Essays on Rural-Urban Migration and Firm Performance Differentials in China

This dissertation focuses on some important features of the Chinese economy, a key player in the global economy.;Chapter 1 looks at the rural-urban migration with particular emphasis on the interaction between urban labor and housing markets. The long-held perception of the seemingly unlimited "cheap labor" has started to shift in the past decade with two puzzling observations: rapid growth in migrant wages and substantial migrant labor shortages despite the presence of a still large rural labor reserve. The theoretical and empirical work presented in this chapter is one of the first attempts to quantitatively examine the impact of the rising urban housing cost on migration, migrant labor shortages and migrant wages. Simulation results show that quantitatively the increase in the urban housing cost from 2004 to 2008 accounts for approximately 34 percent of the migrant wage increase observed in that time period and that the migrant labor supply is 11 percent less than it would have been had the housing price been fixed at the 2004 level.;Chapter 2 investigates empirically how ownership type affects the performance, as measured by return on assets (ROA), of private (non-SOEs) versus state-owned enterprises (SOEs) before and after the state sector reform. The unconditional quantile regression results show that SOE ownership has a negative association with the ROA measure across the entire distribution in both pre- and post-reform periods. The effect is especially large at the upper and bottom quantiles. The decomposition analysis suggests that at the aggregate level, differences in the return to characteristics are relatively more important in "explaining" the ROA differentials at the bottom and upper quantiles in both pre- and post-reform periods, indicating that no matter whether before or after the reform the SOE ownership keeps firms in the upper quantiles from achieving top notch performance, and traps firms at the bottom quantiles from moving up the performance distribution. It is worth noting that although the SOE structure effect explains the majority of the ROA differential at the upper quantiles in both time periods, it becomes less of a problem after the reform.