How does trade affect the labor market? Evidence from Japanese manufacturing

This paper investigates how increased trade has affected labor demand at different levels of skills in Japanese manufacturing since the 1980s. First, the estimated loss of employment in aggregate manufacturing attributable to increased imports between 1980 and 1990 is 4.7 percent of the 1980 level of employment. Second, the rate of change in the relative wage of non-production to production workers attributable to the change in trade between 1980 and 1990 is 2.4 percent or less. These findings suggest that the effect of increased trade on the Japanese manufacturing labor market in the 1980s is not yet very large.     

Does gender structure affect firm productivity? Evidence from China

This study examines the impact of gender workforce composition on firm productivity. Using a large sample of Chinese manufacturing firms and conditional on human capital-related controls, we find that firms with a greater share of female workers demonstrate lower productivity. However, our results suggest that increasing the fraction of highly educated female workers significantly improves firm performance. This effect is evident for all private firms regardless of their trade orientation and foreign firms undertaking purely domestic sales. However, the effect does not exist in the case of state-owned and export-oriented foreign enterprises. Compared with medium-sized and large firms, small firms benefit more from gender diversity at high education level. Finally, the share of highly talented female workers indicates better firm performance in more feminized industries.     

Does Hukou pay? Evidence from nanny markets in urban China

This paper quantifies the effect of the Chinese Hukou (household registration) on expected wage of nannies in urban China. Using a novel data set with detailed individual information of nannies from 12 Chinese cities during 2015–2016, this study finds that a 1% increase in Hukou Index, a measure of inter-regional migration restrictions, leads to a 0.05% increase in expected wage of nannies. The effect is heterogeneous for sub-categories of Hukou policies and among different types of nannies. Migration networks also play a significant role, and the effects are different for migration networks of different sizes. These findings reveal the unexpected consequences of China’s tight control of internal migration and the change in wages of a relatively low-skill service sector.     

Does environmental regulation affect firm exports? Evidence from wastewater discharge standard in China

This paper examines the effect of water pollution regulation on polluters' exporting decisions and exporting structure. Using a detailed firm-by-product level dataset, we employ a difference-in-differenceds model to identify the causal relationship between environmental regulation and firms' exporting performance. We find that stringent environmental regulation decreases both export likelihood and export values. Moreover, we examine the channels that the environmental regulation could affect firms' exporting performance through entry-exit of the export market, price transmission, adjustments of exporting destinations, and product switch. The tightening wastewater discharge standard appears to deter the new polluters rather than incumbents to enter the export market. Productive polluters could gain the relative larger export market by lowering down exporting prices and selling more products overseas. In response to this water pollution regulation, polluters would make substantial adjustments in their exporting destinations, exporting products, and exports value via different trade modes.     

Does religious beliefs affect economic growth? Evidence from provincial-level panel data in China

More and more literature on economic growth and development has increasingly focused on long-run effects of geographic, historical, and cultural factors on productivity and income per capita. This paper investigates the effect of religious beliefs on economic growth using provincial panel data from 2001 to 2011 in China. It's very meaningful to study the role of religion playing in economic development since religion has influence on political preference, human capital and work ethic, especially in current China which is faced with income disparity, environmental pollution, and official corruption. Our results reveal that, among the different religions, Christianity has the most significant effect on economic growth. This conclusion is consistent among different estimators and robust with stability over time. However, no consistent or robust conclusions can be drawn for other religions. Different estimation methods give different signs or significance. Given the very few studies and limited data resources about China in this field, the paper as a tentative study provides a brand new viewpoint.     

Does religion matter to corruption? Evidence from China

There is a growing interest in understanding how religion affects corruption. Using provincial-level panel data from 1998 to 2009, this paper investigates the effect of religious beliefs on bureaucratic corruption in China. The empirical results show that, bureaucratic corruption is negatively associated with local religious heritage, implying that religious culture plays a positive role in restraining official's corruption since religion has influence on political preference and work ethic. We also find that the negative association between religion and corruption is weaker in provinces with stronger law enforcement, which identifies the substitution effect between religious ethic and legal supervision in curbing corruption. Our findings also reveal that, among the different religions, the anti-corruption effects of China's native religions (i.e., Taoism and Buddhism) are more significant than those of foreign religions (i.e., Christianity and Islam). These conclusions are consistent and robust to various measures of main variables and a variety of robustness checks. Given the very few studies and limited data resources in the context of China, this paper as a tentative study provides new evidences of the relationship between religion and corruption.     

How does industrial transfer affect environmental quality? Evidence from China

Rapid industrialization has made China one of the largest pollutant emitters worldwide. The transfer of heavily-polluted industries has become urgent because of environmental problems. Some manufacturing industries, incredibly energy-intensive and pollution-intensive, have been transferred to less-developed areas for lower labor and land costs. In turn, the industrial transfer would also deteriorate the ecological quality of those areas. Along these lines, it is pivotal to examine the two-way interactions from industrial transfer and environmental quality. This paper collected panel data of 30 Chinese provinces from 2000 to 2015, using the GS3SLS method to find the interactive relationship for industrial transfer and environmental quality. The findings show that industrial transfer and environmental quality both have interactive as well as spatial spillover effects on each other significantly. Study results suggest that the industrial transfer of different provinces needs to consider the coordinated development of the whole area. It is recommended to formulate an inter-regional industrial transfer strategy to protect the environment.     

