“…For example, provinces that are well-known to have spearheaded China’s market reform (e.g., Guangdong and Zhejiang) are consistently ranked at the top, whereas provinces whose economies continue to rely heavily on government allocation (e.g., Gansu and Yunan) are consistently near the bottom. Across disciplines, many researchers have used this index and found theoretically plausible associations between it and a variety of outcomes, including employment practices (Cao and Rubin 2014), labor market processes (Liu, McDonald, and Chua 2022), executive compensation (Peng, Sun, and Markoczy 2015), business strategies (Shi, Sun, and Peng 2012), and regional development (Wen 2007). Although most studies use the index to measure cross-sectional differences, NERI researchers have made a conscious decision to use simple arithmetic averages to construct the index so the scores can be harmonized to maintain comparability over time (Fan, Wang, and Zhu 2007; Wang et al 2021).…”