Liang Bai

Welcome! I'm a Lecturer (Assistant Professor) in Economics at the University of Edinburgh. My research interests are in development economics, political economy, and international trade. My work so far has used both experimental and quasi-experimental methods, as well as newly-assembled data, collected from the field, the web, and historical archives.


Address: 31 Buccleuch Place, Edinburgh, EH8 9JT, United Kingdom

Curriculum Vitae

Research Papers

1. "Estimating US Consumer Gains from Chinese Imports", with Sebastian Stumpner (paper) American Economic Review: Insights, Vol.1(2), 2019

We estimate the size of US consumer gains from Chinese imports during 2004-15. Using barcode-level price and expenditure data, we construct inflation rates under CES preferences, and use Chinese exports to Europe as an instrument. We find significant negative effects of Chinese imports on US prices. The effect is driven by both changes in the prices of existing goods and the entry of new goods. It is similar across consumer groups by income or region. A simple benchmarking exercise suggests that Chinese imports led to a 0.19 percentage point annual reduction in the price index for consumer tradables.

2. "Self-Control and Demand for Preventive Health: Evidence from Hypertension in India", with Ben Handel, Edward Miguel and Gautam Rao, NBER Working Paper No. 23727 (paper) Revise and Resubmit, Review of Economics and Statistics

Self-control problems constitute a potential explanation for the under-investment in preventive health in low-income countries. Behavioral economics offers a tool to solve such problems: commitment devices. We conduct a field experiment to evaluate the effectiveness of different types of theoretically-motivated commitment contracts in increasing preventive doctor visits by hypertensive patients in India. Despite achieving high take-up of some contracts, we find no effects on actual doctor visits or health outcomes. A substantial number of individuals pay for commitment, but fail to follow through, losing money without experiencing any health benefit. We develop and structurally estimate a pre-specified model of consumer behavior under present bias with varying degrees of naivete. The results are consistent with a large share of individuals being partially naive: sophisticated enough to demand some commitment, but overly optimistic about whether a given level of commitment is sufficiently strong to be effective.

3. "Political Movement and Trust Formation: Evidence from the Cultural Revolution" with Lingwei Wu (paper) Revise and Resubmit, European Economic Review

This paper examines the effect of political movement on trust formation, in the context of China's Cultural Revolution (1966-76), an influential political upheaval that involved widespread conflict and incentivized non-cooperative behavior. Combining both county-level variation in revolutionary intensity and cohort-level variation in trust formation ages, we measure individual exposures to the revolution, and implement a difference-in-differences strategy. Our findings indicate that more exposed individuals trust significantly less. This effect is more pronounced for those more likely to have been targeted during the revolution, as well as those with greater exposure to its early years (1966-71). The results are robust after accounting for the dynamic effects of pre-revolution county characteristics, an extensive set of region-specific cohort trends, placebo tests, and potential reporting bias.

4. "Political Conflict and Development Dynamics: Economic Legacies of the Cultural Revolution" with Lingwei Wu (paper) Reject and Resubmit, Journal of Economic History

As one of the most influential socio-political movements in 20th-century China, the Cultural Revolution (1966-1976) resulted in widespread conflict, predominantly directed towards the educated elite. This paper investigates its economic legacies, exploiting geographic variation in revolutionary intensity, measured by the number of resulting deaths. Using a county-level panel over five decades and a difference-in-differences strategy, we find worse-affected areas performed better at baseline, but were slower to industrialize. Using individual-level census data to investigate potential mechanisms, we find more exposed cohorts are less likely to obtain higher education degrees, and to take up professional and entrepreneurial occupations.

5. "Rural Banks and Agricultural Production: Evidence from India's Social Banking Program", with Camille Boudot, Andre Butler, and Johannes Eigner (paper) Under Review

This paper studies the effects of improved access to banking services on agricultural production in India. We exploit a series of central-government policy rules during the 1980s to generate a time-varying instrument for rural bank branch expansion at the district level. We find that a 1% growth in rural branches increased aggregate yields by 0.3% over a three-year period. This effect is largely driven by a higher incidence of cropping during the arid winter season. Banks also attenuate the effect of lagged rainfall shocks on output, via changes in the use of irrigation.