Does crop insurance reduce pesticide usage? Evidence from China

We test how crop insurance participation affects the intensity of pesticide use in China using data on staple crop production from eight provinces. Our preferred specification instruments farmers' decisions of participation in insurance by village-level intensities of promotional activities and controls for province fixed effects. We find crop insurance participation significantly reduces pesticide use intensity. The reduction effect is greater for smaller plots, older farmers, and farmers who are more risk averse.     

Does peace boost stock prices? Evidence from the Korean stock market

This study analyzes the impact on the Korean stock market of the inter-Korean summits in 2000, 2007, and 2018 and the North Korea–United States summit in 2018 using the event study methodology. Three portfolios, which have high exposures to North Korea risks are constructed: stocks related to Kaesong Industrial Complex (KS portfolio), stocks related to inter-Korean economic cooperation (IEC portfolio), and stocks related to the defense industry (DEF portfolio). Empirical analysis show that the cumulative abnormal returns (CARs) of KS, IEC, and DEF portfolios react positively or negatively to each summit. These results imply that peace does not simply play a role in boosting stock prices and that the stock price reflects all available information related to the summits, including the process and agreement of the summits' discussion and political context. The robustness test (performed by changing the event day to the announcement rather than the agreement) shows that KS and IEC portfolios reflect positive expectation and that the DEF portfolio reflects negative expectation in the financial market. Although each CAR pattern varies, it is true that the stock price reflects all available information of summits swiftly. In other words, our paper shows that the efficient market hypothesis holds in the Korean stock market.     

Business connectedness or market risk? Evidence from financial institutions in China

We utilize the spectral representation of generalized forecast error variance decomposition to investigate the frequency dynamics of volatility connectedness and systemic risk of financial institutions in China from 2011 to 2018. We find that, first, high-frequency components account for the largest part of volatility connectedness (48.33%), followed by low-frequency components, and finally the medium-frequency components. Second, the low-frequency components reflect the business connectedness among financial institutions, while the high-frequency components capture the market risk. Third, the business connectedness among financial institutions will lead to a rise in overall connectedness as well as the accumulation of potential risks. Further, once a crisis breaks out, the potential risks have realized and the business connectedness among institutions declines; while market risk increases rapidly, which helps systemic financial risk stay at a high level. Lastly, among the financial sectors, the banking sector possesses a relatively higher level of business connectedness which plays an important role in the accumulation of potential financial risks; the securities sector features with higher market risk; while the insurance sector has both comparatively lower business connectedness and market risk.     

Does New Rural Pension Scheme decrease elderly labor supply? Evidence from CHARLS

This paper examines the effect of the New Rural Pension Scheme (NRPS) on the labor supply behavior of the elderly in rural China. Using pooled data from two waves of the China Health and Retirement Longitudinal Survey (CHARLS) and an analytical framework of combination of regression discontinuity design and difference in difference method (RD-DiD), we find no evidence that pension receipt from the NRPS program does significantly induce the elderly to withdraw from the labor market. The heterogeneous effects by health status indicate that pension recipient slightly decreases the probability of labor force participation for those individuals with chronic diseases; however, the effect is not statistically significant. The empirical findings suggest that the introduction of the NRPS program does not improve the welfare effect of the originally targeted elder individuals with illness.     

Do political connections affect corporate poverty alleviation decisions? Evidence from China

Programs to alleviate poverty by corporations are increasingly popular as a new form of corporate social responsibility. This study examines how the political connections of a firm's chairperson are associated with decisions to alleviate poverty based on a sample of listed Chinese firms from 2016 to 2018. We find that the chairperson's political connections increase the probability of participation and the amount of investment in programs to alleviate poverty. This positive relationship is mainly manifested in firms with high agency costs and low regional economic conditions. In addition, the chairperson's political connections are not related to the efficiency of the poverty alleviation program. Politically connected firms receive less government recognition with an increase in investment in poverty alleviation. Our findings are consistent with the notion that firms participate in poverty alleviation programs for reciprocal favor exchanges, but they fail to manage these programs efficiently.     

Does polycentric spatial structure narrow the urban-rural income gap? – Evidence from six urban clusters in China

As urbanization and economic development continue to accelerate, social equity issues are becoming increasingly prominent and the urban–rural income gap is an important manifestation of this. This study uses the data of urban clusters from 2010 to 2019 and focuses on the relationship between the polycentric spatial structure of urban clusters and the urban–rural income gap. The findings show that the development of urban cluster polycentricity can reduce the urban–rural income gap, and the higher the degree of polycentricity in morphology, the smaller the gap. However, the relationship between polycentric spatial structure and the urban–rural income gap is “U” shaped, indicating the need for rational planning of urban polycentric development patterns rather than simple expansion. In addition, the polycentric spatial structure of urban clusters can reduce regional disparities by promoting factor mobility and industrial structure optimization. However, this depends on the level of industrial development and infrastructure. This study highlights the importance of a balanced approach to urban development that takes into account regional disparities and issues of social equity.     

