Chinese data

Everybody knows there are problems in Chinese official statistics. But John Gibson and Chao Li have found what I think is a new one. Anything that's using regional per capita figures is a bit suspect.

Here's their abstract:

Hundreds of studies in economics misinterpret China’s sub-national population and per capita data. The most widely used population counts are of hukou registrations from each province, prefecture, county, or city rather than of the people living in each place and generating local GDP. Over 220 million people have left their place of registration, while almost none had when reforms began, creating time-varying errors in estimates of per capita income of sub-national units. We survey empirical articles in blue ribbon journals, in development journals, and in regional and urban economics journals that use China’s sub-national data. Over 80 percent of articles use these data erroneously; most commonly the wrong population or employment counts are used to measure the size of sub-national units, and per capita data are calculated with the wrong denominator for the interpretation placed on variables. We provide examples of errors from each group of journals, and a critical test of one highly-cited study. Specifically, we show that if hukou registrations are erroneously used to measure the local population, following existing practice, conclusions about driving forces for urban area expansion are reversed. We give recommendations for more careful use of China’s sub-national population and per capita data.

Time varying errors are... not good. They don't wash out in fixed effects.

Careful out there...