Marys Medicine

The human capital roots of the middle income trap: the case of china

Agricultural Economics 00 (2013) 1–12 The human capital roots of the middle income trap: the case of China Linxiu Zhanga, Hongmei Yia,∗, Renfu Luoa, Changfang Liua, Scott Rozelleb aCenter for Chinese Agricultural Policy, Institute for Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, No. 11A, Datun Road, Beijing, 100101, China bFood Security and the Environment, Freeman Spogli Institute, Stanford University, LICOS, Katholic University of Leuven (adjunct professor), 616 Serra Street, Encina Hall East 407, Stanford, CA, 94305, USA Received 22 April 2012; received in revised form 16 November 2012; accepted 26 February 2013 China, like other middle income countries, is facing the challenges of the next stage of development as its leaders seek to guide the nation into becoming a high income country. In this article we explore one of the major challenges that China is facing in the transition from middleto high income: the management of inequality. In particular, we explore the possible roots of future inequality that is associated with a nation'sunderinvestment in the human capital of broad segments of its population. To meet this goal, we describe two challenges that China faces in thelight of rising wage rates and highly unequal income distribution today. We first discuss the structural and institutional barriers that are discouragingmany students (and their parents) from staying in school to achieve the levels of learning that we believe are necessary for preparing individuals foremployment in the coming decades. We also identify severe nutritional and health problems. We believe that these nutrition and health problems,unless addressed, will continue to create human capital deficiencies in poor areas of rural China and locking in decades of hard-to-address inequality.
JEL classifications: I14, I25, O15 Keywords: Human capital; Health and nutrition; Rural China China Development Research Center (2012). This documentstates that the low-hanging fruit of state-driven industrializa- In recent years the world has recognized the existence of a tion is largely exhausted. There is a realization that China is Middle Income Trap (Kharas and Kohli, 2011). The Middle In- entering a new phase of development as it hit the World Bank's come Trap occurs when a country's growth slows and eventually definition of middle income (i.e., when GDP is greater than plateaus after reaching a middle income level. The problem usu- $4,000/capita). The document explicitly and implicitly warns ally arises when developing economies find themselves stuck in that there are many new challenges facing China at this point between high and low income countries. On the one hand, with in its development.
rising wages, middle income nations are less competitive com- In addressing how to avoid the Middle Income Trap, dis- pared to lesser-developed, low-wage economies in the cheap cussion inside and outside of China frequently focus on several production of manufactured goods. On the other hand, they are different areas. Some researchers stress the importance of build- unable to compete with advanced economies in high-skill in- ing domestic markets to replace export markets (Leung, 2010).
novations. A large number of papers recently have addressed Others discuss the need to boost the role of science and tech- how a country should try to avoid the Middle Income Trap (e.g., nology (Nallari et al., 2011). There are also those that stress the Nallari et al., 2011; Ohno, 2009; Yusuf and Nabeshima, 2009).
importance of infrastructure (Nag, 2011). Certainly all of these One issue that has attracted attention in recent years is are important.
whether China is headed toward the Middle Income Trap, and The goal of this article, however, is not to reexamine these if so, how it can be avoided. Perhaps the highest profile state- well-trod arguments. Rather, this article seeks to examine ment on this was issued jointly by the World Bank and the China's development path and the prospects of falling intothe Middle Income Trap from an angle that has not been dis-cussed in much depth: the danger of growth without equity and *Corresponding author. Tel.: +86-10-64888985; fax: +86-10-64856533.
the problems associated with serious underinvestment in rural E-mail address: (H. Yi).
Paper presented at the 2012 IAAE Conference, Brazil, August 18 to 24.
education, health and nutrition in the nation's poor Western  2013 International Association of Agricultural Economists DOI: 10.1111/agec.12059 L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 provinces. To meet this overall goal, we will proceed as fol- country is if most people in the nation, including wage-earners, lows. In Section 2, we describe the challenges that China faces have high income), it also brings fundamental challenges. One in the light of rising wage rates and highly unequal income of the basic questions is if China's labor force is ready for higher distribution today. We also document the high levels of human wages. In a high wage economy, workers in factories and the capital inequality in China today, a harbinger of high future in- service sector get paid ten or more dollars per hour. To be worth equality. In Section 3, we discuss the first of two broad sources that level of wage to an employer, however, workers must have of the human capital inequality: the structural and institutional high levels of productivity (or an employer will not be willing barriers that are discouraging many students (and their parents) to hire him/her). In other high wage economies (such as South from staying in school to achieve necessary levels of learning.
