The Long-term and Distributional Effects of School Consolidations Evidence from China

The Long-term and Distributional Effects of School Consolidations: Evidence from China (Job Market Paper) School consolidation has become a popular policy response to the declining population in rural areas worldwide due to rural out-migration and fertility decline. Whether this approach may balance the easy access and efficiency is an open question, and is drawing extensive attention. Existing literature mainly focuses on high-income economies and sheds limited light on developing countries. I study the impacts of the largest primary school consolidation ever implemented, using household surveys in China between 1989 and 2015. Employing a generalized Difference-in-Difference framework to evaluate long-term effects, I find that educational attainment of males remained unchanged while that of females increased. Treated individuals had a higher labor force participation rate and worked longer hours, and the average wage and income increased by 20.2% and 22.2%. As for the mechanism, villages further away from economic zones experienced a larger increase in income. But the interaction between treatment and teacher wages is insignificant. These findings are more consistent with the prediction of enhanced labor market proximity rather than with improved education quality. I also find evidence for a reduction in gender inequalities. Treated females were less likely to do child labor. They were also more likely to migrate, spent less time doing housework, and had increased bargaining power at home. A study of the distributional effects shows that individuals in the middle of the income distribution experienced a larger increase in earnings, and increases in inequality were small relative to the increase in average earnings. Government Brain Drain: Education Return, Entrepreneurship, and Talent Reallocation in Chinese Tertiary Graduates Hiring Reform This paper studies the impacts of reducing public hiring on talent reallocation and private sector growth by exploiting a reform of the Chinese tertiary graduate labor market in 1994. The reform terminated the government-oriented job allocation for tertiary graduates, and it greatly reduced the labor mobility cost across sectors. I use a generalized Difference-in-Difference framework and Regression Discontinuity Design to show the causal impacts of this deregulation and find that: after the reform tertiary graduate earnings decreased, and it decreased more in cities with higher levels of ex-ante public sector demand. The termination of guaranteed job allocation also led to a boom in the private sector. Prefectures with more tertiary students graduating from industry-related majors had a larger number of private firm entries in that industry after the reform. In terms of innovation, although the reform stimulated market-oriented innovation activities like design patents and trademarks, it had insignificant impacts on innovations that were more closely related to long-term productivity growth. Fiscal Decentralization and Resource Misallocation: Evidence from China (with Marialuz Moreno Badia and W. Raphael Lam) Can fiscal decentralization and associated regional disparities explain resource misallocation in China? Using a sample of over 300,000 manufacturing firms for the period 1998-2007, we quantify the extent of misallocation and find that vertical imbalance is correlated with a wide efficiency dispersion across provinces. To alleviate potential endogeneity caused by reverse causality and omitting variables, we instrument the funding gap of local government by the product of each province's average share in national transfer and the total net transfer in a given year. Empirical estimates suggest that higher vertical imbalances led to larger across-province differences. The channels appear to be related to a lack of local government funding resulting in financial constraints at the firm level and a larger distortion in the land market.