Book Description

This dissertations consists three essays on development issues in contemporary China. Two essays focus on the role of e-commerce in China's economic development and the third essay studies the latest trend of Chinese inequality. China has been the world's largest e-commerce market since 2013. E-commerce development in China has been fast but uneven with the rural and inland markets relatively left behind compared with city and coastal markets. Since 2014, the Chinese government has been supporting major e-commerce development in rural and remote areas. Chapter One studies the effect of the national-wide rural e-commerce program on rural residents' labor market outcomes. One likely consequence of the expansion of e-commerce is saving in time cost of shopping for people in remote villages. This paper analyzes the impact of this time saving on labor supply of men and women in rural China. I first uncover the heterogeneity of response in e-commerce use to the government program with a machine learning approach. Then to investigate the causal effect of e-commerce expansion, I exploit an interaction IV strategy making use of the roll-out time of the government program and heterogeneous response of online shopping to the program across distance and age structure, as supported by findings from the machine learning approach. My estimates suggest that e-commerce expansion increases weekly labor supply by 7 hours and the probability of working in the wage sector by 14 percentage points by relaxing the time budget constraint. The result is significant for both men and women, but in a gender differentiated manner. It shifts labor away from self-employed agriculture to the wage sector for men, and from working inside the home to outside the home for women. Chapter Two studies how local e-commerce development affect household consumption growth and its structure. By matching a nationally representative China Family Panel Studies survey with county-level e-commerce information obtained from Alibaba, this chapter examines how e-commerce development has shaped household consumption growth in China. The paper presents three major findings. First, e-commerce development is associated with higher consumption growth. Second, the relationship is stronger for the rural sample, inland regions, and poor households, suggesting that e-commerce development helps reduce spatial inequality in consumption. Third, the consumption of in-style goods and high-income elasticity goods has grown faster than the consumption of local services. Chapter Three investigates the long-term evolution and latest trend of Chinese inequality. The chapter argues that after a quarter century of sharp and sustained increase, Chinese inequality is now plateauing and, according to some measures, even declining. A number of papers have been harbingers of this conclusion, but this paper consolidates the literature indicating a turnaround, and provides empirical foundations for it. The argument is made using a range of data sources and a range of measures and perspectives on inequality. The evolution of inequality is further examined through decomposition by income source and population subgroup. Some preliminary explanations are provided for these trends in terms of shifts in policy and the structural transformation of the Chinese economy. We relate the turnaround to two classic phenomena in the development economics literature-the Lewis turning point and the Kuznets turning point. The plateauing is not yet a full blown decline, and there are short term variations. But the narrative on Chinese inequality now needs to accommodate the possibility of a turnaround in inequality, and to focus on the reasons for this turnaround.