Abstract：Based on the analysis of asset portfolio and consumption structure while previous literatures merely focus on households’ portfolio structure, this paper builds up a Bewley model with two sectors and two products to study the effects of China’s inflation on wealth inequality. The results show us that as inflation rate rises from 0 to 5%, wealth inequality will be intensified, and the percentage of net wealth loss of poor households could be over 30 times as many as that of rich households, and rural households suffer higher welfare loss than the urban do. The poor due to holding higher proportion of money generally suffer more wealth reduction and welfare loss; more importantly, China’s inflation with structural characteristic would further deteriorate consumption structure of high-Engel-Index households, especially the rural and the poor, causing wealth reduction and higher welfare loss.
Key Words：Inflation; Wealth Inequality; Inflation Welfare Cost; Engel Index; Dual Economy

Abstract：China is going through a critical period in which labor relations face major transition, therefore the role and economic effect of labor union are of widespread concern. This paper illuminates the effect of union on labor share in a theoretical model, and undertakes empirical analysis with the National Survey Data of Private Enterprises in 2010. Our studies show that, unions boost both firm’s average wage and its labor productivity, but the latter outpaces the former, which results in instead the decline of labor share. Further investigations with subsamples reveal that the effects of union vary among industries with different factor intensity. Our studies confirm both theoretically and empirically that union is indeed one of the factors that affect labor share, and help to sharpen our understanding of union’s role in the income distribution.
Key Words：Labor Union；Labor Share; Wage；Labor Productivity

Abstract：The distribution of the income among the three stakeholders in the firms-government, investors (including shareholders and creditors) and labors is mainly reflected in the relationship among tax, capital gains and salaries. In this paper, with the Shanghai and Shenzhen listed companies during 2000—2011 as the samples, we find that the descending order is the return on capital, the rate of labor income and the tax burden on unit assets. The rate of labor income increases year by year, while the rate of shareholder’s income fluctuates greatly. We also find that the ownership of the firms, being in the monopoly industries, the registration region and the size of the firms will take some influence on the distribution of the income of the firms.
Key Words：Income Distribution; Capital Gains; Labor Shares; Tax

Abstract：This paper investigates the influence of China’s New Rural Pension Scheme (NRPS) on the eldercare patterns in rural China. Using panel data from 2005 and 2008 waves of Chinese Longitudinal Healthy Longevity Survey (CLHLS), we adopt an empirical strategy that combines propensity score matching with difference-in-differences approach to correct the potential selection bias. It shows that enrollees were more likely to live independently rather than co-reside with their adult children. And enrollees became less dependent on children in terms of financial resource and informal care. We also find that participation in NRPS increases the utilization of the formal care among enrollees. Hence, although the adult children continue to be the most important source of the elderly care and financial support, NRPS has become an important supplement to the traditional eldercare patterns in rural China.
Key Words：New Rural Pension Scheme; Eldercare Patterns

Abstract：One of the key questions in evaluation of the performance of the New Rural Society Endowment Insurance Program (NSEI) in China is that how the intergenerational transfers among families will change along with the NSEI reform. Based on Chinese Longitudinal Healthy Longevity Survey (CLHLS) and econometric methods of IV, FE, and PSMDD, the results show that NSEI has significant replacement, or “crowding out”, effects on intergenerational transfers among Chinese families in rural areas. A dollar of pension is associated with a reduction of 80.8 cents of intergenerational transfers from adult children. The elders who attended NSEI received 587.1 RMB, on average, less transfers from adult children in 2011 compared with those who did not attend NSEI, which amounts to 62.4 percent of public pensions by NESI at the same period. Thus, we argue that adult children benefit more from NSEI compared with their old-age parents. The major outcome of NSEI is the alleviation of aged-supporting burden on adult children, rather than the increase of benefit level of elderly.
Key Words：New Rural Society Endowment Insurance;

Abstract：As the data of lifetime earnings is difficult to obtain, a common practice in the literature is applying current income instead of lifetime earnings, and life-cycle bias emerges because current income is not parallel to lifetime earnings. When we estimate the returns to education, the life-cycle bias may be a more serious problem than the endogenous bias on which researchers have paid much attention. This paper conducts a meta-analysis to investigate how life-cycle bias could influence the estimates of returns to education and their time tendency in China. The result suggests that life-cycle bias is serious and a large part of the growth of returns to education in China is due to sample average age growth caused by an aging population.
Key Words：Returns to Education; Life-Cycle Bias; Lifetime Earnings; Meta-Analysis; Publication Bias

