Research

Abstract: This paper examines labor adjustments between the informal and formal sectors in response to the adoption of industrial robots in China. Using a longitudinal household data from 2010 to 2018, I find that robotization increases informal employment. Quantitatively, one more robot per thousand workers increases the share of informal employment by 1.16 percentage points. The reallocation is not driven by new entrants or re-entrants, but by workers initially employed in the formal sector. Formal workers tend to transition into informal jobs, particularly non-manufacturing or non-routine jobs. Lastly, this study explores labor adjustments within households, revealing that wives (daughters) are more likely to enter the labor force and take up informal jobs if their husbands (mothers) work in the informal sector than in the formal sector. 

Abstract: We use a local projections instrumental variables approach to estimate dynamic macroeconomic effects of temporary, exogenous remittance shocks. We identify exogenous remittance shocks by instrumenting remittances with the migrant-share-weighted GDP per capita of migrants’ destination countries. Impulse response functions show that the identified remittance shock is temporary and that it has a significant positive effect on remittance-recipient countries’ real GDP per capita on impact, and cumulatively over the medium term, e.g. over periods of 5 and 10 years. Household consumption and investment significantly increase while the ratio of net-exports over GDP decreases. We also find that the increase in exogenous remittances causes a significant increase in external debt and a significant decrease, on impact, in the external debt servicing cost as a fraction of GNI. Our empirical results are consistent with the predictions of the model by Bahadir et al. (“The Macroeconomic Consequences of Remittances”, Journal of International Economics, 2018) for the case that an exogenous, temporary remittance inflow accrues to credit-constrained entrepreneurs.

Abstract: This paper presents estimates of the effects that government regulation of diesel and petrol prices has on GDP growth. We specify VAR models with asymmetric effects of positive and negative changes in the regulatory prices. We estimate the VAR models on quarterly data from China's national accounts statistics during the period Q1 1998 to Q4 2018. Our main findings are that: (i) negative growth rates of regulatory diesel and petrol prices significantly reduce GDP growth; (ii) positive growth rates of regulatory diesel and petrol prices have small positive effects on GDP growth which are not significantly different from zero.

Abstract: We provide estimates of the effects that income inequality has on economic growth in China. Our empirical analysis is at the county level. Using data provided by the China Health and Nutrition Survey, we construct measures of inequality and the growth rates of household incomes per capita for 72 Chinese counties during the period 1989–2015. System-GMM estimates of panel models show that the within-county effect of inequality on economic growth is significantly decreasing in initial average income. For the relatively low levels of initial average incomes that were prevalent in China during the 1980s and 1990s, our model estimates imply that the increase in inequality that occurred in China during the 1980s and 1990s had a significant positive effect on economic growth. However, for current levels of average income, our panel model predicts that inequality has a negative effect on economic growth: a 1 percentage point increase in the Gini would reduce the per annum growth rate by around 1 percentage point. 

Abstract: The average country in Asia–Pacific experiences more natural disasters than average countries of other developing regions. The paper estimates the effects that natural disasters have on human development. Controlling for country- and time-fixed effects, the dynamic panel model estimates show that external debt has a mitigating effect on the adverse impacts that natural disasters have on human development; in countries with low external debt-to-GDP ratios, natural disasters significantly decrease the human development index, but not so in countries with high external debt-to-GDP ratios. External debt (i.e., borrowing from abroad) is a financial contract for obtaining resources from abroad (i.e., imports of goods and services). When a country experiencing a natural disaster borrows from abroad to increase imports of goods and services, the population suffers less when a natural disaster strikes. Natural disasters destroy goods and capital (e.g., food, machinery, buildings, and roads) in the countries in which they occur. If imports of goods and services do not increase, then the population has less goods and services to consume following a natural disaster. By increasing imports, which are mirrored on the financial side by an increase in external debt, the population of a country that was struck by a natural disaster can experience consumption smoothing.