This paper studies the unintended spillover effects of China's 2020 "Three Red Lines" policy – a macroprudential intervention aimed at deleveraging real estate developers – on employment in the upstream manufacturing firms. Exploiting variation in industries' exposure to the real estate sector via input-output linkages and employing a generalized difference-in-differences (DID) design on panel data of listed manufacturing firms (2017-2022), we find a significant decline in employment among upstream suppliers, while there is no substantial effect on downstream firms. We identify two transmission channels: a demand propagation channel, evidenced by falling sales and inventory overhang, and a balance sheet contagion channel, where liquidity strain is passed upstream via extended payables and a shift to riskier short-term debt. Furthermore, we show that downward nominal wage rigidity shaped the adjustment, as firms resorted to layoffs rather than wage cuts for ordinary workers. From a regional labor market perspective, the employment losses represent a net reduction at the aggregate level, as displaced workers are not absorbed by other local firms in the same city or province. Our study reveals a significant real economic cost of sectoral macroprudential regulation and clarifies how such shocks propagate through production networks and interact with labor market frictions.

While government support programs are often effective at helping firms achieve their objectives, these programs may have unintended consequences. Motivated by this, this study empirically examines the impacts of receiving investments from government-guided funds (GGFs) on executive-employee pay gaps in Chinese public firms. The results from difference-in-differences analyses show that GGFs investments lead to a significantly greater widening of the pay disparities between executives and employees in recipient firms than in other firms after funding is granted. This widening gap is driven by a larger increase in executive compensation relative to employee wages. The mechanism analysis suggests that increased cash holdings associated with receiving GGFs create financial slack that facilitates managerial opportunism, ultimately resulting in greater pay gaps. These findings reveal an unintended consequence of GGFs, highlighting an overlooked agency cost of government financial support programs.

In this paper, we design two chapters to discuss trade dynamics with heterogeneous fluctuations, contributing new insights to macroeconomic issues related to international trade. In the first chapter, we model general exchange rate fluctuations through stochastic processes and analyze the impact of heterogeneous price shocks on export competitiveness. We find that monetary policy and innovation both show positive effects on export trade, while monetary policy stabilizes exchange rate fluctuations to comprehensively boost provincial export competitiveness, innovation reduces its reliance on exchange rate mechanisms. The optimal policy according to exchange rate fluctuations aims to solve the wealth distribution of exporters, and it suggests that optimal policy should promote dynamic transitions in trade patterns rather than maintain existing comparative advantages in heterogeneous trade structures. In the second chapter, we model labor market fluctuations and the ability to utilize production factors through stochastic processes, and we analyze the impact of heterogeneous aggregate production shocks on general international trade. We find that labor market fluctuations only benefit international trade under the cooperation policy. Moreover, for both sanction and cooperation policy scenarios, positive shocks (i.e., shocks where average wage growth in the labor market exceeds unemployment) strengthen their impact on import trade while weakening their impact on export trade, and vice versa. Regarding the theories proposed in these two chapters, we prove them through empirical analyses using the provincial data of China.

We construct a Housing Purchase Intention Index (HPII) using the Baidu Search Index, which captures online search behavior directly reflecting households’ housing purchase intentions. We assess the predictive power of the HPII for the growth rate of housing transaction volume and further examine factors influencing housing purchase intention. The results show that the HPII has significant predictive ability and enhances real-time forecasting accuracy, highlighting the role of search behavior as a behavioral signal in the housing market. We also find that housing purchase intention is shaped by policy, economic, demographic, and supply factors. Specifically, purchase restriction policies exhibit an inverted U-shaped effect; moderate mortgage-rate hikes dampen purchase intention, while persistent increases may induce anticipatory buying. In addition, rising wages, increasing population concentration, and expanded residential land supply consistently strengthen housing purchase intention. These findings provide new behavioral evidence on the drivers of housing demand and underscore the value of search-based indicators for understanding household decision-making in the real estate market.

This paper examines why tax incentives fail to stimulate participation in China's third-pillar commercial pension insurance, emphasizing the role of rational inattention. Using household survey data from China Family Panel Studies (CFPS) spanning 2014-2022 and a difference-in-differences-in-differences (DDD) design, we find that pilot policy generated a statistically insignificant average effect on participation, with rational inattention - proxied by financial literacy - explaining much of its ineffectiveness. We develop a dynamic consumption-portfolio model featuring costly information acquisition, and then resolve limitations of standard models through a dynamic framework with distinct savings channels and policy-focused rational inattention. The models show that rational inattention distorts perceptions of tax benefits and wage growth, raising participation costs, while multiple savings channels dilute incentives. Only households with higher financial literacy substantially respond to the policy. Our results reveal how cognitive frictions undermine pension reform and offer implications for designing behaviorally-informed retirement schemes.

