Make rural China run: Three essays on entrepreneurs, regulators and cadres

Since China launched its reform in the late 1970s, there has been a lot of interest and work on the agricultural sector, town and village enterprises and migration. However, there are still significant gaps in the understanding of who is making China's rural economy run. In this dissertation I seek to fill some of the gaps on behavior of those economic actors that are helping to run rural China. Specifically, I write three essays that seek to illuminate three segments of the rural economy that have helped account for a degree of its success.; The first essay is to examine the nature of the rise of off-farm self-employment. This paper provides evidence that demonstrates that although the self-employed enterprises are small, they have grown fast, operate as complex business organization and perform well in a financially healthy way. These results can be interpreted to mean that the expansion of self-employment is not symptomatic of a failing economy; instead it likely is a component of the dynamic development process that characterizes rural China.; The second essay is to examine how local government regulation has affected the rise and performance of different types of rural enterprises in rural China. I find that, holding other things constant, higher entry costs and stricter general regulation tend to discourage the formation of private enterprises in villages (firms with 8 or more employees) while they do not seem to adversely affect village enterprises. In addition, when compared to private enterprises, self-employed firms (micro-enterprises with at most 7 employees) do not seem to be discouraged by regulation.; The third essay is to examine whether rural cadres are getting rich in their jobs as village leaders. My results show that once controlling for both time invariant and variant unobservables, the returns to being a village cadre that have been found in previous studies literally disappear. These results indicate that cadre households are not better off because of their village cadre status. Instead, they are better off because of their human and physical capital, their ability and family background, and other unobservable heterogeneities rather than village cadre status.