Korea), most workers have fairly high levels of math; language, In Section 4, we discuss the other source of human capital in- English, and information and communication technology (ICT) equality: the severe nutritional and health problems, which we skills. It is only when workers have such skills that employers believe (unless addressed) will continue to create human capital can afford to pay them high wages.
deficiencies in poor areas of rural China and lock in decades of Unfortunately, it is unclear if China's work force in the 2020s hard-to-address inequality. The article ends with a discussion (when wages will reach those levels—given China continues to of what China (and other countries at the same level of income grow rapidly for the next decade) will have those skills. The of China) should do to avoid the Middle Income Trap.
fundamental question is that if China continues to grow andwages continue to rise, will today's low-wage, unskilled factoryworkers be able to be productive (and be hired by an employer) 2. China, high wages, and the nation's future challenge
in an environment with high wages and high demand on skill?Another way to cast the question in light of the discussion Low wage rate in the 1980s and 1990s is one of the main rea- above: Can China overcomes the human capital roots of the sons that China is the world's number one manufacturing base Middle Income Trap? in the world today. In the 1980s, the unskilled wage rate wasless than 50 cents US per hour (Knight and Song, 2003; Mengand Kidd, 1997). During the 1980s and 1990s, even as tens of 3. Human capital inequality in China today
millions of workers entered the labor market (de Brauw et al.,2002), the wage rate remained low (Yueh, 2004). The wage rate The purpose of this section is to understand if China's work in China during the 1990s and early 2000s can be seen to be force is ready to accept the challenge of becoming a high-wage, especially low when compared to wages in South Korea (during high-skill work force. To do so, we will focus on the level of the same years), Brazil and Mexico (Blanchflower and Oswald, human capital of workers and students (that is, workers-to-be) 1994; Fiszbein and Psacharopoulos, 1995). In the 1990s and in China's poor rural areas. We focus on this part of the labor 2000s, the unskilled wage in South Korea rose to more than US force because this is not only a large segment of the future $10 per hour (Park et al., 2010). It was nearly US $4 dollars in labor force, it is also a part of the (future) labor force about Mexico. At less than 50 cents per hour (among other things), which the least is known. We know that students in Shanghai it is not surprising that labor intensive manufacturing shifted to score as high as any students in the world on Programme for China in the 1980s and 1990s.
International Student Assessment tests (New York Times, 2010).
While low wages and labor intensive manufacturing fueled We know that increasingly larger shares (up to 70% and 80%) economic growth in China during the 1980s, 1990s, and 2000s, of students in large municipalities, such as Guangzhou, go to China today is entering a new era. This new era is remarkably college and that higher education is expanding rapidly (Gu, like the one experienced by South Korea in the 1970s and 2011). However, much less is known about the other part of 1980s and early 1990s. It is the period of time in which the China's education system—the education system in poor, rural, unskilled wage rate begins to rise and a country begins to lose its Western provinces, and the students/graduates it produces.
comparative advantage in unskilled, low-wage manufacturing.
Before examining the nature of human capital in poor rural In China, according to many sources, the era of low wages areas of China, it is important to understand what is included is over and the wage rate is rising rapidly. According to Cai in the definition of "poor rural economy" and how large of a and Du (2011), after languishing at a low level for two decades, share of the labor force it is (or will be). In fact, it is not easy since the early 2000s the unskilled wage rate began to rise.
to define exactly how much of China's future labor force will Park et al. (2010) document several other sources for the rise of come out of poor rural areas. However, there are two fairly easy wages. Li et al. (2012) show that wages are not only rising, they ways to estimate. If one uses the poorest 500+ counties (the are quickly surpassing many other countries in Asia. With the nationally designated poor counties), about 20% of each age exception of Japan, South Korea, Taiwan Province, Hong Kong, cohort that are in elementary school today (and who will be Singapore, and Malaysia, China now has one of the highest in China's workers of 20 years from now) come from rural areas Asia and certainly one of the fastest growing in the world.
of these counties, about 3 million people per year. If a broader Of course, while this is welcome from the standpoint of definition is taken, for example, rural counties in all Central rising income per capita (the only way to become a high income and Western China, then more than 50% of each age cohort is L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 included, around 8 million people per year. Hence, if one thinks the highest of any country in the world. According to a study about who will be in China's main labor force in the coming of more than 50 countries, China's tuition is more than four years, this means that over the next two decades (from 60 to 160 times the rate of the next highest country. Tuition, fees and other million members of the nation's labor force (about 20% to 50% expenses can be up to 5 to 10 times per capita income of the poor.
of the labor force) will come out of relatively poor rural areas.
Two studies have shown that reducing tuition would increase While not everyone in China needs to go to college, as the matriculation to high school (Chen et al., 2011; Liu et al., 2012).
discussion on South Korea and Mexico above tried to motivate, While high tuition may be responsible for the low rates of we believe that everyone should have the skills that are taught matriculation to high school, it can not explain the high rates in upper secondary school—competency in math, language, of dropout from junior high school. Tuition and fees in junior English, and ICT skills. The bottom line (summarizing the high school are more or less zero (Liu et al., 2011; Mo et al., arguments from above) is that in order for most of the labor 2013). There are expenses, but, in general the levels of such force to be employable at the high wages that will inevitably be expenses are much lower than those that are needed to go commanded should China continue its transition from middle to high school. However, there is still one high (and rising) to high income, individuals will need to have the skills that cost of going to junior high school: the opportunity cost of will make them productive enough to be worth $10 dollars going to school and staying out of the work force. With the (or more) per hour. If there are large segments that do not unskilled wage approaching between 2,000 and 3,000 yuan per have such skills, there may be large shares of the cohort that month, this means that in nominal terms, a worker that puts in can only find work in the informal economy. Expectations of 60 hours per week is making more than $2/hour. In PPP terms living a better life may be dampened to the point that many this is nearing $4 to $5 dollars per hour. Hence, staying in individuals may decide to drop out of the system altogether and school has become an expensive proposition. Many 13 to 14 join organized crime or some other extra-formal organization.
