In the Faculty of Humanities and Social Science at UNNC, we have a great many research-active academics who lecture about creative topics from all around the world. Our School of Economics is particularly famous and has received a high number of international grants and awards. As you can expect, our economics professors are very busy publishing, and their work is very high quality, receiving invitations and accolades from around the world. Over the past year, the research output has been extremely impressive, so we’re eager to learn more about what they produce and how they do their research.
This week, we caught up with Economics Professor Dr. Minghai Zhou, who was kind enough to talk us through his recent publication. Minghai and his colleagues are busy analyzing changes in China’s recent economic changes, examining how this has affected Chinese people and their opportunities today. As you can imagine, we are very grateful to Minghai for making time for us and for explaining this grounding breaking research paper.
Dr. Minghai Zhou
Hi Minghai! Please tell us about your new publication!
The paper is called “China's ‘Great Migration’: The Impact of the Reduction in Trade Policy Uncertainty". It came out in the Journal of International Economics in 2019 and was a collaborative research work over 4 years with Nottingham UK colleague Professor Giovanni Facchini and other two colleagues Dr Maggie Yuanyuan Liu and Dr Anna Maria Mayda in the US.
What inspired you to write about this topic?
In November 2014, I met with my colleague from UK campus, Professor Giovanni Facchini, in the GEP-China conference here at UNNC and we discussed a potential research project that we could work together on. Since 2010, trade and labor economists have written about the impact of the ‘great event’ (China’s accession to the World Trade Organization in 2001), on the US economy and provided evidence about how US workers have been negatively affected by greater competition from China. These economic studies seem to endorse the US president’s actions on trade protection and justify the more recent US-China Trade War. However, we decided that we would like to have a more complete picture of the local labor market impacts of trade. Instead of solely focusing on the already developed economies, such as the US, we wanted to look at China as the largest developing economy.
Wow! This is really interesting and seems like an important gap in the existing data. How did you conduct the research?
Methodologically, we combined product-level trade data with population census data and implemented a difference-in-differences estimation strategy to examine the effect of China’s integration into the world economy on workers’ internal migration in the country. We argue that the reduction in trade policy uncertainty is characterized by plausibly exogenous variation across Chinese prefectures so that the difference-in-differences empirical specification based on variation across Chinese prefectures before and after 2001 can be used. We find that prefectures facing the average decline in trade policy uncertainty experience a 24% increase in their internal in-migration rate. The result is driven by migrants who are “non-hukou”, skilled, and in their prime working age. We highlight how free trade can improve the livelihoods of poor people in inland China, largely by moving to the coastal areas when seeking job opportunities.
Ah, I think this says a lot about current changes in China today and their impact. What support did you receive in this important research?
I learned a lot by collaborating with my coauthors, especially Giovanni from the UK campus. I presented the paper in more than 10 seminars, workshops and conferences since 2015. The comments and feedbacks of the participants are really valuable to improve the paper. I am also very thankful for the financial support from the University to a young researcher for attending these conferences.
That’s really nice to hear. We are glad that UNNC could support you so well. 10 presentations is a lot, but sounds like it was worth it. Can you tell us, were there any surprises along the way?
It is surprising to see how well our research work could fit into the heated ongoing debates on the trade war between China and the US. As many other economists, I support the argument that free trade is a win-win game for both trading partners. Taking US-China trade as an example, the US consumers enjoy cheaper Chinese products while the Chinese workers receive better pay, both of whom improve their living standards and wellbeing notably. Our paper demonstrates that one way in which China has been able to reap the benefits of trade openness has been through a more efficient geographic allocation of workers, especially skilled workers.
It’s good that your paper has such clear and practical outcomes, that is really impressive. What are your future research plans now?
This collaborative research project led me to make a transition of my main research interests from income distribution to internal migration in China. This paper focuses on the “pull” factor, i.e., trade liberalization, contributing to the China’s great migration. I am working with my collaborators on another project with a new focus on the “push” factor, that is, the demography of China’s great migration.
Impressive! It sounds like your research will continue to be of great use to understanding contemporary China. Finally, please tell us what is your advice to students who would like to study and research in your topic?
Look outside the fast-changing world and search economic phenomena that attract your attention and trigger your passion. Look inside the unchangeable true self and search your deepest drive for a best match. Stand on the shoulders of giants and think like an economist. After taking the journey of a small research project, you will have a new understanding of the world and yourself.