Workshop on: Innovation, Trade and Wages in the East Asia Time Zone
Workshop on: Innovation, Trade and Wages in the East Asia Time Zone (Jointly supported by: RIEB Seminar / Rokko Forum / Grant-in-Aid for Scientific Research (A)・(B))
Local Labor Market Effects of China's WTO Entry
Combining a comprehensive household survey and an industrial firm survey, we investigate the impacts of import tariff reduction after China's entry into WTO on urban labor market outcomes. Our identification strategy exploits the variation in the degree of tariff reduction across industries and the variation in the pre-WTO industry composition of local employment across Chinese cities. We find that those cities with larger tariff reduction after WTO entry experienced lower wage growth for manufacturing
workers. There was only limited impact on the reallocation of labor from manufacturing to non-manufacturing sector and on unemployment. Tariff cut did not affect regional differences in skill premium.
Identity in Public Goods Games
Motivated by examples on climate change and energy conservation, this paper incorporates identity into a model of voluntary public good contribution with players of heterogenous preferences. An ideal of contributing to public goods divides players to different social categories: Players who identify with the ideal become insiders, obtaining identity utility but incurring disutility if their contributions depart from the ideal, while players who do not identify with the ideal remain as outsiders. To best resolve the free-riding problem of the public good game, the ideal level being chosen reflects a tradeoff between the depth and width of identity. With uniform distribution of players' preference, we solve for the optimal ideal that maximizes public good contribution, and show that this ideal also maximizes welfare as long as the population is a large enough. We then extend our analysis to general distribution functions. Our analyses have implications for social policymaking, especially for policies that aim for greenhouse gas abatement and energy conservation.
China's Family Planning Policies and Their Labor Market Consequences
China initiated its family planning policy in 1962 and one-child policy in 1980 and allows all couples to have two children as of 1st January, 2016. This paper systematically examines the labor market consequences of China's family planning policies. First, we briefly review the major historical evolution of China's family planning policies. Second, we investigate the effects of these policies on the labor market, focusing on the size and quality of the working-age population and its age and gender composition and paying special attention to regional as well as rural-urban differences in the demographic structure resulting from the interaction of the family planning policies and internal migration. Last, we discuss undergoing and prospective policy changes and potential consequences. Though urban areas and coastal provinces have implemented stricter family planning policies, our analysis shows that because of internal migration, the aging problem is more severe in rural areas and in inland provinces. Our simulation results further indicate that the new two-child policy may be too late and too little to alleviate the aging problem in China.
Competition, Product Innovation and Licensing
This paper compares market profit and social welfare levels between differentiated Bertrand and Cournot duopoly. We start with a basic model in which a firm with a production technology can license its new technology to a potential rival who can use the technology to produce a differentiated product and compete with the incumbent firm. It is found that for any given technology level, Bertrand competition is necessarily more profitable but less socially desirable, due to its higher royalty rate. By contrast, if the licensee firm is an incumbent firm, the results hold if the technology level is high. Furthermore, if we assume the licensor firm can engage in product innovation and choose its optimal technology endogenously and the R&D efficiency is high (low), the welfare ranking is reversed (still holds).
Does Housing Price Affect Cities' Comparative Advantage?
Cities in China witnessed a rapid increase of housing prices among them. It's quarreled that this weaken China's role of "world factory". However, few studies have been done on it. This paper investigates whether and how the increase of housing prices affect the comparative advantage of cities using housing price data of cities and the Annual Survey of Industrial Firms in 2004 and 2008 from China. It shows that the increase of housing prices forces low-productivity firms to exit markets and drives low-skilled labors out of cities, and thus weakens cities' comparative advantage in low-skilled-labor intensive industries.
Anti-dumping Duty Circumvention through Trade Re-routing
We investigate the anti-dumping duty evasion behaviors of exporters by re-routing trade
through third countries or regions, in the case of U.S. imports from China. Using detailed monthly trade data reported by China and the U.S. Customs during the period of 2002-2006, we find that anti-dumping actions lead to a more positive correlation between U.S. imports from third countries and Chinese exports to the same third countries and such an effect is stronger for the products subject to anti-dumping duties (treatment groups) than similar products not subject to these duties (control groups). This result is consistent with a trade rerouting story. As additional support for the hypothesis, we show further that this correlation increases with some product or third country characteristics that are inducive to duty evasion. We also find stronger evidence of evasion from domestic firms and trading companies in China, as compared to foreign firms and producers as direct exporters.
Housing Bubble and Government Regulation: Evidence from China's Home Purchase Restriction Policy
Facing rampant house price surge, the Chinese government imposed home purchase restriction policy to dampen speculation activities in major cities in 2010. Using a comprehensive dataset covering the housing markets across various cities, we find that the policy triggered substantial decline in house price and transaction volume. Cities with higher reliance on real estate sector for fiscal revenue and economic growth experienced greater drop in house prices following the policy implementation. However, the policy had no measurable effects on the construction boom, suggesting the limitation of policy in correcting the housing bubble.