BOSTON UNIVERSITY GRADUATE SCHOOL OF ARTS AND SCIENCES Dissertation THREE ESSAYS ON MODERN ECONOMIC DEVELOPMENT IN CHINA

This dissertation studies three topics in modern Chinese economic development. The problems tackled include the determinants of city size distribution and economy growth, the impact of privatization of the state-owned enterprises (SOEs), and the relationship between executive compensation and …rm-level risk. Chapter 1 documents the emergence of Zipf’s law in China, using a new database containing population and other information for Chinese cities in 34 years during 1918-2008. I show that during much of the “Revolutionary”(i.e. Maoist) period, there were systematic deviations from Zipf’s law; in particular, small cities grew more rapidly than large cities due to restrictions on internal migration. However, since Deng Xiaoping’s famous economic reforms, migration has been less restrictive, and the city-size distribution in China has rapidly converged to Zipf’s law, similar to the pattern observed in developed, “capitalist”economies. Chapter 2 studies a key feature of economic development in China today, namely, the privatization of state-owned enterprises (SOEs). My analysis uses a …rm-level panel data set derived from primary sources, which is a signi…cant improvement over previous studies. Using a di¤erence-in-di¤erence, “event-study”style analysis, I show that privatization leads to substantial downsizing of employment, increasing labor productivity, and rising pro…tability. Chapter 3 studies the relationships among …rm size, select features of executive compensation (cash and stock-holding) and risk-taking, using a new database of 197 …nancial institutions