We document a speculation channel through which house market booms negatively affect entrepreneurship. To address endogeneity concerns, we exploit plausibly exogenous variation in house prices generated by staggered and unintended policy spillovers in China. We find house market speculation triggered by house booms crowds out entrepreneurship. Reduced labor supply, reduced capital supply, and heightened entry costs do not appear to explain our main findings. The negative effect exhibits in the OECD countries as well. Our paper complements the well-documented collateral channel by offering novel evidence on a previously under-explored adverse consequence of house market booms – their hindrance to entrepreneurship.

Combining daily personnel records of an unlisted manufacturer with stock market data, we find that market overnight returns negatively predicts same-day worker output. The effect is greater on Mondays and extreme overnights. Analysis suggests that the stock market attracts (discourages) public attention when the overnight returns are extremely positive (negative), consistent with humans’ natural tendency of incorporating good news while discounting bad news. As a result, employees at work are disproportionally distracted by positive overnight returns, leading to reduced output. Additional evidence suggests that our results can hardly be explained with alternative distraction events or workers’ stock wealth concerns. This study reveals a novel channel through which the financial market shapes labor supply.

In China's labor market, there is a phenomenon that enterprises choose whether to provide "social insurance and housing fund" to laborers autonomously. This paper use micro-data from two leading Internet recruitment platforms and empirically finds that in a labor market with double-side information asymmetry, "social insurance and housing fund" is not only a cost but also a signal. Providing workers with "social insurance and housing fund" can both send a signal of stable operation to the labor market and identify high-quality workers for enterprises. With an instrument variable of local average social security payment rate, this paper excludes the endogenous effect of labor supply on wages while the signaling effect above is still significant. In addition, "housing fund" has a stronger signaling effect than "social insurance", and the strength of the two signaling effects is affected by the scale of the enterprises and the level of local payment rates. This paper also introduces a theoretical framework of two micro-mechanisms — signaling and screening — into the analysis. In terms of policies, this paper proposes to strengthen the information disclosure and the propagation of social security payment, and further reduce the financial burden of enterprises.

This paper studies how a potential policy change that raises women’s social security eligibility age from 50 to 60 would affect women’s employment, human capital, and earnings in China. I develop a dynamic model of female labor supply, featuring voluntary retirement; occupational choice; human capital accumulation contingent on occupation, age, and employment status; and child care using time inputs from parents, grandparents, and formal child care from the market. I estimate the model parameters by matching moments on employment, wages, and the time allocation of child care from micro data in China. The policy counterfactual raising women’s social security eligibility age yields two main findings. First, the policy change leads to only a moderate increase in aggregate labor supply because it affects the employment of old and young women in opposite directions. The reduction in social security insurance encourages women above the age of 50 to supply more labor. Yet low-skilled young women with children reduce their labor supply in response to the children’s grandmothers working more and providing less child care. Second, since human capital accumulation is faster on the earlier career path rather than later, the reduction in early career employment leads to persistent losses in human capital and earnings for low-skilled women.

Women work less often and earn significantly less than men in Japan. We use panel data to investigate employment and earnings dynamics of single and married women over the life-cycle and build a structural model to study roles of fiscal policies in accounting for their behavior. We show that eliminating spousal deductions, social insurance tax exemptions and survivors’ pension benefits for low-income spouses would significantly raise labor supply of women and their earnings. More women would choose regular jobs rather than contingent jobs, accumulate more human capital and enjoy higher income growth. The government would earn higher net revenues and there is a welfare gain when additional taxes are transferred back.

This paper studies the effect of housing wealth shocks on workplace shirking. We use the type and actual time stamps of credit card transactions to detect non-work-related behavior during work hours. After positive shocks to house prices, affected homeowners experienced a fast and persistent increase (by 19% per month) in their propensity to use work hours to attend to personal needs. The post-shock response is more pronounced among homeowners with a greater wealth increase, with poorer career potential, or for occupations with higher monitoring costs. Our estimate implies an elasticity of shirking propensity with respect to house price of 3.8.

This paper sheds new light on the external and domestic dimension of China's exchange rate policy. It presents an open economy model to analyze both dimensions of macroeconomic adjustment in China under both flexible and fixed exchange rate regimes. The model-based results indicate that persistent current account surpluses in China cannot be rationalized, under general circumstances, by the occurrence of permanent technology or labor supply shocks. As a result, the understanding of the macroeconomic adjustment process in China requires to mimic the effects of potential inefficiencies, which induce the subdued response of domestic absorption to permanent income shocks causing thereby the observed positive unconditional correlation of trade balance and output. The paper argues that these inefficiencies can be potentially seen as a by-product of the fixed exchange rate regime, and can be approximated by a stochastic tax on domestic consumption or time varying transaction cost technology related to money holdings. Our results indicate that a fixed exchange regime with financial market distortions, as defined above, might induce negative effects on GDP growth in the medium-term compared to a more flexible exchange rate regime.

This paper answers the following question posed by Richard Roll: Should one work less, or perhaps retire early, if her stock portfolio performs well? We show that in a standard life-cycle model the answer to both questions is yes. We solve explicitly for the endogenous retirement time and labor supply. We nd that human capital acts like a portfolio of European put options on stock. The agent's labor choice can be characterized by four regions (categorized according to the nancial wealth of the agent at a given time): retire, vacation, work, and work-forever. We show that for a constant wage when the agent's stock performs well, she will work less and retire earlier. We also nd that poorer people (those whose stock returns are worse) should 1)-invest less of their wealth in stock, and 2)-borrow heavily when their stock does badly. We nd that the conditional volatility of labor income is hump-shaped as a function of the stock price. An agent will invest fewer dollars in the stock market when she has no future labor income.