Are female teachers more likely to practice grade inflation? Evidence from China

Grade inflation has become a global phenomenon that raises concerns in the academia and the public. This study examines whether high grades accompanying with the growth of female teachers arise from student improvement or grade inflation. We use randomly assigned samples from the China Education Panel Survey and obtain the following results. (1) Students taught by female teachers obtain 1.57 grades point higher compared with those taught by male teachers. High grades do not result from student progress but from grade inflation. (2) Female teachers practice grade inflation for different students, and the effect is more pronounced among female students, low-ability students, and students in senior grades. (3) Female teachers may adopt a high-grades practice due to potential pressures under discrimination and uncertainty rather than for the sake of course or students. (4) Last, high grades brought by female teachers lead to less effort for students in the second year. This paper not only provides data support for understanding the increasing grade inflation, but also offers clear implications for the improvement of evaluation systems.     

The effects of formal and informal child care on the Mother's labor supply—Evidence from urban China

The women's labor force participation rate in China has declined considerably during the last twenty years in urban China. Since the reforms started in the mid-1990s, publicly subsidized child care programs have decreased, and private care centers have increased. This might have increased the reliance of working mothers on informal child care and reduced their reliance on formal child care. Using post-reform data from the Project on Rural–Urban Migration in China (RUMiC) of 2008, I estimate the effects of formal and informal child care on the labor supply of mothers of young children. A recursive model with instrumental variables is employed to account for endogeneity. I find a positive and significant impact of informal child care in the form of grandchild care on the mother's labor force participation, while no significant effect of formal child care in the form of kindergartens or paid nannies. Considering recent tendencies in China to postpone retirement, one possible method to maintain mothers' presence in the labor market could be to reinforce the availability and affordability of formal child care.²³     

Does participating in the standards-setting process promote innovation? Evidence from China

This paper provides novel empirical evidence on the positive effect of standards-setting involvements on corporate innovation in China, reflecting in improving the patent quantity and patent quality. This kind of positive effect increases as the firm's top management team quality increases. We also show that the positive effect of standards-setting involvements is more evident for state-owned enterprises than non-state-owned enterprises due to the unique features of state-owned enterprises. Our results are robust to a battery of tests, including the use of alternative model specifications, firm fixed effects, the instrumental variable approach, potential omitted variables, and propensity score matching procedure. Further analysis reveals that standards-setting involvements foster innovation mainly through improving firms' R&D efficiency, reducing financial constraints, and inducing collaborative innovation. Overall, our findings suggest that standards-setting involvements matter for corporate innovation in China.     

Does winning a venture competition encourage entrepreneurial exploration? Evidence from China

This paper examines whether winning venture competition spurs entrepreneurs to carry out entrepreneurial exploration. We use data from new venture competitions organized by Shanghai municipal government that are open to innovative small ventures. Using a regression discontinuity design, we show that winning leads to a higher level of entrepreneurial explorations in the year following the competition. However, this effect is reduced for female entrepreneurs, and entrepreneurs whose affiliated ventures have a shorter time of operation. Our findings are consistent with existing theories about entrepreneurship and behavioral economics, including entrepreneurial experimentation and “house money” effect.     

Does religion enhance firm performance? Evidence from private firms in China

We study the impact of religiosity on firm performance in China. We find that entrepreneurs with religious beliefs have higher accounting performance. Firms are more likely to obtain bank credit if entrepreneurs have religious beliefs as religiosity stimulate them to invest more in networking, which further enhance the access to bank credit. Religious entrepreneurs have more trust towards external people, which incentivizes them to adopt a shareholding reform and employ external professional CEOs instead of family members, and thus enhances the corporate governance of these firms. In contrast, religious entrepreneurs also prefer family members as shareholders and inheritance of the firm by family members. The preference of inheritance of the firm by family members undermines the enhancing effect of external CEOs on firm performance. Religious entrepreneurs are more likely to spend more on safety insurance for employees, which is driven by the altruism originated from religious doctrines and also the risk aversion channel. The impact of religiosity complements market institutions, and political and social status of the entrepreneurs, which shows the interaction between religion and formal market institutions. We find that it's mainly Buddhism that drives our results, while other religions have limited impact on business activities in the country.     

Does export liberalization cause the agglomeration of pollution? Evidence from China

This paper investigates the impact of export liberalization on the geographic concentration of water pollution. Data shows that water pollution emissions are unevenly distributed across regions in China. Using China's accession to the World Trade Organization (WTO) as the exogenous shock, we identify a negative causal effect of export liberalization on the agglomeration of water pollution across regions in China. It suggests that relatively more water pollution is discharged in those previously low-pollution regions after export liberalization. We confirm this with data on regional relative pollution emissions. Further decomposition shows that it is the intensive margin (average pollution emission) rather than the extensive margin (number of polluting firms) that drives the deglomeration of water pollution emissions within the liberalized industry.