations to the attributes of China＇s development and uniqueness of population aging, this paper examines the overall impacts of China＇s population aging on labor supply in the four aspects of education level, skill level, work intensi（y and the share of working age population. Results indicate that despite the irreversibil#y in the decline of labor supply under the effect of intensifying degrees of population aging in the long run, this tendency will be weakened or slowed down by the improvement in labor quali^y. It is expected that China＇s real labor supply will not encounter a significant turning point by 2027, which is 12 years later than the occurrence of decline in nominal labor supply measured by labor quanti~

Longevity,Capital Formation and Economic Development

Many researchers have concluded that longer life expectancies prompt increased investment in education,as a prolonged labor supply raises the rate of return on education.Besides explaining the empirical evidence behind this conclusion(at an absolute level),there is another issue to be discussed:does time spent studying and working increase proportionally with higher longevity? Building on an extended life-cycle model,this paper shows that prolonged life expectancy will cause individuals to increase their time in education but may not warrant rises in labor input.Later we show that higher improvement rate of longevity rather than initial life expectancy will promote economic growth,even we exclude the mechanism of human capital formation,and only consider growth effects of higher improvement rate of life expectancy from physical capital investment.

HOW to Look at the ＂Migrant Worker Shortage＂ from an Economic Perspective

The ＂migrant worker shortage＂ which occurred several）pears ago and the recent ＂labor shortage＂ were both caused by an imbalance between the supply and demand of migrant workers. It is a periodical outcome of spontaneous adjustment by the migrant labor market. As rural welfare was greatly enhanced in 2009, migrant workers＇ opportunity cost of working outside their hometowns was raised. The connotation of migrant workers＇ ＂market price＂ is changing. The new generation of migrant workers, namely, those born after 1980, are becoming the mainstay of enterprises＇ employment. Being better educated, they have different lifestyles than previous generations. ＂Leisure and entertainment＂ have become part of their opportunity cost and reduced their labor supply. ＂Labor shortage＂ is an endogenous force that helps transform China＇s growth patter, upgrade the industrial structure and promote urbanization. The seasonal ＂return of migrant workers＂ and the ＂labor shortage＂ which appears around China＇s Spring Festival each year have grown into a unique b,t effective collective bargaining mechanism that helps increase migrant workers＇ wages. Facing labor shortages, governments should regulate the labor market pricing and orientate labor-intensive enterprises towards transition, continue to enhance the social security system for migrant workers and those in rural areas, and make an accurate forecast of the population trend and adjust population policies.

Do supply shocks in the audit partner labor market affect auditor choice?Evidence from a quasi-natural experiment

We examine whether supply shocks in the audit partner labor market induce clients to switch audit partners.We argue that audit partners in their early careers(i.e.,junior partners)charge low audit fees to attract clients,which induces client firms to switch from senior partners to junior partners when there are more junior partners available.Utilizing the Big4 localization policy,we find that Big4 clients are more likely to replace senior auditors with junior auditors to cut costs after the policy.Furthermore,the results are mainly driven by clients who are charged high fees.Our empirical evidence enriches the understanding of auditor choice determinants and informs the ongoing debates surrounding new regulations for Big4 firms in China.

Trends in the Mincerian Rates of Return to Education in Urban China:1989-2009

This study examines the trends in the Mincerian rates of return(MRRs)to education in urban China between 1989 and 2009 using two sources of data:the China Urban Household Survey and the China Health and Nutrition Survey,and attempts to explain the underlying causes of the trends.The authors find that while the rates of return to education had been rising steadily since 1992 in urban China,a trend consistent with earlier studies,they have stagnated and even shown a statistically insignificant and very small decline between 2004 and 2009.Using the conceptual framework of supply,demand and institution in labor economics,the authors show evidence that the rapid rise in MRRs since 1992 has been driven by the strong relative demand for skills and productivity unleashed by the market-oriented economic reforms of the late 1980s and 1990s when relative supply of skilled labor was by and large stable.However,the“great leap forward”in senior secondary and tertiary education since the late 1990s produced huge numbers of graduates by the mid-2000s,outpacing the growth of relative demand for skilled labor due to the economy’s overdependence on low value-added industries such as manufacturing and construction.The apparent slowdown in the deepening of marketization since the mid-2000s may have also contributed to the stagnation or slight decline in the returns to education in urban China.

Unintended Consequences of Lockdowns:Evidence from Domestic Helpers in Urban China

This paper addresses the reactions of domestic helpers to the Wuhan(Hubei Province)lockdown that began on January 23,2020.We use a novel dataset containing the information of over 40,000 Chinese domestic helpers registered on a leading professional website from November 2019 to June 2020.The results indicate a declining pattern of short-term labor supply of domestic helpers across 11 major Chinese cities,which shows an increase in the expected monthly wage of domestic helpers in these cities.More importantly,using a difference-in-difference(DID)model,this paper provides some evidence on the existence of labor market discrimination against domestic helpers bom in Hubei Province due to employers’fear of infection.

Analysis of China＇s Unequal Income Distribution from the Perspective of Functional Income Distribution

China＇s unequal income distribution is to a large extent expressed in unequal functional income distribution, that is, as China＇s economy develops, the share of wage income in national income falls. The unlimited supply of labor under China＇s current dual economic structure is the major reason for this. In a disequilibrium dynamic model framework with Keynesian features, empirical analysis shows that the unlimited supply of labor not only prevents wages from responding to supply and demand situation in the labor market, but also makes them insensitive to labor productivity and price changes. This suggests that when there is a rise in labor productivity or prices following economic growth, the rise in wages may not be sufficiently marked. The benefits derived from economic growth or labor productivity increases have been, to a very large extent, converted into profits and not wages. Therefore, if we are to reverse China＇s worsening income distribution, our fundamental path should remain the maintenance of high-speed growth and the acceleration of urbanization and industrialization so that surplus rural labor can be absorbed as soon as possible.

A Case Against Zero Capital-Income Taxation

This paper develops a dynamic general equilibrium model to investigate the optimal level of capital income taxation in light of stochastic endogenous economic growth. Although endogenous human capital is incorporated into our model, we restrict our investigation to the issue of optimal physical capital income tax; and the labor supply is also endogenously determined. This paper proves that the optimal capital income tax should be zero provided exogenous government expenditure on production; however, capital income should be taxed if we consider endogenous government consumption.