year olds can make more in one month than their parents can Unfortunately, in the case of poor areas of rural China, the in one year on the farm (back in the village). Unfortunately, picture of matriculation to high school more resembles Mexico while they may be gaining in the short run, if individuals with than South Korea. In fact, as argued in Wang et al. (2011a, poor human capital are segmented out of the formal labor force 2011b), during the past 10 years, less than half of individuals of in the future, there may be long run costs for both individuals high school age in poor rural China matriculated to high school.
and society. In Mo et al. (2013), it is shown that when parents The number is not much higher when including new vocational of students are offered a conditional cash transfer to keep their education schools (Chu et al., 2012; Liu et al., 2012). In short, kids in school, the drop out rate falls sharply.
only approximately 60% of individuals who are in grade 3 of There is a third reason why individuals drop out of high junior high end up matriculating into upper secondary school. If school. It well known in the international literature that when high school is the place in which a student gains command of the school systems are competitive, there is a higher degree of skills needed for getting a job in the formal economy after wages drop out (Schultz, 1992). Higher dropout rates in competitive rise, China is producing millions of individuals who may not be school systems is thought to occur because the benefits of able to join in the rising prosperity of the nation in the future.
staying one extra year are reduced if one is unsure that one will In fact, there are many individuals that are coming out the be able to get into higher levels of schooling. It is well known school system of poor rural areas that have even fewer years of that China's college entrance exam is competitive (CRI, 2012).
education (and presumably less skills). According to a number What is less known is that China's high school entrance exam of papers by Yi et al. (2012) and Mo et al. (2012), the rate of is every bit as competitive if not more so. In a recent survey dropout from junior high is as high as 25% in poor rural areas.
of counties in poor areas of Northwest China, it was found that Partly due to high wage rates (among other things), in several the number of slots available in academic high school is less different poor rural counties in Western China, student dropout than 40% of the number of students matriculating to junior rates are between 5% and 10% in each year of junior high high school. Obviously, students know that many of them will school. If this is true of all of poor rural areas, then between not be able to attend academic high school.
1 and 2 million individuals per year are leaving school beforethey have even graduated from junior high school. Again, ifthis is true, it means that millions of new people every year 4. Sources of China's human capital problem
are entering the work force today who are barely numerate andliterate. They have almost no English skills. They are without While liquidity constraints and the lack of competitiveness ICT skills (Yang et al., 2013). Clearly, students like this would are clearly some of the reasons why children are dropping out have difficulty finding employment in a high-wage economy.
of junior high school and not matriculating to upper secondary While a complete discussion of this issue is beyond the scope school, there are good reasons to believe that the roots of the of this article, there are three factors that have been shown to be problem begin far before the junior high school years. There is responsible for inducing students to drop out immediately after evidence of statistically significant differences in educational and during junior high school (Liu et al., 2011; Mo et al., 2013).
performance between rural and urban students when examin- First, tuition for rural public high schools in China is arguably ing standardized test scores (Webster and Fisher, 2000; Young, L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 1998). Mohandas (2000) finds that differences in scores on ment and altered brain function (Yip, 2001). Hence, anemia mathematics achievement tests indicate that students from ru- is doubly burdensome because it also has been shown to have ral areas are significantly behind students from urban areas.
serious implications for the educational performance of those China's government also recognizes that there are still policy with the disease; indeed, iron deficiency and anemia have been challenges to reducing the rural-urban education gap in student shown to be negatively correlated with educational outcomes, achievement (Asia Society, 2005). Lai et al. (2011) demonstrate such as grades, attendance and attainment. Improvements in that the Trends in International Mathematics and Science Study language and motor development have been observed among (TIMSS) scores of fourth graders from rural schools are more pre-school age children in East Africa following increased lev- than one standard deviation below those of fourth graders from els of iron (Stoltzfus, 2001).
urban schools.
