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“Building Through Downturns: Export Slowdown and Construction in China”
[ Abstract ]
Construction projects are used to absorb unemployed workers during economic downturns in many countries. This paper studies how city governments in China use construction job creation to respond to the mid-2010s export slowdown that caused a significant decline in manufacturing employment. I first document that cities more exposed to the export slowdown experienced an increase in construction employment, which increased the likelihood of city leaders being promoted. Meanwhile, cities led by leaders with stronger career incentives had greater boosts in construction employment. This increase in construction employment can be due to increased government land sales: (i) residential and commercial land sales bring real estate projects, and (ii) land sales revenue enables the government to finance more infrastructure projects. However, in the longer term, this land sales strategy is associated with housing oversupply and higher real estate risk.
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“From Settlement to Stability: The Political Impact of Relaxing Migration Barriers in China”
with Weizheng Lai
[ Abstract ]
There are growing concerns that lax migration policy may undermine social stability. We study this issue by estimating the causal effect on labor unrest of China's recent reform to its internal migration institutions, which facilitated permanent settlement for migrants in small and medium sized cities. Using the reform's population cutoff rule as identifying variation, we find that the reform significantly reduced labor unrest. We suggest that one mechanism behind our finding is the enhancement of migrants' settlement intentions, which increases their dependence on the state and promotes more obedient behavior. Evidence shows that the reform raised the likelihood of migrants staying in their destinations. Through a novel causal mediation analysis, we find that heightened settlement intentions explain up to 27 percent of the reform's total effect on labor unrest. We find no evidence that the reform led to compositional changes among migrants, immediate deliveries of benefits to migrants, and tighter government social control. Our results highlight the influence of migration policy on stability by shaping migrants' prospects in their destinations.
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“The Shattered Iron Rice Bowl and Youth’s College Decision: Evidence from China’s State-owned Enterprises Reform”
[ Abstract ]
How would a public sector downsizing reform affect the educational investment of potential job market entrants? This paper empirically investigates this question through the lens of China's state-owned enterprises reform (SOE reform) starting in 1998, which led to a substantial reduction in SOE employment. Leveraging regional and cohort variations in the SOE reform, my difference-in-differences estimate shows that the SOE reform significantly increases the likelihood of high school graduates obtaining a college degree. I provide evidence that this increase in college attainment after the reform can be attributed to the SOE reform's impact on increasing the likelihood of college graduates being employed and the college wage premium. Furthermore, the increase in college graduates’ likelihood of being employed is observed in both the state and non-state sectors, while the increase in the college wage premium is primarily attributed to the non-state sector.