Abstract：There are many factors that affect a country’s terms of trade(TOT). In addition to the familiarly known factors from supply side and demand side, macroeconomic environment and operation features may also trigger the adjustments for price terms of trade in the short and long run. Applying the dynamic stochastic general equilibrium model, we found that: (1) the speed of money supply may cause short-term fluctuations for TOT, but does not have influence on TOT in the long-term. The volatility of money supply does have substantial impacts on TOT in the long-term and the role of inter-temporal elasticity of substitution is important. (2) when the volatility of foreign money supply increases, the country’s long-term TOT will be improved with different degree due to intertemporal elasticity of substitution.
(3) wage stickiness not only affects the fluctuation extent for TOT, but also affects the adjustment cycle length. In the face of monetary shocks, the closer to flexibility for price adjustment mechanism, the smaller the fluctuation extent for TOT and the shorter the complete dynamic adjustment cycle. Elastic price mechanism is conducive to a country’s TOT stability.
Key Words：Wage Stickiness; Monetary Shocks; Price Terms of Trade

Abstract：We study the impact of corporate social responsibility on a producer‘s quality investment decision and its evolution path by employing a discrete choice and rational expectations equilibrium framework. We analyze the relationship among commitment, consumer choice and producer’s quality investment decision. We show that without the basic price-consistency commitment and the corporate social responsibility constraint defined as quality-consistency commitment, a consumer‘s rational consumption choice will lead to a low quality level. The quality level will be improved only limitedly when the producer keeps the price-consistency commitment whereas with both price- and quality-consistency commitment the consumer’s choice behavior will drive the market to achieve an equilibrium of quality-price-consistency and the quality will be improved to be sufficiently high. We also discuss the different mechanisms of quality guarantee regarding the real practice of food and pharmaceutical industry in China. We show that although a company‘s self-commitment will be a better choice for quality guarantee, the government may still need to have strict quality regulations when non-commitment prevails.
Key Words：Commitment; Consumer Choice; Quality; Rational Expectations Equilibrium; Corporate Social Responsibilit

Abstract：The accelerating speed of interest rate liberalization in China has imposed an extremely important research topic: how to establish an effective monetary control mechanism that adjusts well to the pricing mechanism of the interest market. Equilibrium interest rate, defined as the interest rate at which the production gap is zero and the inflation is stable, is generally considered to be an important benchmark used by the central bank when making indirect interest control. In this paper, we studied the “Dual-track interest rates” system of China, and constructed a four-branch DSGE model to estimate the equilibrium interest rate of China. Then, we studied the inherent mechanism between the equilibrium interest rate fluctuation and the other elements, such as the macroeconomic situation, and the monetary policy implementation. The result shows that the equilibrium interest rate is a leading indicator to the macroeconomic variables such as GDP growth and CPI, and an important benchmark for the monetary policy making.
Key Words：Equilibrium Interest Rate; DSGE Model; Dual-track Interest Rates; Real Interest Rate Gap

Abstract：This paper studies free entry by firms of which ownership and control are separated, and discusses its welfare implications. We use Cournot model to characterize competition in homogeneous goods market, while use spatial competition in circular city to characterize competition in differentiated goods market. We show that if managerial compensations will be included as part of the entry costs, then both excessive entry and insufficient entry may emerge in an equilibrium outcome.
Key Words：Separation of Ownership and Control; Free Entry; Chamberlin Effect; Cournot Competition; Spatial Competition in Circular City

Abstract：Low reputation of insurance industry in China imposes a prominent negative impact on its healthy development. In this paper, we uncover the economic mechanism driving the formation of low reputation of insurance industry and propose some policy suggestions to remedy this problem. We first apply semi-hyperbolic discount model to study insurance purchasing behavior of consumers and show that the consumers’ time inconsistent preferences make them less willing to buy insurance. Given consumers’ low insurance demand, we show, under the assumption of monopolistic competition, that the best response strategy of insurance companies in market equilibrium is to manipulate consumers’ risk perception, which constitutes the direct cause of the low reputation of the insurance industry. The market equilibrium, however, does not necessarily lead to the loss of consumers’ well-being. As a consequence, strengthening government regulation may be inefficient at overcoming the low reputation of insurance industry and even harm consumer welfare. In contrast, implementing consumer cognitive education about risk is an effective means.
Key Words：Insurance Industry Reputation; Insurance Purchase; Monopolistic Competition; Time Inconsistent Preference

Abstract：This paper investigates the contribution given by the 30 provinces and their related economic variables to the decline of national carbon intensity during the period from 1997 to 2008 by means of logarithmic mean Divisia index. The results show that: (i) Liaoning, Heilongjiang, Hebei, Hubei and Shanghai have made greater contributions to the decline of national carbon intensity during the 12 years, while Hainan, Ningxia, Fujian, Inner Mongolia and Shandong have inhibited the decline; (ii) the change of national carbon intensity is determined by the changes of carbon intensity, energy intensity, fuel mix, output share, and carbon emission share of all provinces; (iii) the contribution of a province to the decline of national carbon intensity lies mainly in the promotion of its energy efficiency; (iv) regional decline of carbon intensity may be inconsistent with the national decline in certain situations in the pattern of nationwide current traditional development based on fossil energy; and (v) in order to successfully achieve national carbon intensity target, we should duly evaluate the contribution given by every province to the decline of national carbon intensity, focus on the provinces with large output share and carbon emission share, and build a system of national accounts whose core is green GDP.
Key Words：Carbon Intensity; Province and Region; Decomposition; Carbon Emission