Programs to overcome iron deficiency anemia also have been Therefore, an even more fundamental question is why rural shown to increase pre-school participation in India (Bobonis students—especially those from poor rural areas—are scoring et al., 2006). Lower standardized math test scores among so much lower than urban students on standardized tests. There school-age children and adolescents in the United States have are many possible reasons. School facilities and teachers are been attributed to iron deficiency, even to nonsevere iron defi- systematically better in urban areas (Wang et al., 2011a; World ciency (Halterman et al., 2001). School-age children and ado- Bank, 2001). There is greater investment per capita in urban lescents deficient in iron register lower scores on various mental students compared to rural students (Ministry of Education and performance and educational achievement tests (Nokes et al., National Bureau of Statistics [MOE/NBS], 2004; Tsang and 1998 and references therein). Yet, treating the iron deficiency Ding, 2005). Parents of urban students also have higher edu- of school-age children and adolescents can improve and may cational attainments and more time and opportunities to help even reverse the diminished cognitive and educational perfor- their children in their studies (Huang and Du, 2007). In recent mance iron deficiency causes (Nokes et al., 1998 and references years the government has begun to allocate a large amount of therein). As shown from a study of adults in Indonesia (using resources to this problem (MOE, 2010).
the Indonesia Family Life Survey), treatment of iron deficiency However, investment into teachers and facilities may not be at latter stages of the life cycle may also be effective for im- enough. There are additional possible factors that may be affect- proving health and human capital; participants were more likely ing the educational performance (and scores) of students from to lose less time due to illness, be more energetic, have better poor rural areas. Specifically, one reason is that the students are psycho-social health, be working and earn more. Therefore, to not "ready" for public school because of nutrition and health the extent that anemia is a problem in China's poor rural areas, problems that may be hurting the human capital accumulation it may be one of the factors that is leading to poor educational of children in poor rural areas. If students are not healthy or are malnourished, it could be that no matter how good (or im- In almost all countries of the world the prevalence of anemia proved) the facilities and teachers are, the students may still not falls when incomes rise. Indeed, the World Health Organiza- be able to learn.
tion's "Global Database on Anemia" and a number of other In the rest of this article, as a way to illustrate the seriousness studies reveal that countries with higher income levels tend to of the human capital problem, we examine two possible reasons have lower levels of prevalence of iron deficiency anemia (de for poor human capital. In the next section, we examine anemia.
Benoist et al., 2008; Gwatkin et al., 2007). Incomes across China In the following section, we look at intestinal worms. There are have risen, even in rural areas. Yet despite growing wealth and many others that could be discussed (e.g., infant malnutrition; the growing commitment of China's government to providing myopia; hepatitis; etc.). Space constraints limit the discussions quality education, a number of (local, sometimes dated) stud- ies show that a significant share of children across rural Chinaare nonetheless so severely iron deficient as to be classified asanemic. For example, a recent study in Shaanxi province run 4.1. Anemia by the provincial Center for Disease Control found anemia inas many as 40% of freshmen in a rural junior high school (Xue One of the problems that potentially contribute to the gap in et al., 2007). A study in Guizhou found anemia rates to be as educational performance between rural and urban students is high as 50–60% (Chen et al., 2005). Although these studies are iron deficiency anemia. Iron deficiency anemia is a debilitat- small-scale and nonrepresentative, they still give rise to con- ing health condition that affects hundreds of millions of people cerns that anemia may be a serious problem in rural China, at worldwide, mostly in developing countries (Yip, 2001). Pro- least for a segment of the population. Such a finding would longed iron deficiency impairs hemoglobin production, limiting be important since China in the past has been shown to have a the amount of oxygen that red blood cells carry to the body and highly unequal distribution of income (Khan and Riskin, 2001).
brain. As a consequence, anemia leads to lethargy, fatigue, poor If a large share of China's rural population is still suffering from attention and prolonged physical impairment. A large body of a nutritional deficiency, such as anemia, and only a small share research links anemia (as well as iron deficiency not serious of the urban population is (as is clear from Shang et al., 2012), it enough to impair hemoglobin synthesis) with cognitive impair- would suggest that the efforts of the government in recent years L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 to reduce inequality still have not been sufficient and more effort in our sampling frame account for most of the grade three, four is needed in targeting nutritional deficiencies.
and five students in the study areas. In total, we identified 368schools that met our criteria and randomly chose 283 schoolsfor inclusion into our study. The location, size, date and other 4.1.1. Data and survey methodology information about the survey are summarized and grouped by The overall goal of this part of the article is to understand if province and study year in Table 1.
poor nutrition—in particular, anemia—is negatively affecting Data were collected by eight enumerator teams. In each team the educational performance of students in poor areas of rural one person collected data on the school from principals and China. To show the prevalence of anemia, we rely on student- third, fourth and fifth-grade homeroom teachers, while others and school-level data that were collected on third, fourth, and collected individual and household socio-economic information fifth grade elementary school students from 41 nationally des- from students. Trained nurses from the Xi'an Jiaotong Univer- ignated poor counties in the four provinces, Ningxia, Qinghai, sity's School of Medicine measured hemoglobin levels on-site Shaanxi, and Sichuan between October 2008 and April 2010.
using a Hemocue Hb 201+ system.
