Do Analysts Matter for Corporate Tax Planning? Evidence from a Natural Experiment

We exploit an exogenous shock to analyst coverage as a result of brokerage house mergers and closures to examine whether financial analysts influence the tax‐planning activities of the firms they cover. Using a difference‐in‐differences design, we find that, on average, firms affected by broker mergers and/or closures experience a reduction in their GAAP (cash) effective tax rates (ETR) of 2.5 percent (2.6 percent), relative to control firms, translating into average tax expense (cash tax) savings of $34 ($35) million. The treatment effect is more pronounced among firms with lower pre‐event analyst coverage. To explore how analysts affect tax planning, we further document that the treatment effect is greater among firms that lose an analyst who provided an implied ETR forecast in the past, suggesting that analysts influence tax planning via their tax‐specific research efforts. In addition, we find that after merger/closure, weakly governed firms increase their use of aggressive tax strategies, and financially distressed firms experience a larger reduction of cash effective tax rates, relative to control firms. Overall, we provide evidence that a shock to analyst coverage sufficiently changes the cost‐benefit trade‐off of tax planning.     

Giving to the Poor? Targeting of Food Aid in Rural Ethiopia

This study determines the factors underlying the allocations of food aid in Ethiopia. We focus on regional differences in targeting criteria, and targeting accuracy according to per capita income. Data are drawn from two linked rural household surveys in 1995–96. We find large differences in food aid allocations across regions that cannot be explained by observable regional characteristics such as per capita income and rainfall. These differences are consistent with speculation that food aid is being used by the Ethiopian government to transfer resources to favored regions. We also find wide variations in the criteria used to identify recipient households across regions. We identify measurable indicators that could be used by food aid authorities to improve targeting effectiveness in the future, both across and within regions. Finally, we present simulation results on targeting accuracy under various targeting strategies and discuss potential benefits and shortcomings of those strategies.     

Does School Quality Matter? Evidence from the Hong Kong Experience

This paper analyses the differential returns to education and to language ability of natives and Chinese immigrants in Hong Kong. The large difference in quality between Hong Kong schools and Chinese schools provides a natural experiment for evaluating the effect of school quality on students' performance in the labor market. We show that the rate of return to schooling is more than three times higher among local-born workers than among Chinese immigrants to Hong Kong. Our analysis also suggests that English language education is one important component of the success of the Hong Kong education system.     

Does Allocation of Public Spending Matter in Poverty Reduction? Evidence from Thailand*

The present paper uses a panel dataset to estimate the marginal returns to different types of government expenditure on agricultural growth and rural poverty reduction in Thailand. The study finds that additional government spending on agricultural research provides the largest return in terms of agricultural productivity and has the second largest impact on rural poverty reduction. Increased investment in rural electrification has the largest poverty reduction impact, mainly through improved nonfarm employment. Rural education has the third largest impact on both productivity and poverty reduction. Irrigation has a positive impact on agricultural productivity, but regional variation is considerable. Government spending on rural roads has no significant impact on agricultural productivity and its poverty reduction impact ranks last among all investment alternatives considered. Additional investment in the Northeast Region has a greater impact on poverty reduction than in other regions.     

Does Land Rent between Acquaintances Deviate from the Reference Point? Evidence from Rural China

This paper theoretically and empirically investigates whether acquaintance networks influence the deviation of land rent from the reference point advanced by Hart and Moore. The coefficient of variance and the range of land rent are used to represent the degree of deviation from the reference point. Based on village‐level data from the 2015 China Household Finance Survey, the estimated results indicate that land rent between acquaintances is more likely to significantly deviate from the reference point. Although rental transactions are conducted between acquaintances, larger deviations from the reference are also associated with a longer time to close deals. Our analysis using household‐level data further supports our findings, indicating that land rental markets embedded in the acquaintance networks of rural China are in a transition period and have characteristics of both relational and market orientation. The policy makers should introduce more outer village lessees or other market ingredients to increase the voluntary marketization of land rentals inside acquaintance networks.     

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.     

Does Membership Homogeneity Matter for Group-based Financial Services? Evidence from the Gambia

This paper examines the effect of membership composition on the components of group design to provide financial services, and on the performance of these groups. Regression results based on data from RoSCAs in the Gambia show that gender homogeneity is less likely to affect components of group design than is homogeneity in income generating capacity of members. Membership homogeniety does not directly affect the repayment performance of the members but only indirectly through the components of the group design. — Cet article examine l’incidence de la composition sur les composantes et la performance des groupes constitués en vue de la fourniture de services financiers. Selon les résultats d’une analyse de régression basée sur les données de “RoSCA” en Gambie, il apparaît que l’homogénéité du genre influe moins sur les composantes de la conception des groupes que l’homogénéité de la capacité des groupes à générer des revenus. En ce qui concerne la performance en matière de remboursement, l’incidence de l’homogénéité de la composition n’est pas directe mais indirecte au travers des composantes de la conception des groupes.     

Does Ethnicity Matter for Access to Childhoodand Adolescent Health Capital in China? Evidence from the Wage-Height Relationship in the 2006 China Health and Nutrition Survey

This paper considers whether ethnicity conditions the return and access to health capital in China. Given that the wage-height relationship reflects the labor market earnings returns to childhood and adolescent health capital, differences in the labor market returns to height by ethnicity reflect ethnic differences in access to health capital during childhood and adolescence. We theoretically motivate the role of height in earnings by providing a Bioeconomic rationale for stature and height determining individual wages, and estimate height-augmented Mincerian earnings functions with data from the 2006 China Health and Nutrition Survey. Our results show that when the effects of unobserved genetic influences on adult height are accounted for, the labor market return on height is higher for Chinese ethnics. This suggests that in China there are ethnic disparities in access to the inputs that produce childhood and adolescent health capital.     

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.