Economics Ph.D. Candidate,
Clark University
Research Interests:
Urban Economics and International Trade
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Department of Economics
Clark University
950 Main Street
Worcester, MA 01610
Measuring the Border Effect Among China's Provinces: A Structural Analysis
with Yang Ye, Yameng Guo, and Haoyun Zhao
2024, R&R.
This paper employs a structural model to estimate border effects among China’s provinces. The results indicate that, from 2002 to 2017, China experienced a rapid decline in objective trade costs—such as those related to distance and language differences—while institutional trade costs associated with provincial borders steadily increased. For example, in 2002, these institutional costs raised trade costs for inter-provincial goods by 38% compared to intra-provincial trade. Counterfactual analysis reveals that reducing institutional costs could significantly boost inter-regional trade flows and lower goods' price levels. On average, between 2002 and 2017, a 50% reduction in institutional costs would lead to a 51% increase in trade flows and a 5% decrease in price levels. Notably, the importance of mitigating institutional costs to promote inter-regional trade in China has grown over time.
Overcoming Information Barriers: Embeddedness of Venture Capital Networks and Acquisition of Innovative Resources
with Qiangyuan Chen, Huirong Li, and Yihua Yu
2024, R&R.
Technology-based startups are the main force in emerging industries and the source of disruptive technologies, but they face information barriers when acquiring knowledge, technology, and other resources necessary for innovation. As an important platform for connecting resources such as knowledge, technology, and capital, 'how' and 'through what channels' venture capital influences corporate technological innovation are still lacking reliable evidence and direct mechanisms in theory. Based on a matched database constructed from China's tax survey data, venture capital data, and granted invention patent data, this paper empirically tests the impact, mechanism, and source of venture capital on the technological innovation of technology-based startups, and verifies the role of venture capital in corporate innovation resource acquisition based on firm-pair level data. The study finds: (1) Venture capital enhances the quantity but not the quality of technological innovation in technology-based startups, and the results are more significant when venture capitalists with diversified information channels; (2) The embedding of technology-based startups in venture capital networks is beneficial for them to obtain innovation resources from formal channels such as technology transfer and R&D cooperation; (3) In the acquisition of innovation resources in technology-based startups, venture capital mainly plays the role of an “information broker” rather than a “reputation endorser”. The research in this paper will provide good theoretical insights and policy implications for accurately understanding the information barriers encountered in the innovation of technology-based startups, as well as for understanding the role and mechanism of venture capital in technological innovation.
"Leaving from the Bottom" or "Racing to the Bottom": Can Political Turnover Drive Poverty Alleviation?
with Yang Ye, Haoyun Zhao, and Yameng Guo
2024, R&R.
A significant body of literature has discussed the crucial role that government and officials' behavior play in alleviating regional poverty. However, existing research often overlooks the potential trade-offs that officials may face regarding whether to improve ("leave from the bottom") or maintain ("race to the bottom") the poverty status of the regions they oversee. Newly appointed officials may choose to maintain regional poverty and slow development in the short term to secure more resources and policy support from the central government, which could be advantageous for long-term development. Conversely, if the officials prioritize their political performance, they may strive to promote development in poverty-stricken areas during their tenure to achieve short-term accomplishments. In this paper, we empirically investigate the effects of political turnover on poverty levels by examining county-level data. We explore how newly appointed officials decide between focusing on short-term versus long-term development outcomes and their decisions on economic outcomes and equity. Our findings indicate that the turnover of local officials is not conducive to short-term economic improvement in the region. It does not significantly increase personal savings or incomes for urban and rural residents and has a negative impact on GDP. Moreover, our analysis of the mechanisms behind these effects reveals that official turnover can exacerbate unemployment issues and social investment in the short run, with less pronounced effects on consumption levels, loan situations, and innovation strength. Additionally, we discover that the development of poverty-stricken areas is more significantly affected by official turnover compared to non-poverty-stricken areas. This ultimately manifests in a development pattern where regions alternate between "leaving from the bottom" and "racing to the bottom", and vice versa.
How City Size Affects Firm Survival?
with Haoyun Zhao, Yang Ye, and Yameng Guo
2024, R&R.
Using data from the National Business Registrations and city-level statistics in China, this paper empirically investigates the relationship between city size and firm survival. The findings indicate that firms located in larger cities exhibit higher survival rates. However, the relationship between city size and firm survival is non-linear: while city size positively influences firm survival in smaller cities, this effect diminishes and becomes insignificant in larger cities. Mechanism analysis indicates that large cities generate positive externalities, including increased export activities, lower entry barriers, and enhanced innovation capacity, which offset the negative effects of high wages. Furthermore, we identify an inverted U-shaped relationship between city size and firm survival, with the optimal city population size estimated at 10.96 million. These results are robust across multiple specifications.
The Spatial-Temporal Patterns and Evolution of Urban Talent Policies in China
with Yang Ye
2024, R&R.
Based on the 2014-2018 China Migrants Dynamic Survey (CMDS) data and panel data on talent policy scores for 293 Chinese prefecture-level cities, this study uses a Logit model to empirically examine the impact of talent policies on individuals' willingness to stay. The findings are as follows: The overall improvement in talent policy scores positively influences the willingness of talent to stay. In terms of city types, talent policies in smaller, non-provincial cities have a stronger positive impact on the willingness to stay compared to large and provincial capital cities. Regarding city location, talent policies in eastern coastal and southern cities significantly influence the willingness to stay, whereas those in inland and northern cities do not show a clear effect. Concerning individual characteristics, urban talent policies have a greater positive impact on individuals with higher education levels and incomes, with a notably stronger effect on those aged 25 and above. For specific policy components, the effectiveness varies across different geographic regions. Eastern coastal cities achieve the most significant results in talent utilization and retention, with southern cities also excelling in retention policies, followed by utilization policies, while attraction and training policies have less impact. In contrast, talent policies in inland and northern cities do not show marked effects across any components. Among policy tools, developmental policies exert the strongest positive influence on the willingness to stay, followed by welfare policies, with incentive-based policies having the least impact. In terms of policy targets, policies tailored for high-skilled talent and innovation and entrepreneurial talent effectively influence their willingness to stay, while targeted policies for senior technical professionals, enterprise management talent, rural skilled workers, and talent with specific educational backgrounds do not achieve the desired outcomes. The paper concludes with recommendations for local governments on how to formulate effective and scientifically sound talent policies.
Government Procurement and Firm Performance
with Haoyun Zhao
2024, R&R.
Large-scale government procurement has a significant impact on both firm performance and macroeconomic development. This paper constructs a comprehensive Chinese government procurement database and, based on matched data with the Chinese tax survey database, reveals the following key findings: Government procurement shows a notable preference for "selecting the best," favoring high-performing firms as contract awardees. Additionally, government procurement has a "nurturing" effect, as firms' performance continues to grow after winning contracts, a result further analyzed through mechanism analysis. Further investigation shows that government procurement can help small firms, startups, and emerging industries grow rapidly. Based on these findings, we designed and calibrated a model to create a virtual economy for counterfactual simulation. This simulation shows that the "selecting" and "nurturing" mechanisms in government procurement enhance overall productivity by 9.15% and increase GDP by 8.29%. We also simulated alternative policy scenarios, such as government procurement aimed at supporting small and medium-sized enterprises (SMEs). Our findings suggest that while this policy promotes SME expansion, it also lowers overall productivity.