Conducting the study in four western China provinces allows usto identify anemia prevalence across widespread regions of theimpoverished rural west. Over 737 million people live in rural 4.1.2. Results of the study of anemia prevalence regions of China, accounting for 56% of the population. Even Across all of the schools surveyed (combining all 41 coun- if we only consider the rural populations of the poor counties ties), we found the overall mean hemoglobin average was in our four sample provinces, the results in this article still has 124.6 g/L. Hemoglobin levels were normally distributed across an impact on between 10 to 15 million school aged children.
all seven datasets, with a standard deviation of 12.5 (Table 2, The four study provinces are among the poorest in China, row 1, column 3). In our sample, 4,303 of the 12,768 students we based on per capita income (Luo et al., 2011). In Ningxia, the surveyed had hemoglobin levels lower than 120g/L, resulting in average per capita income is 3,180 RMB (where 7.62 RMB = 1 a population anemia prevalence of 33.7% (row 9, column 3). Al- US Dollar), falling 23% below the mean national income. Qing- though we do not show the results here, given the frequency of hai's average per capita income (2,683 RMB) is even lower, students with hemoglobin counts between 115g/L and 120g/L 35% below the mean national income. Shaanxi's per capita in- is high, if we were to instead use an anemia cutoff of 115g/L, come is 3,546 RMB, 14% below the mean national income.
anemia prevalence would be lower but still significantly high Lowest among our sample provinces, Sichuan has an average per capita income of 2,644 RMB, or 36% below the mean na- There was considerable variation in anemia prevalence tional income.
(<120g/L) across the sample, ranging from 25.4% in Ningxia In choosing our sample observations, we followed a uniform to 51.1% in Qinghai. From a multiple regression of county selection procedure. First, we obtained a list of all poor coun- dummies on anemia levels (results not shown for brevity), the ties in each of the study regions. In China a poor county is a P-value of the test (an F-test of the joint significance of the designation given by the National Statistics Bureau as a way dummies) indicated that there was a significant county effect of identifying counties that contain significant concentrations (P < 0.001) within provinces. In other words, different counties of people that live under the poverty line. There are 592 poor in our sample had significant differences in anemia prevalence.
counties in China, making up about one third of the number of Beyond the variation observed among provinces and coun- counties in which lives 20% of the population (PALGO, 2012).
ties, we also observed significant variation among schools.
There are 109 poor counties in the four study provinces. From Prevalence of anemia ranged widely across schools, for exam- these poor counties we took a random sample of 41 counties.
ple more than 90% of 165 students in each of the four sample Inside each sample poor county, the survey team obtained schools were anemic in Qinghai province while in another four a list of all townships and in each township we then obtained schools in Ningxia province less than 10% of the 203 students a list of all wanxiao (rural elementary schools with six full were anemic. The differences between the prevalence of anemia grades, grades 1–6). Sampled schools had over 400 students in different schools are statistically significant, as evident from and at least 50 boarding students. With the implementation of a multiple regression analysis with school dummies (results not school merger programs in rural China, more and more jiaox- shown for brevity).
uedian (small branch schools that still offer teaching services According to the WHO, anemia should be considered a seri- to younger first or second grade students in remote villages) ous problem in populations with a 5% or greater prevalence of are disappearing. Across rural areas, jiaoxuedian students are anemia. Of the 283 schools we sampled only 4 had anemia levels moving to dormitories of wanxiao. Many townships now have below 5%. Although there was significant variation across the only one or two primary schools. Since boarding schools are be- sample, all 41 counties contained schools with anemia levels coming the main providers of education services in rural China, above this cutoff.
we specifically used the criteria of including only wanxiao, and In summary, existing data show that there is a good likelihood schools with at least a certain number of total students as well as that widespread pockets of anemia in rural china will lead to boarding students in this study. The students in the schools that further inequalities in human capital in the future.
L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 Table 1Description of sample populations of datasets that are used in the anemia studies Per capita income of sample area (PPP-adjusted, in USD)a Data sources: Authors' surveys.
aAll values are reported in US dollars in real PPP terms by dividing all figures that were initially reported in yuan (Chinese currency) by the official exchange rate(7.62 yuan : 1 dollar in 2007) and multiplying by the purchasing power parity multiplier (1 : 2.27543).
Table 2Hemoglobin counts and anemia (Hb < 120 g/L) prevalence of sample students Above 12 years old Hemoglobin (g/L) Below 12 years old Shaanxi—2008 (Dataset 1) Shaanxi—2009a (Dataset 2) Shaanxi—2009b (Dataset 3) Qinghai—2009 (Dataset 4) Ningxia—2009 (Dataset 5) Sichuan—2010 (Dataset 6) Shaanxi—2010 (Dataset 7) Anemia (%)Total Shaanxi—2008 (Dataset 1) Shaanxi—2009a (Dataset 2) Shaanxi—2009b (Dataset 3) Qinghai—2009 (Dataset 4) Ningxia—2009 (Dataset 5) Sichuan—2010 (Dataset 6) Shaanxi—2010 (Dataset 7) Data source: Authors' surveys. See Table 2 for more information about the datasets.
aNumbers in parentheses indicate the standard deviation of hemoglobin count distribution.
