Research Papers
Explaining Life-Cycle Female Labour Supply in Japan
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Aggregate life-cycle female labor supply (hours per woman) in Japan features an interesting pattern. First, it exhibits an “M” shape, with two peaks occurring when women are in their 20s and 40s, and a significant dip in between. Second, the two peaks are of different heights with the second one lower than the first. The goal of this paper is to provide an explanation to this aggregate pattern. Employing a micro-data set, I first document empirical facts underlying the aggregate pattern by correlating women’s labor supply choices with their marriage, fertility and child-rearing behavior. I show that the aggregate pattern can be understood as a result of both demographic changes and behavioral differences across different types of women: single women, married women without kids, and married women with small or grown-up kids. Guided by the empirical findings, I then build a life-cycle model featuring heterogeneous types of women and transitions between the types, human capital accumulation and childcare cost. Embedded in the model are three key determinants of female labor supply: initial gender wage gap, return to experience and childcare cost. After calibrating the model to the Japanese data, I evaluate the model performance and quantitatively assess the importance of each determinant. The calibrated model accounts for the aggregate pattern well. Counterfactual experiments suggest that narrowing gender wage gap (through lowering initial gender wage gap or increasing return to experience) would have a larger positive effect on female labor supply than simply lowering the childcare cost, a result mostly explained by the human capital channel.
Idiosyncratic Distortions & Aggregate Losses
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Under the economic environment of Restuccia and Rogerson (2008) (RR), we characterize analytically the mappings from distortions to total factor productivity (TFP) and other aggregate measures. Using these mappings, we explain in a unified way three features emerged from RR's numerical experiments, where endogenous exit of firms is assumed away and distortions are restricted so as to have no impact on capital accumulation. Additionally, we explain why these features disappear when distortions affect capital accumulation. We then extend RR's study by introducing the endogenous exit margin and find that various aggregate losses can respond to this margin quite differently.
Credit Discrimination and Capital Misallocation in China's Manufacturing Sector
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Hsieh and Klenow (2009) present empirical evidence of substantial resource misallocation in China's manufacturing sector that leads to large sectoral TFP loss. In this paper, we propose financial frictions as a source of the misallocation. We emphasize two aspects of the financial frictions in the Chinese context. One is credit discrimination: Unproductive state-owned enterprises (SOEs) have easy access to credit while productive non-SOEs are credit constrained. The other is that the credit constraint faced by non-SOEs is much tighter than those in financially developed countries. The financial frictions result in factor misallocation between the two types of firms as well as across non-SOEs. Using a firm-level data set, we find that a potential 24% TFP gain can be achieved if the credit constraint faced by non-SOEs is at a reasonable level similar to the one in the US, and that 53% of the gain can be attributed to improved allocations between SOEs and non-SOEs.