Abstract: We analyze how layoffs affect child quantity and quality, by exploiting the downsizing of China's state-owned enterprises between 1995 and 2004. It induced a layoff of more than 47 million workers who had previously held permanent jobs. Difference-in-differences estimates indicate that layoffs increased birth rates by around 3.6‰, driven mainly by layoffs of female workers. This occurs on two margins: 1) the extensive margin: women's selection into earlier motherhood; and 2) the intensive margin: the increased births of subsequent children. We also find that the layoffs reduced children's educational attainment, driven by two mechanisms: 1) negative parental selection: women with lower socioeconomic status are more likely to increase fertility during layoffs, compared with others; and 2) reduced educational investments during schooling. This evidence suggests that negative income shocks affect both the size and quality of the involved cohorts.

Abstract:  Weather conditions are a fundamental determinant of economic outcomes in agricultural societies. Using high-frequency monthly precipitation data, we investigate the demographic consequences of extreme rainfall variability - comprising extreme droughts and heavy rainfall - in rural China. We find that both forms of extreme weather increased fertility rates, with the effect more pronounced among less-educated young females from 1990 to 1999. Over a decade later, individuals exposed to extreme weather conditions, particularly heavy rainfall, during their mothers' pregnancy exhibit lower educational attainment compared to unexposed individuals. We also find the second trimester of pregnancy as the critical period, with exposure during this time having the strongest negative effect on adult educational outcomes. Analyzing the mechanism, we find that extreme weather events reduce household incomes and increase child mortality. These findings highlight the enduring demographic impacts of environmental disasters.

Abstract: Large technology firms have substantial advantages in data, a key non-rival input for developing AI technology. We argue that investments by large technology firms stimulate innovation by AI startups through the sharing of data, bringing more than money to the startups. We assemble a unique dataset containing (nearly) the universe of AI-inventing firms in China to examine the innovation effects of these investments. Our difference-in-differences estimation shows that, after receiving investments from large technology firms, AI startups increase the number of AI patent applications by 62% and the number of software products by 56%,  relative to their mean values prior to the investments. Using a triple-differences strategy, we further find that the innovation impact of investments by large technology firms is stronger than that of investments by other firms without data advantages. We confirm these findings using an instrumental variables approach based on recent investments by large technology firms in peer startups. Finally, we provide novel evidence that the innovation effect works mainly through sharing non-rival data by leveraging our rich information on non-AI data-related patent applications and data-related online job postings.

Abstract: The extrajudicial detention and deportation of migrant workers under the Custody and Repatriation system in China greatly restricted rural-to-urban migration until its abolition in 2003. We use the abolition to investigate how institutional barriers affect economic development in which labor movement, farm size, and technology adoption are the focus. Among the findings on migration are that the repeal induced rural out-migration persistently through predetermined migration networks, the out-migration occurred in intensive and extensive margins, and the repeal effects differed greatly depending on household sizes. Over time, the removal accelerated: 1) the expansions of operational holdings, 2) the exit of labor from agriculture, and 3) the transition to mechanization. However, the effects depend crucially on the initial age structure of households' labor force. Finally, we discuss the findings with a model where machines substitute young workers endowed with physical aptitude.

Abstract: We examine the effect of urban aging on technology adoption in a dual economy. To guide empirical work, we present a simple model where aging in one sector influences technology adoption in both through an induced reallocation of labor between sectors. We test the predictions of the model by using unique data from China and find no evidence that urban aging has led to an increase in industrial automation. We examine the mechanism and provide evidence that prefectures with more rapid aging as destinations of migration have a larger inflow of rural migrants that may have discouraged firms' incentive to automate. These findings suggest that industrial automation has received a limited boost from demographic changes in the urban sector. Instead, we find that the exodus of rural labor induced by urban aging has accelerated a shift toward capital-intensive agriculture in the rural sector. These findings highlight how aging generates uneven effects on technology adoption across sectors in a dual economy.

Abstract:  We study the implication of migration barriers on labor misallocation by using China’s hukou reform in the 2000s, which reduces barriers to moving by granting local urban residency rights to rural migrant workers. We show that the reform increased employment by 26.0%, revenues by 4.1%, capital by 11.8%, and decreased marginal revenue products of labor by 23.8% for previously more labor-constrained firms compared to others. This suggests a more concentrated distribution of marginal products and reduced misallocation. Geographically, the gains in allocative efficiency are attenuated in areas facing stiff competition from "early reform adopters" and are enhanced in regions with weaker pre-reform networks of migration. We find also various firm heterogeneity that reveals winners of labor deregulation. At the aggregate level, the hukou reform led to a 4.6% increase in aggregate productivity and a 14.6% surge in manufacturing output.