4.2. Intestinal worms ment experts applauded China's health care system for its ef-fective delivery of basic health services, including roundworm Another neglected disease (beyond anemia) in China is control, in rural populations (Wagstaff et al., 2009a). Minimally intestinal roundworms. Intestinal roundworms have a devas- trained "barefoot doctors" lived in and visited remote villages, tating effect on a population, siphoning valuable nutrients offering free treatment of common diseases and educating the away from the host and leading to malnutrition and delayed population about disease prevention and healthy behaviors. Lo- growth (Stephenson et al., 1980, 1989). Heavy roundworm cal health personnel often treated large numbers of children in burdens can leave children feeling fatigued and nauseous.
schools, since schools have a concentration of the targeted pop- Infection with intestinal roundworms has also been associ- ulation, making care fairly inexpensive (Montresor and WHO, ated with poor performance on tests of memory and intelli- 2002). Treating intestinal roundworms was among their list of gence (Ezeamama et al., 2005; Jardim-Botelho et al., 2008).
priorities (Li et al., 2010).
These effects have been documented extensively and the WHO In the 1980s, however, public funding for rural health de- has approved a variety of cheap, simple and effective med- clined precipitously (Wagstaff et al., 2009b). The barefoot doc- ications to treat such infections (World Health Organization, tor system collapsed and rural residents were largely left to fend for themselves. It is only in the past several years that At one time China's government seemed to have understood China has once again turned its attention to rural health. In the severe consequences of intestinal roundworms and took the interim, many diseases that had been nearly eradicated (or action to control them. As recently as the 1960s many develop- at least well-controlled) appear to have re-emerged. Intestinal L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 roundworms—perhaps due to their nearly invisible nature and ucational affairs in the town) and one additional primary school prevalence that is highest in remote, out-of-the-spotlight ru- were chosen to be sample schools. In each school, we classified ral areas—may be one of these re-emerging conditions. Re- the 8–10 year old students in grades 3 and 4 (henceforth called searchers have found high roundworm prevalence in various school-aged children) by their home villages and chose sample regions of the country from Yunnan (Steinmann et al., 2008) to students from two of the villages (11 students per village— Fujian (Xu et al., 2000) to Hunan (Zhou et al., 2007). However, henceforth called sample villages). Next, we obtained a list of nearly all of these studies have been small in size, typically all the 3–5 year old children in the two sample villages from the limited to a single township or even a single village. The no- Register of Child Immunization (which is recorded and stored table exception to this otherwise fragmented look at helminths in the town's health center) and randomly chose 11 3–5 year old across China is a large-scale national survey conducted by the children from each of the two sample villages (henceforth called Chinese Ministry of Health nearly ten years ago, from 2001 to preschool-aged children). Overall then, in each sample village 2004 (Coordinating Office of the National Survey on the Im- we randomly sampled 11 preschool-aged children aged 3–5 and portant Human Parasitic Diseases, 2005). This survey included 11 school-aged children aged 8–10. In each school, 22 students 356,629 individuals across China. However, it failed to rigor- from two villages (11 students per sample village) were sur- ously identify the correlates of roundworm infection in rural veyed. A total of 95 villages and 46 schools were included in the China, information that could help explain why certain areas survey. Because some parents and students refused to produce have higher roundworm infection rates than others. Without fecal samples, some sample villages had fewer than 22 observa- further definition of roundworm correlates, it is impossible to tions with fecal samples. In no case, however, were there fewer move forward with a solution.
than 8 preschool-aged children and 8 elementary school-aged In this part of the article, we aim to supplement the literature children. On average, there were 9.75 school-aged children per by reporting the results of a recent large-scale survey of over sample village and 9.09 preschool-aged children per sample 1700 preschool and elementary school children in six randomly selected counties in Sichuan and Guizhou provinces. We will The survey was composed of three parts: anthropometric document the roundworm prevalence in the study areas, thus measurements; data from a socio-economic survey; and fecal better defining the roundworm problem across a fairly large samples. Children were measured for height and weight by area of rural China. Our large sample size allows us to conduct nurses from Xi'an Jiaotong University. The socioeconomic regression and decomposition analyses, which we will use to survey collected data on each child's age and gender, parental identify the correlates of infection and explain variance in the levels of education, health and sanitation behavior and other household characteristics. The survey also asked whether thechild had taken anti-helminth medication in the past 18 months.
The school-aged children completed the survey themselves 4.2.1. Data and survey methodology under the direct supervision of trained enumerators from the The data used in this part of the report were collected by Chinese Academy of Sciences. The preschool-aged children the authors in April and June of 2010 as part of a wide-scale did not fill out the survey themselves; instead, their parents survey of preschool and elementary school-aged children were interviewed by enumerators. All children in the final in Guizhou and Sichuan provinces, in the southwestern sample submitted a fecal sample, which was sent to the lab at region of China. A total of six rural counties—three in each the local Center for Disease Control (CDC) for testing using the province—were randomly selected based on income level.
