"Intergenerational Contracts and Female Labor Supply," Current version: October 2016, Job Market Paper.Appendix Abstract: This article studies how intergenerational relationships between parents and grandparents affect females' labor supply. To help sustain such relationships in the face of long-term incentive problems, I develop a non-altruistic dynamic contract model using economic benefits such as a bequest, coinsurance, and cheaper care service. I then estimate the parameters of the model using Chinese household survey data. I evaluate the labor and income reallocation effect throughout the relationships. I find that intergenerational relationships in China increase the labor supply of younger females by 32%, but reduce the labor supply of older females by 21%, while increasing older females' household savings by 13%. My policy experiments produce the following predictions: delaying retirement age reduces the labor supply of younger females; raising inheritance taxes increases the labor supply of young females and the savings of both parents and grandparents; child care subsidies increase the labor supply of both households. I conclude that public policies are not only affecting the target group by also the households attached to the target group through intergenerational relationships.
"How Does Online Piracy Affect Film Revenue in China? " Current version: July 2016. Abstract: I estimate the impact of online piracy on movies' box office performances in China from 2006 to 2013 using a unique dataset that reports the pirating data for 1,039 wide-release movies from several file-sharing websites. Using these piracy-level proxies and Chinese box office data, I estimate that movie piracy caused substantial box office losses, that the substitution elasticity of the consumption of pirated movies on consumption in theaters was small, and that government anti-piracy policies reduced box office losses, but only in the short term. I estimate that the average revenue loss caused by piracy was about 30 percent.
Abstract: We aim to quantify the role of social networks in job-related migration. With over 130 million rural labors migrating to the city each year, China is experiencing the largest internal migration in the human history. Using instrumental variables in the 2006 China Agricultural Census, we find that a 10-percentage-point increase in the migration rate of co-villagers raises one's migration probability by 7.27 percent points, an effect comparable to an increase of education by 7-8 years. Evidence suggests that most of this effect is driven by co-villagers helping each other in moving cost and job search at the destination.
Abstract: This study investigates households' education investment responses to Affirmative Action (AA). The admission system of National College Entrance Examination (NCEE) in China is a kind of AA, that allocates college seats by regions. This article uses the college expansion in China after 1997 as a natural experiment to study the education investment responses of households to education chance change.Using Chinese household surveys and a college enrollment data, I examine the competitions among households with heterogeneous talents and endowments for college seats. I find that on average, higher enrollment ratios encourage households to invest more in education. The effect of encouragement is greater for the households with better education level and higher income. I conclude that AA and the college expansion widen the education and income disparity within each region.
Abstract: This paper studies policy competition for a foreign-owned multiproduct monopolist firm producing two products that are horizontally differentiated between two countries of different size. We show that the equilibrium outcome of FDI competition is determined by the interaction between the market size effect and the cannibalization effect, and countries subsidy policies. Welfare e§ects of competition for FDI are derived; in particular, we show that the competing countries may Pareto strictly gain from or Pareto strictly lose from FDI competition.
Abstract: This paper studies the bidding war to attract a foreign-owned monopolist firm, which produces two vertically differentiated products, between two countries of different size. We show that the equilibrium outcome of competition for foreign direct investment (FDI) is determined by the interaction between the market size effect and the cannibalization effect, and two countries (strictly positive) willingness-to-pay to attract FDI due to the import substitution effect. Welfare effects of competition for FDI are fully characterized.
“Land Misallocation and Firm Productivity Distribution,” with Guang Shi, Current version: August 2016, working paper.
Abstract: We estimate the effect of market-oriented land allocation reform on the firm productivity distribution in China. The non-market-oriented land allocation rules caused the misallocation of land of firms. Chinese government introduced an auction system of land market nationwide around 2002. The establishment of the auction system is a natural experiment to estimate the impact of eliminating land misallocation. We estimate policy effects on the firm productivity distribution change brought about by the policy. We find following results. (1) the land auction policy increased the average total factor productivity by 23%. (2) the land auction policy increased the average land price by 19%. (3) for 36% of the productivity change is attributable to the price increase. (4) About 54% of the productivity change are explained by the new policy gives private firms opportunities to enter the market.
"Value-added Tax Reform and Primary Income Distribution in China," with Guang Shi, Current version: June 2016. Chinese version published inStudy in Labor Economics, 2016, 4(1):65-88. Abstract:We use the taxation reform in China to evaluate the effect of taxation on income distribution. It adapts the Difference in Difference in Difference methodology to investigate the causal effect of the value-added tax reform on income distribution in the Northeastern region since 2004. The reform significantly reduced the labor share by a magnitude of four percent, with the peak occurring in 2005. The labor share of the foreign sector and the state-owned sector dropped the most. Declining employment and wages are the major manifestations of the negative effect. Recommendations from the study include the government reforming the individual income tax and property tax to offset the adverse effect of the consumption-type value-added tax on primary income distribution.
Abstract: What determines mass migration within countries? Examining data from China – the biggest internal migration experience in human history – this column finds that migrants from the same village tend to cluster at the same destination for the same occupation. This pattern is driven by social networks within villages that reduce the moving costs for future migrants, such as the risk of not finding a job.