Social capital, institutions, and economic development in China

This thesis investigates the impact of social capital and institutions on economic development in China. Specifically, Chapters Two and Three address issues regarding social capital and cooperation, and Chapter Four studies the effect of a specific institution on economic status. In Chapter Two, I study whether social capital has an effect on household decisions to participate in Rotating Labor Associations (ROLAs) in rural China. I find that households in communities with higher levels of social capital are more likely to participate in ROLAs using household data collected from the Gansu province in China. The presence of village temple prior to 1949 is employed as an instrument for social capital. Numerous falsification exercises are performed to evaluate the efficacy of the instrumental variables approach. In Chapter Three (joint with Kathy Baylis and Yazhen Gong), we compare the effect of bridging versus bonding social capital on the management of a common pool resource. We develop a theoretical model and show that bonding social capital increases vulnerability to social sanction, while by giving communities an outside option, bridging social capital can reduce people’s vulnerability to social sanction, and reducing the enforcement capability of the community. However, bridging social might decrease people’s consumption by providing financial support to those who have few options to self-insure against risk. We then show that the empirical analysis using household level data on firewood collection from the Yunnan province in China supports the theoretical findings. In Chapter Four, I study the long-term impact of class identity (chengfen) on individuals’ income and households’ wealth in urban China. The Chinese government launched movements to make income and consumption in cities substantially homogeneous and assigned an inheritable class identity to each family in the 1950s. The government then implemented class-based discriminatory policies against the rich and middle class until 1978. This chapter shows that individuals with poor class origins have significantly lower income and family assets per capita than those from the rich class in 2002, however individuals with revolutionary background and Chinese Community Party (CCP) members from the poor class do not have lower income than those from the rich.Arts, Faculty ofVancouver School of EconomicsGraduat