Kato-Katz smear method for Ascaris lumbricoides (ascariasis), The average net per capita incomes in the surveyed counties Ancylostoma duodenale (hookworm), and Trichuris trichuria in Guizhou and Sichan are 2,750 RMB and 4,750 RMB per year (412 USD and 713 USD), respectively, putting the A total of 817 preschool-aged children and 890 school-aged individuals surveyed in the bottom quartile of China's rural children were tested for ascariasis, hookworm and whipworm.
income distribution (CNSB, 2010). A total of 1,707 children A total of 1,707 children were surveyed. The survey of were surveyed. Preschool-aged children were aged 3–5 years preschool-aged children took place in their homes, while the and elementary school-aged children were aged 8–10 years.
survey of school-aged children took place in their schools.
In the rest of the report we call this the Intestinal Worms The data can thus be divided into two groups: home, or village-based data, and school-based data.
The sampling strategy was as follows. In each county, we ranked all towns according to net income per capita, then ran-domly chose four towns: two with income per capita above the 4.2.2. Results: Intestinal roundworm prevalence in China median level of income, and two with income per capita below Roundworm infection occurs by ingesting worm eggs, usu- the median-level of income. In each town, the central primary ally through fecal contamination. In the case of hookworms, school (there is one per town, which also serves as the local infection occurs not via egg ingestion, but by contact with soil Bureau of Education's administrative representative for all ed- infected with the filariform larvae, which penetrate the skin, L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 usually when someone steps on them. The eggs hatch and grow demic in Guizhou and are still a major public health concern within the body, eventually becoming full-grown roundworms.
deserving attention from the CDC.
Adult roundworms cannot reproduce within the body; instead, In addition to considering prevalence, it is also important their eggs are expelled in the feces of the host, where they can to look at the roundworm burden in the sample, which gives easily be re-ingested by another (or even the same) host.
an approximate indicator of the number of roundworms per There are two main measures of roundworm infection within child. The results of the worm burden (egg) testing are shown a population: prevalence and intensity. Roundworm prevalence in Fig. 2. The WHO classifications for the intensity of in- refers to the percentage of the population with any sign of fection vary by type of roundworm; the cutoffs are listed roundworm infection. It is the measure upon which the WHO below the figures. The highest infection intensity rates ap- community treatment guidelines are based (World Health Orga- pear among preschool-aged children with ascariasis in both nization, 2006). According to these guidelines, any population Guizhou and Sichuan, at 23,568 and 17,064 epg, respectively.
with over 50% prevalence should be mass-treated twice annu- These worm burdens put preschool-aged children firmly in the ally with albendazole or mebendazole. Likewise, any popula- WHO classification of "moderate infection intensity." By the tion with between 20% and 50% prevalence should be mass- time these children reach school age, however, burdens drop treated once annually. Populations with prevalence below 20% in both provinces. In Guizhou the infection intensity remains should be treated on a case-by-case basis.
high enough to remain "moderate," while in Sichuan the in- Our data indicate high rates of infection in the survey areas, fection intensity drops to "low." The intensity of infection in with wide variation according to age, location and type of round- both provinces for both age groups is lowest for whipworm, worm. Overall, 21.2% of preschool-aged children and 22.9% with all groups classified as "low infection intensity" according of school-aged children were infected with one or more of the to WHO guidelines. Infection intensity is also low for hook- three types of roundworms tested for in the survey (Table 3).
worm, with only school-aged children in Sichuan suffering from These infection rates are high enough to qualify for mass treat- worm burdens high enough to classify as "moderate infection ment, according to the WHO guidelines. The average rates are driven by high rates of infection in Guizhou province, where33.9% of preschool-aged children and 40.1% of school-agedchildren tested positive for infection with one or more types of intestinal roundworm. Prevalence among preschool-aged andschool-aged children was lower in Sichuan province, at only This report began with a review of the China's moderniza- 9.7% and 6.6%, respectively.
tion successes and challenges. Our premise was that to become A closer look at Ascaris, hookworm, and whipworm infec- a modern nation with an innovation-based economy China's tion rates by age group reveals a pattern. In Guizhou fewer industrial/service sector would have to experience rapidly ris- preschool-aged children are infected than school-aged chil- ing wages and would need to restructure its economy into one dren, suggesting that prevalence increases as children age. In that can afford to pay high wages and be competitive interna- Sichuan the opposite is true: fewer school-aged children are in- tionally. We conjectured that one of the key constraints to this fected than preschool-aged children. The reasons behind these transformation might be the low level of human capital of its opposing trends are unclear. One possibility is that schools labor force (especially the labor force coming out of poor ru- in Sichuan have a better health education curriculum. This ral areas). It is possible that growth could wane and instability would explain why the infection rate drops as children age rise if expectations are not met—because sizeable parts of the into school and would also explain the lower overall rates in population (who are currently not endowed with or not being Sichuan versus Guizhou. Alternatively, it may be the case that endowed with sufficient levels of human capital) are not able to in Guizhou, schools have higher rates of transmission relative to find employment in an economy that is high wage and demand students' home environments, leading to the spike in infection highly productive workers.
rates among school-aged children there.
