Essays on Development of China

Linan Peng

Advisor: Donald J Boudreaux, PhD, Department of Economics

Committee Members: Peter J Boettke, Richard E Wagner

Buchanan Hall, #D135
April 23, 2019, 02:00 PM to 03:30 PM


My dissertation consists of three chapters on development of China. The first Chapter examines the claim of worker exploitation in the Chinese manufacturing sector. Many news outlets and scholars have expressed concerns that workers have been unfairly exploited by employers in the Chinese manufacturing sector. Economic theory suggests that this exploitation, if it exists, is the result of employers in the manufacturing sector having considerable monopsony power. While there is a vast economic literature on monopsony power in the United States and other nations, little monopsony research has been conducted on the Chinese manufacturing market. This chapter follows the monopsony research tradition and examines the Chinese manufacturing sector along several likely indicators of monopsony power. These include the turnover rate in the manufacturing sector, the relation between marginal factor cost and average factor cost, the relation between average real labor productivity and real wage in the manufacturing sector, and the comparison of labor costs between China and other countries. This chapter found that worker exploitation/monopsony in the manufacturing sector is not as severe as previously reported.

The second chapter of my dissertation examines the agricultural productivity recovery in 1961. While previous literature of the Chinese agricultural crisis has focused on analyzing the factors that caused this catastrophic event, none of those have systematically explained why the agricultural productivity started to recover in 1961, instead of 1962 when most policy reversals began in the agricultural sector. This chapter attempts to address this gap in the literature of the Chinese agricultural crisis by arguing how the collective action problem in communes exacerbated the crisis and how the alleviation of the collective action problem attributed to the productivity recovery in 1961.

The third chapter of my dissertation develops a theory to explain the initiation of the agricultural collectivization in China. While there has been a large volume of literature that study the causations and consequences of the agricultural crisis in China in the early 1960s, little attentions have been paid to study why there was agricultural collectivization in the first place. This chapter aims to explain the initiation of the agricultural collectivization by developing a theory from a property rights approach. I argue that the central government faced tradeoff between regime legitimacy and wealth. If the central government attempted to secure its regime legitimacy, less private property rights would be preferred, as it upheld the founding cores of the nation. More private property rights granting would create more wealth for the central government to extract, while doing this would undermine the legitimacy of its regime.