☰

Publications

The Agricultural Wage Gap Within Rural Villages (with C. Baysan, M. Dar, K. Emerick, and E. Sadoulet).
Journal of Development Economics, May 2024. [SSRN] [CEPR WP]

Abstract

We use unique data on daily labor-market outcomes for Indian casual workers to study labor reallocation between agricultural and non-agricultural activities within rural areas. Controlling for both individual time-invariant attributes and time-varying shocks, we find that workers who switch sectors across years or even within a week can obtain 23% higher wages by taking non-agricultural jobs. We then estimate a discrete choice model of daily labor allocation that decomposes preferences for jobs into two types of disamenities: i) those associated with job characteristics and ii) those associated with location. We find that the first type of disamenity is 23% of wages for men and 38% for women, and the second type is 36% of wages for men and 31% for women.

Local Effects of Global Capital Flows: A China Shock in the U.S. Housing Market (with L. Shen and C. Zhang).
Review of Financial Studies, March 2024. [SSRN]

Abstract

This paper studies the real effects of foreign real estate capital inflows. Using transaction-level data, we document (i) a “China shock” in the U.S. housing market characterized by surging foreign Chinese housing purchases after 2008; and (ii) “home bias” in these purchases, as they concentrate in neighborhoods historically populated by ethnic Chinese. Exploiting their temporal and spatial variation, we find that these capital inflows raise local employment, with the effect transmitted through a housing net worth channel. However, they displace local lower-income residents. Our results show that real estate capital inflows can both stimulate the real economy and induce gentrification.

Media

Macro Musings, Boston Fed, 香樟经济学术圈

Property Rights and Firm Scope (with T. Tong and M. Xu).
Journal of Management, September 2023. [SSRN]

Abstract

The voluminous strategy research on the determinants of corporate scope is often premised on a well-established property rights regime, which contrasts with the weak property rights protection that still characterizes most countries today. We address this gap by applying property rights theory to theorize and empirically examine how the strengthening of the property rights regime affects corporate scope. Our analysis exploits the enactment of a property law that enhanced the formal protection of private properties in China as a quasi-experiment. We show that with a strengthened property rights regime, the horizontal relatedness among private firms’ businesses increases, but their vertical relatedness decreases, compared with state-owned firms. Further, these effects are less prominent for politically connected firms that are afforded informal protection of property rights. Our findings shed new light on property rights regime as a critical determinant of firms’ horizontal and vertical scope.

Political Connections, Competition, and Innovation: Quasi-Experimental Evidence From Chinese Firms (with L. Cheng).
Economic Development and Cultural Change, April 2023. [SSRN]

Abstract

This paper studies the causal impact of political connections on innovation. Using a unique hand-collected data set of sudden deaths of politically connected independent directors (i.e., retired government officials) in Chinese firms, we find that an unexpected loss of political connections increases a firm’s patent applications by 34% (14 patents). The innovation response is more pronounced in firms with stronger connections: when the connected directors held higher-level bureaucratic positions or when firms operate within their geographical jurisdictions. Upon losing political connections firms face higher competitive pressure and divert resources from rent-seeking into innovation investment. Our findings highlight the role of competition in the substitution between political connections and innovation, particularly in settings where formal institutions are weak.

Inferring Informal Risk-Sharing Regimes: Evidence From Rural Tanzania (with E. Ligon).
Journal of Economic Behavior and Organization, September 2020. [CUDARE WP]

Abstract

This paper studies informal risk-sharing regimes in a unified framework by examining households’ intertemporal consumption behavior. We exploit a theoretically-consistent link between interest rates and cross-sectional consumption moments to test alternative risk-sharing models without requiring data on interest rates or assuming a restriction to eliminate the need for such data, which are often unavailable in developing economies. We specify tests that allow us to distinguish among models even with temporal dependence in income shocks. Using data from rural Tanzania we find that the consumption pattern is consistent with the self-insurance regime, and that risk aversion varies substantially across districts. Imposing a strict condition on interest rates, as often done in prior literature, misses their intertemporal heterogeneity and biases the estimation of risk aversion.

What Do Private Firms Do After Losing Political Capital? Evidence From China (with L. Cheng).
Journal of Corporate Finance, February 2020.

Abstract

This paper studies the real effects of losing political capital by exploiting exogenous shocks from the sudden deaths of politically connected independent directors in Chinese firms. Using difference-in-differences estimation, we find that upon losing political capital, a firm boosts its physical capital expenditures by 28%, or 2.93 percentage points, which is an order of magnitude larger than estimates from the United States. The loss of political capital leads to a decrease in the economic benefits a firm can obtain, in terms of bank loans, tax benefits, and government subsidies, and an increase in its production costs. Our evidence suggests that private firms use physical capital investment as a substitute for political capital.

Media

政府会计学术网, 香樟经济学术圈

The Long-Run Effects of Government Spending on Structural Change: Evidence From Second World War Defense Contracts (with D. Koustas).
Economics Letters, May 2019.

Abstract

This paper studies the long-run effects of the largest government spending program in U.S. history – Second World War defense spending – on structural change in local economies. We link a dataset of war supply contracts with economic data at the county level spanning from 1930 to 2000. Using counties that received no defense spending as a comparison group and controlling for prewar characteristics, we find that wartime defense spending led to sustained reallocation of labor to manufacturing and other non-agricultural sectors in war production centers, contributing to the long-term population growth in those regions.

Working Papers

Initial Conditions, Size, and the Biggest Push in US History (with D. Bartelme and D. Velasquez).

Structural Transformation in China: The Roles of Trade and Migration Cost Reductions.