Research Fields
Labor Economics, Health Economics, Public Economics
Publications
The Intergenerational Effects of Housing Regulations: the Regression Discontinuity Estimates on Child Development (with Han Li, Jiangyi, Li and Yi Lu), Journal of Public Economics, Vol. 227 104995. 2023
This paper studies the intergenerational effects of housing policies on child development. Exploiting a policy-induced discontinuity in house size in China, we identify that favorable housing policies significantly reduce children’s cognitive skills, lessen their beliefs in an internal locus of control, and decrease their self-esteem but have little impact on physical health or depression symptoms. The heterogeneous analyses show that children at a critical stage of skill formation and girls respond more strongly to housing policies. Our mechanism decomposition shows that parenting skills play a large role in the effect of housing wealth on child development.
Pay for Performance Scheme and Labor Productivity: Evidence from a Kinked Payment in China (with Xiqian Cai, Hong Song, and Wei Jiang), Journal of Development Economics, Vol 156 102840. 2022
This paper examines workers’ response to a nonlinear payment system with a penalty and a reward design in a manufacturing firm in China. Using bunching methods, our estimates show that about 31% of workers make decisions with errors, and the structural elasticity of output response to the piece rate is 0.28. The focal nonlinear payment scheme generates 4% output gains compared with a linear payment scheme given the same total wage costs. Further decomposition analysis shows that the reward aspect of the nonlinear scheme mainly contributes to total output gains. Counterfactual analyses show that total output generated by the nonlinear payment system falls with the reduced worker heterogeneity. Our results illustrate the role of worker heterogeneity in designing compensation schemes and provide new insights into the increasing adoption of nonlinear payment systems in modern manufacturing production.
Education and Mental Health: Evidence and Mechanisms (with Wei Jiang, Yi Lu), Journal of Economic Behavior & Organization, Vol 180: 407-437. 2020
This paper investigates how education affects mental health outcomes. The investigation exploits the compulsory schooling laws implemented in the mid-1980s in China. The laws generated dramatic kinks with small jumps in educational attainment across cohorts. Using a regression probability jump and kink design, we find a strong positive causal relationship between education and mental health outcomes in adulthood. Our mechanism analysis suggests that resources, cognition, and social integration play significant roles in the effects of education on mental health outcomes in the long run.
Housing Wealth and Labor Supply: Evidence from a Regression Discontinuity Design (with Han Li, Jiangyi Li and Yi Lu), Journal of Public Economics, Vol. 183 104139. 2020
This paper uses the discontinuity in house size generated by Chinese housing policies to identify the effect of housing wealth on labor supply. The analysis finds a substantial deterrent effect of housing wealth on labor supply. Much of the housing wealth effect comes from the labor participation decision, with the effect on employed workers being ambiguous. Females and elderly individuals are more responsive to gains in housing wealth.
The Average and Distributional Effects of Teenage Adversity on Long-Term Health (with Jie Gong, Yi Lu), Journal of Health Economics, Vol. 71 102288. 2020
A central question in human development is what causes health inequalities over the life cycle. This paper links adversity in the teen years to individuals' long-term health outcomes. We examine a mandatory rustication program, the"send-down" policy during China's Cultural Revolution, and employ Regression Discontinuity Design to estimate the impact on people's physical and mental outcomes 40 years later. Our results suggest that rusticated youths were more likely to develop mental disorders but not to have worse physical outcomes. Further assessing distributional effects through marginal treatment effect (MTE), we find strong heterogeneous treatment effects and selection on gains.
Long-Term Impact of Trade Liberalization on Human Capital Formation (with Jie Li, Yi Lu, and Hong Song), Journal of Comparative Economics, Vol. 47(4), pp. 946-961, 2019
While a growing line of research has assessed the effect of trade liberalization on human capital formation, most of these studies focus on its short-term effect on individual’s school attendance. Much less is known about its long-run effect, as well as the impact on other aspects of human capital formation such as labor market and noncognitive outcomes. This paper studies the impact of trade liberalization on individuals’ long-term human capital accumulation, including school attendance, cognitive abilities, labor market performance, and noncognitive outcomes. By constructing prefecture-year-level tariff barriers, our identification strategy exploits variations in different cohorts’ exposure to a trade shock at age 16 for individuals within the same prefecture. Empirical results suggest that trade liberalization leads to decreased completed years of schooling, cognitive abilities, wage, and noncognitive outcomes. We provide suggestive evidence that this observed pattern is explained by the expansion of job opportunities in relatively low-skilled and labor-intensive sectors.
