RIEB Seminar
RIEB Seminar (Jointly supported by: Grant-in-Aid for Scientific Research (C) / Workshop on International Finance)
RIEB Seminar
Jointly supported by: Grant-in-Aid for Scientific Research (C) / Workshop on International Finance
| Date & Time | Wednesday, May 29, 2019, 1:30pm-3:00p |
|---|---|
| Place | Meeting Room at RIEB (Annex, 2nd Floor) |
| Intended Audience | Faculties, Graduate Students and People with Equivalent Knowledge |
| Language | English |
3:30pm-5:00pm
- Topics
- Skill Premium and Preferential Policy: The Case of China
- Speaker
- Qing LIU (School of Economics and Management, Tsinghua University)
- Abstruct
- Using the national sample of Urban Household Surveys, we document a new stylized fact in China: the skill premium was rising over the past decades until 2008, but started to decline substantially after 2009. What is the cause of this abrupt decline? This paper interprets this change as a reflection of a long-lasting change in the structure of the
Chinese economy. That is, starting from 2009, the government offered its preferred firms cheap credit. Since many of these preferred firms are unskilled labor intensive, with a lower financing cost, they increase investment and hire more unskilled workers, thereby reducing the skill premium. A calibrated version of the model accounts for most of the
decline of the skill premium in the data. Moreover, the model also predicts a surge in the aggregate investment rate, which is also in line with the data.