The rest of the report then examined the nature of human It is important to note that even though prevalence is compar- capital from poor rural areas and what can be done to improve atively low in Sichuan on average, there is significant variation it. Specifically, we examined the current symptoms of the across both villages and schools (Fig. 1). Seven of the 48 sample failure of rural education. The report focused mostly on the villages and two of the 23 sample schools have prevalence of low levels of matriculation into college and high school. It was 20% or higher. About half of both sample schools and sample shown that there are few barriers for rural students once they villages show some evidence of roundworm infection.
enter high school. When poor rural students are in high school, Infection rates in Guizhou also vary by village and school, they are as competitive as urban students.
but high rates of infection were found in all sample villages So what is the barrier to education? There are likely two and schools. Nearly a quarter of sample villages and a third of major sources. One is that China may be a victim of its own sample schools have infection rates of over 50%. This further success. With rising wages, the opportunity cost of going to confirms our initial findings that intestinal roundworms are en- high school (and staying in junior high school) is high and

L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 Table 3Infection rates of Ascaris, hookworm, and whipworm for two age cohorts in Guizhou and Sichuan, 2010 Infection with any of the three types of roundworms (%) Source: Authors' data (Dataset 9).
Fig. 1. Villages and schools by prevalence of infection with Ascaris, hookworm, whipworm, or any combination thereof in Guizhou and Sichuan, 2010.
Data source: Authors' survey as described in Wang et al., 2012.
rising. This is especially true considering the high cost of high try to show that more is needed. In particular, one of the very school in China and the competitive nature of China's system real problems of students in poor rural areas is that they are un- of education.
healthy and lack nutrition. Thus, even if the state provides better Although we believe (and show in other work) that high tu- facilities and teachers, if students are sick or malnourished, they ition in high school is one of the barriers to educational achieve- will not be able to take advantage of the new investments. In ment in poor rural areas, the article argues that the key source of the article we demonstrate that anemia and intestinal worms the uncompetitiveness lay in the years before secondary school.
(as well as other diseases) are common. Indeed, it is not too It is true that the government has been investing heavily in facil- strong of a statement to say that there is an epidemic of diseases ities and teacher training/salaries in recent years. However, we that are keeping poor rural students down. These diseases were

L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 Fig. 2. Eggs per gram in stool sample, by Ascaris, hookworm, and whipworm for two age cohorts in Sichuan and Guizhou, 2010.
Data source: Authors' survey as described in Wang et al., 2012.
shown to have truly profound negative effects on education response should not be tentative or piecemeal. Instead, China's leaders need to declare an all out war on poor human capital.
In conclusion, if the Middle Income Trap is truly related to The nation needs to take drastic steps to improve health, nu- inequality in an economy, our article suggests China needs to be trition and rural education. If accomplished, we believe that on guard. China has high and rising levels of income inequality.
China will raise the probability of a smooth transition to a high China's high levels of human capital inequality today raise grave income country where most individuals in the labor force in concerns that there will be high income inequality in the coming 2030 (especially the young and middle aged individuals) have decades. To be clear, we are not saying that there is an absolute the skills which employers demand in order to pay the high causal link between inequality and stagnation in growth when a wages that are needed in a high income country that can grow country reaches middle income. However, we are saying that if sustainably over decades.
in the very near future China does not address income inequalityand—even more so—human capital inequality, China will haveto try to accomplish what no successful Graduate has ever done since World War II: make the transition from middle to highincome with high levels of inequality.
The authors would like to acknowledge the financial assis- Because of this danger (though not inevitability), we believe tance of the National Natural Science Foundation of China one of the most important actions that can be taken is to take (71110107028, 70903064, 71103171, and 71033003), the action now. Indeed, we believe that China has exactly enough Chinese Academy of Sciences (KZZD-EW-06,) and its In- time starting now. There is a crisis. The crisis is so large that stitute of Geographic Sciences and Natural Resources Re- it may threaten the future of China's growth and stability. If search (2011RC102, 2012ZD008). We want to thank the Free- China starts now, there is time to remedy the problem. But, the man Spogli Institute's Global Underdevelopment Development L. Zhang et al./ Agricultural Economics 00 (2013) 1–12 Fund. The Stanford Center for International Development pro- tive performance in Brazilian schoolchildren. Trop. Med. Int. Health 13(8), vides support for research contained in this manuscript. The support of Eric Hemel and Barbara Morgen; Jade and Paul Khan, A.R., Riskin, C., 2001. Inequality and Poverty in China in the Age of Globalization. Oxford University Press, Oxford.
Chien; Bowei Lee and Family are gratefully acknowledged.
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Cardiovasc Intervent Radiol (2008) 31:735–744 Transcatheter Arterial Chemoembolization for AdvancedHepatocellular Carcinoma with Inferior Vena Cava and RightAtrial Tumors M. C. Chern Æ V. P. Chuang Æ T. Cheng ÆZ. H. Lin Æ Y. M. Lin Received: 24 September 2007 / Accepted: 17 March 2008 / Published online: 22 April 2008Ó Springer Science+Business Media, LLC 2008