Telecommunications Externality on Migration: Evidence from Chinese Villages (with Yi Lu, Colin Xu), China Economic Review, Vol. 39, pp.77-90, 2016.
We use a unique data set of Chinese villages to investigate whether access to telecommunications, in particular, landline phones, increases the likelihood of outmigration. By using regional and time variations in the installation of landline phones, our difference-in-differences (DID) estimation shows that the access to landline phones increases the ratio of out-migrant workers by 2 percentage points, or about 51 percent of the sample mean in China. The results remain robust to a battery of validity checks. Furthermore, landline phones affect outmigration through two channels: information access on job opportunities and timely contact with left-behind family members. Our findings underscore the positive migration externality of expanding telecommunications access in rural areas, especially in places where migration potential is large.
OLS bias and MSE in a Unit Root Model (with Albert K. Tsui), International Journal of Statistical Sciences, Vol 22(1), 79-98. 2022
We revisit the problem of deriving analytically tractable expressions for lower order moments of the ordinary least squares (OLS) estimator in autoregressive models with unit roots. Simple algebraic techniques are used to approximate the series sums of the first two moments derived by Tsui and Ali (1991). Compared to the exact moment values obtained by numerical methods, it is found that our approximate closed forms in simple functions are reasonably accurate for a wide range of sample sizes. We also validate the numerical accuracy of asymptotic mean and variance derived by Shenton and Vinod (1995).
Working Papers
Do Judges Exhibit Gender Bias? Evidence from the Universe of Divorce Cases in China (with Xiqian Cai, Pei Li, Qinyue Luo, and Hong Song), Journal of Labor Economics, R&R
Does gender identity affect judicial decisions? This paper provides novel evidence of in-group gender bias in the judicial decisions for almost all divorce cases in China. Exploiting the effectively random assignment of cases to judges, the analysis finds that a claim with a male plaintiff is 1.2\% more likely to be accepted if it is randomly assigned to a male judge as opposed to a female judge. Heterogeneity analysis finds significantly larger bias in regions with initially higher gender discrimination, indicating that the traditional social norm is a source of in-group gender bias. The analysis finds similarity in the gender bias across regions with different levels of legal development, indicating that compared with institutions, culture and attitudes might be more important determinants of gender bias in judicial decisions. The findings raise policy concerns about the fairness of trials in courts with a small proportion of female judges, especially those in developing countries and regions.
Early Childhood Conditions and Adolescent Mental Health (with Bilge Erten, Pinar Keskin, Rodrigo Pinto and Lianming Zhu), Journal of Economic Behavior & Organization, R&R
We investigate how early life circumstances induced by trade liberalization affect adolescent mental health in China, exploiting variation in tariff uncertainty faced by prefecture economies pre-2001. Our model differs from the classic difference-in-differences design in that it considers a moderator variable determining the intensity with which the treatment affects the outcomes. Our findings show that children born in prefectures more exposed to an exogenous change in international trade policy experienced a significant decline in the incidence of severe depression during adolescence. We find that the estimated relationships are robust to controls for initial prefecture attributes and other policy changes. Improvements in parental income, early childhood investments, and care provision in formal early childhood education programs are likely operative channels of impact.
