Predicted TFP gains under Hsieh and Klenow (2009)’s framework are sensitive to demand elasticities and returns to scale, but simultaneously estimating them is difficult. We solve this problem by developing a framework allowing for an arbitrary distribution of firm-level markups and use microdata to estimate industry-specific production elasticities, within-industry type-specific demand elasticities when types are not observed, and firm-specific distortions. We apply our model to 2005 Chinese firm-level data and find that the predicted Total Factor Productivity (TFP) gains are 44% which is half of the previous findings. While the variation in markups does not affect predicted TFP gains, it lowers the predicted increase in labor income share by one-third, suggesting lower gains to average workers due to heterogeneous markups.

We build a unified framework to quantitatively examine population aging and credit market frictions in contributing to Chinese economic growth between 1977 and 2014. We find that demographic changes together with endogenous human capital accumulation account for a large part of the rise in per capita output growth, especially after 2007, as well as some of the rise in savings. Credit policy changes initially alleviate the capital misallocation between private and public firms and lead to significant increases in both savings and output growth. Later, they distort capital allocation. While contributing to further increase in savings, the distortion slows down economic growth. Among factors that we consider, increased life expectancy and financial development in the form of reduced intermediation cost are the most important in driving the dynamics of savings and growth.

We study how service trade affects structural transformation and regional patterns of specialization. Using unique Canadian trade data, we document that i) interprovincial and international trade of services have increased between 1992-2017; ii) inter-provincial trade is larger in services compared to goods; iii) structural transformation occurs from goods to tradable services, especially in tradable service-intensive provinces; and iv) there is significant regional specialization in producing goods and services across provinces. Using a spatial model of structural transformation and trade, we quantify the effects of service trade, domestic and international, on the share of the tradable-service sector and regional specialization. Our results indicate that domestic service trade has significantly contributed to the regional specialization. On the other hand, we find that, international service trade is more responsible for the increase of the tradable service share than domestic service trade in the aggregate Canadian economy.

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.

In the context of technological competition and international trade, a country may attempt to influence a rival’s innovation efforts and use trade and innovation policies to gain at another’s expense. In a multi-country, multi-sector, dynamic model with endogenous technology accumulation through R&D innovation, we show that there is an additional incentive (beyond conventional terms of trade considerations) for Home to shift its demand for particular foreign goods and in turn affect foreign’s innovation efforts. We derive explicit expressions for optimal policies under an efficient baseline case, and general results for a wide range of specifications. In a dynamic setting, Ramsey optimal policies do not distort domestic R&D efforts if a country can commit to a schedule of trade policies, but time consistent policies employ both innovation and trade policies to implement the optimal foreign allocation, viewed from the Home country’s perspective.

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.

Utilizing a national online survey we conducted in China, we examine the impact of COVID-19 on individuals’ willingness to take risks, willingness to trust other people, and mental health measured by the Center for Epidemiological Studies-Depression (CES-D) scale. Our findings suggest that people who live in the neighborhood with a higher number of confirmed cases became more risk-averse, less likely to trust others, and more depressed. Interestingly, the effects on risk preferences and trust attitudes are statistically significant only for men, and the effects on depression are statistically significant only for women. Furthermore, the impact of COVID-19 on financial decisions, such as buying new commercial insurance and making a risky investment, is also statistically significant only for men, which is consistent with our findings on risk preferences. Attitudes towards cadres and doctors mainly drive the results on trust attitudes. The change in employment status does not drive these effects.

We study the equilibrium effects of introducing competitive bidding in drug procurement. In 2019, China introduced a competitive bidding program in which drug companies bid for a prespecified procurement quantity in nine provinces. Using a difference-in-differences design, we show that the program reduced average drug prices by 47.4%. Generic drug firms won most bids and cut prices by 59.4%. We develop a model of demand and supply to quantify the trade-off between lower prices and potential choice distortions. Competitive bidding increases consumer welfare if policymakers consider brand preferences welfare irrelevant. The program also reduced government expenditures on insurance by 27.5%.

Numerous countries cut payroll taxes in response to COVID-19, including China, which reduced employer contributions by up to 21 percentage points. We use administrative data on more than 800,000 Chinese firms to evaluate payroll tax cuts as a business relief measure. We estimate that the tax cuts cover 31.5% of the decline in business cash flow, but labor informality causes 53% of registered firms—24% of aggregate economic activity—to receive no benefits at all. We quantify the targeting of the policy in terms of how much benefits flow to small firms less able to access external finance and to sectors worse hit by COVID-19. We find that (1) small firms and vulnerable industries are comparatively more labor intensive, which leads to desirable targeting; (2) labor informality worsens, but does not eliminate, targeting by firm size; and (3) labor informality is uncorrelated with the COVID-19 shock, and therefore does not affect targeting by sector.

作为新一轮科技革命和产业变革的重要驱动力量，人工智能对企业提高生产率、优化劳动力结构方面有重要影响。本文收集了 2007-2018 年中国沪深 A 股上市公司年报和专利文本信息，采用机器学习的方法构建了企业层面的人工智能指标，究了人工智能对企业生产率的影响以及劳动力技能的匹配过程。本文发现人工智能显著提升了中国上市公司的生产率。为了发挥人工智能的生产率效应，企业会提高劳动力总数，增加非常规高技能劳动力数量，减少常规低技能劳动力数量。人工智能的生产率效应在国有企业、劳动密集型企业、拥有技术型董事会的企业、高技术行业、高要素市场发育程度的地区以及拥有较大政府支持力度的地区中更显著。最后，本文发现人工智能有助于提高公司价值。本文加深了微观企业层面对人工智能在生产过程中所扮演角色的理解和认知，并在企业和政策层面推动人工智能技术发展给出了建议。