Previousresearch on internal mobility has neglected the role of local identity contrary to studies analyzing international migration. Examining social identity and labor market outcomes in China, the country with the largest internal mobility in the world, closes the gap. Instrumental variable estimation and careful robustness checks suggest that identifying as local associates with higher migrants’ hourly wages and lower hours worked, although monthly earnings seem to remain largely unchanged. Migrants with strong local identity are more likely to use local networks in job search, and to obtain jobs with higher average wages and lower average hours worked, suggesting the value of integration policies.

As China’s population ages, more older workers are participating in the labor market, including a significant number of older migrant workers moving to urban areas. However, surprisingly little research has been done on their destination city and employment patterns. This paper addresses this gap by investigating the impact of city-level and industry specialization on the employment prospects of older migrant workers. Using both individual- and city-level data, we find that unlike prime-age migrant workers, older migrant workers have higher employment probabilities in relatively less-developed lower-tier Chinese cities than in better-developed high-tier cities like Shanghai, Beijing, Shenzhen, or Guangzhou. This phenomenon is driven by industry specialization, particularly in the construction sector, which fosters a dense labor market and facilitates higher job-finding rates. Additionally, construction firms and real estate developers in lower-tier cities are more willing to offer better wages than those in high-tier cities, which aligns with older migrant workers’ relatively moderate education profile and wage preferences over housing costs.

This study examines whether and how minimum wage hikes affect workers’ strikes in the context of China. We show that minimum wage significantly increases strikes at the city-level, and this effect is mainly motivated by demands for unpaid wages and severance pay. Mechanism analysis reveals that workers’ strikes are caused by inevitable involuntary unemployment arising from wage hikes. In addition, the increase in workers’ strike activities is more significant in tertiary industries, which require a larger share of low-wage workers and in regions with a higher degree of digital economy and innovation. Our findings provide clear policy implications for policymakers concerned with minimum wage and unemployment.

Using the firm-level data of the Chinese industrial sector from 1998 to 2010, this study investigates the impact of the previous environmental protection experience of prefecture-level Communist Party secretaries on the COD regulation within the secretaries’ respective jurisdictions. The study finds that the secretaries’ previous environmental protection experience has reduced the COD discharge intensity. The duration of the previous environmental protection experience is selected as an instrumental variable and the endogeneity is further addressed; the research conclusion remains unchanged. However, this negative impact only lasts for two years and presents an unclear long-term impact. The negative effect on COD discharge intensity caused by the previous environmental protection experience is affected by the mandatory regulation pressure from the central government and the overall polluting density of the sub-sectors. Secretaries with previous environmental protection experience do not reduce the COD discharge intensity by using the punishment mechanism of increasing sewage charges. The secretaries, instead, encourage enterprises to use clean production technology, save water resources, and reduce the produced COD level. Also, the secretaries place an emphasis on the treatment of wastewater pollutants, thus reducing the COD discharge intensity. The conclusions of this study can provide decisionmaking reference for the selection and training of local officials, with the goal of environmental regulation.

Using the firm-level data of the Chinese industrial sector from 1998 to 2010, this study investigates the impact of the previous environmental protection experience of prefecture-level Communist Party secretaries on the COD regulation within the secretaries’ respective jurisdictions. The study finds that the secretaries’ previous environmental protection experience has reduced the COD discharge intensity. The duration of the previous environmental protection experience is selected as an instrumental variable and the endogeneity is further addressed; the research conclusion remains unchanged. However, this negative impact only lasts for two years and presents an unclear long-term impact. The negative effect on COD discharge intensity caused by the previous environmental protection experience is affected by the mandatory regulation pressure from the central government and the overall polluting density of the sub-sectors. Secretaries with previous environmental protection experience do not reduce the COD discharge intensity by using the punishment mechanism of increasing sewage charges. The secretaries, instead, encourage enterprises to use clean production technology, save water resources, and reduce the produced COD level. Also, the secretaries place an emphasis on the treatment of wastewater pollutants, thus reducing the COD discharge intensity. The conclusions of this study can provide decisionmaking reference for the selection and training of local officials, with the goal of environmental regulation.