School Nutrition and Human Capital Formation: Evidence from a National Program in Rural China (with Dan Su and Peng Zhang), Journal of Development Economics, Reject and Resubmit
This paper analyzes the effects of a school nutrition program on child development. By exploiting the staggered implementation of this program across counties in China, we find that the school nutrition program significantly improved physical health, cognitive development, and noncognitive and behavioral outcomes for exposed children. The heterogeneous analyses reveal that the effects are more pronounced among marginalized groups, including girls and children with mothers possessing lower levels of education. The mechanisms driving this impact include enhanced parental income, improved nutrition intake, increased monetary investments in children, and the adoption of more engaged parenting styles and interactive family dynamics. Furthermore, our cost-benefit analysis shows that the additional benefit resulting from enhanced noncognitive and behavioral outcomes constitutes approximately 48.9\% of the program's overall benefit, suggesting that previous studies have largely underestimated the benefits of school nutrition programs.
Causal Inference under Kink Bunching (with Yi Lu and Jianguo Wang)
This paper develops a generalized framework for identifying causal impacts in a reduced-form manner under kinked settings when agents can manipulate their choices around the threshold. The causal estimation using a bunching framework was initially developed by Diamond and Persson (2017) under notched settings. Many empirical applications of bunching designs involve kinked settings. We first propose a model-free causal estimator in kinked settings with sharp bunching and then extend to the scenarios with diffuse bunching, misreporting, optimization frictions, and heterogeneity. The estimation method is mostly non-parametric and accounts for the interior response under kinked settings. Applying the proposed approach, we estimate how medical subsidies affect outpatient behaviors in China.
Adapting to Trade Shocks: The Role of Local Knowledge (with Hyejin Ku, Yi Lu and Qinyue Luo)
This study examines how Chinese exporters respond to adverse trade shocks, with a focus on the US-China trade war that began in 2018. It explores the role of localized market knowledge in facilitating export diversion—specifically, the influence of destination-specific, product-specific, and destination-product-specific export experiences across Chinese regions. Using detailed Chinese customs data from 2016 to 2020, we find that US-imposed tariffs significantly reduced exports to the US, while simultaneously prompting a shift toward alternative markets. Regions with prior experience in non-US markets, as reflected in their 2017 trade networks, were more likely to redirect exports. All three types of market knowledge positively affect export adaptation, with more specific knowledge exerting a stronger impact. These findings highlight the importance of trade diversification and market-specific expertise in sustaining export resilience amid growing global trade disruptions.
Beyond Test Scores: The Behavioral and Social Toll of Teacher Stereotyping on Non-Local Students (with Qinyue Luo)
This study investigates the impact of teachers' stereotyping of nonlocal students in terms of both academic performance and noncognitive outcomes. Based on a random assignment of a representative sample of Chinese middle school students to teachers within schools and grades, we find that biased beliefs against nonlocal students, particularly among Chinese teachers, adversely affect the academic performance of nonlocal students and lead to increased behavioural problems. No significant impact, however, is observed among local students. The results of a mechanism analysis suggest that these negative outcomes result from teachers' reduced engagement with nonlocal parents, weaker integration of nonlocal students into the classroom, and a decrease in nonlocal students' self-confidence. These detrimental effects are predominantly experienced by nonlocal boys, who report a less favourable classroom climate, exhibit decreased self-confidence, and expend less effort on their studies. In contrast, nonlocal girls tend to exhibit resilience by increasing their academic efforts. The findings of this study highlight the significant influence of teachers' stereotyping on disparities in human capital development between local and nonlocal students.
Starting Early: The Effects of a Nationwide Preconception Care Project on Newborn Outcomes in China (with Zijing Lin, Yi Lu, and Lu Peng)
Infant health significantly shapes long-term socioeconomic outcomes. This paper provides the first rigorous causal evaluation of a nationwide preconception care intervention in China, specifically by taking advantage of the intervention's staggered rollout and employing a stacked difference-in-differences (DD) approach. The program substantially reduced the incidence of low birth weight by 3.7 percentage points, particularly among less-educated mothers, younger mothers, and individuals in economically disadvantaged regions. A mechanism analysis revealed that these improvements were driven by enhanced parental health knowledge and healthier prenatal behaviors, including increased medical visits and reduced smoking and alcohol use. A conservative cost-benefit analysis revealed a benefit-cost ratio of approximately 27.5:1, thus highlighting the substantial economic returns of preconception interventions. Our findings identify such preconception interventions as a promising, cost-effective strategy that can help mitigate disparities in infant health outcomes.