Research

Publications 



Working Papers


Does Elite Capture Matter? Local Political Elites and the Targeted Poverty Alleviation Strategy in China with Jie Tang and Xia Li (R&R, PDF) Presentations (including scheduled): 98th WEAI  Annual Conference 2023.

China has implemented a nationwide poverty alleviation campaign, called the targeted poverty alleviation (TPA) strategy, to achieve the national goal of completely eradicating poverty by the end of 2020. However, the capture of political elites is considered an obstacle to achieving this goal. This paper investigates whether political elite capture exists in TPA based on the specific targeting strategy using the “Thousand-Person Hundred-Village” survey dataset in 2017. Overall, TPA is not subject to political elite capture in practice and deliberately excludes political elite households from the strategy. Here, we present three main findings. First, the probability of political elite households registering in the national poverty database (jiandanglika) under TPA is approximately 12.5% lower than that of non-elite households. Second, we found that the lower registration probability of political elite households was mainly reflected in households with committee members in the village. Third, political elite connections increase the likelihood of political elite households receiving general government transfers, suggesting that political elite capture still exists in other public welfare programs.


VAT Distortion and Corporate Tax Avoidance with Renjie Zhao and Binbin Tian (Draft available upon request)

Presentations (including scheduled): 58th MVEA Virtual Conference 2021 and 97th WEAI Annual Conference 2022


Excess input VATs cannot be refunded in China, which causes a heavy financial burden for firms. Using the China National Tax Survey Database (NTSD), this paper explores the relation between input VAT credit carryovers and corporate income tax avoidance behavior. We find that the ratio of input VAT credit carryovers (IVCCs) scaled to cash inflow is negatively associated with effective corporate income tax rates (ETRs). In addition, we find that the tax avoidance activities of firms can be carried out by increasing their costs deducted before tax to underreport their profits. Finally, to explore the causal effect of input VAT credit carryovers on corporate income tax avoidance, we investigated the impact of a recent VAT reform that allowed VAT refunds for excess input VAT credits in 18 industries in 2018 using the China Stock Market & Accounting Research Database (CSMAR). The results indicate that refunding excess input VAT credits could improve corporate tax compliance.


How Does Land Use Policy Affect Local Labor Market and Housing Market? with Meng-Ting Chen  (under review, PDF)

Presentations (including scheduled):  IEAS Research Workshop (Academia Sinica, Taiwan) 2022, Soochow University Seminar (Taiwan) 2022, 98th WEAI  Annual Conference 2023, Soochow University Seminar (Suzhou) 2023, Hehai University Seminar 2023, University of New Mexico Seminar 2023, National Sun Yat-sen University Seminar (Taiwan) 2023, WRSA’s 63rd Annual Meeting 2024, New Mexico Tech Research Colloquium 2024, AAG 2024 Annual Meeting, National Central University (Taiwan) 2024, Renmin University of China Seminar in 2024, Shandong University Seminar 2024, Northwest University of Political Science and Law Seminar 2024, and Northwest University Seminar 2024.


This paper investigates the impact of land use policies on local labor and housing markets in China. Analyzing the allocation of land between residential and productive uses, we find that increasing shares of productive land significantly lowers unemployment rates, and raises regional wages and housing prices. We then develop a spatial model featuring labor search, housing development, and local public finance to quantify these empirical findings.  In addition, we conduct several counterfactual analyses, incorporating geographical constraints, to explore optimal land allocation. This paper provides insights into rapid urbanization in China from the perspective of land allocation.


Local Protectionism and Firms’ ESG Choices: Evidence from the Judicial Independence Reform with Jiayin Li and Keyi Zhao (under review)

Presentations (including scheduled): SUFE workshop 2023


Local protectionism has been studied to be closely related to corporate behavior. This paper exploits new sources of quasi-experimental variation in the elimination of local protectionism from judicial reforms launched in 2014 to examine its impact on the Environmental, Social, and Governance (ESG) disclosure levels of the firms. The study reveals that the judicial reform leads to an increase in the ESG disclosure scores of affected local firms. The potential mechanism behind this effect is that judicial reform escalates legal risks. Lastly, there is no evidence that the reform enhances corporate ESG performance, including metrics related to carbon emissions.


Shifting Employment and Investment Structures Towards Environmental Sustainability with Meng-Ting Chen, Juin-Jen Chang, Jhy-Yuan Shieh, and Jhy-Hwa Chen (paper) 

Presentations (including scheduled):  the IEAS Research Workshop (Academia Sinica, Taiwan) 2024, Soochow University Seminar (Taiwan) 2024, and WRSA’s 64th Annual Meeting 2025


This paper examines the labor market and investment effects of China's Environmental Protection Tax (EPT) reform, focusing on the reallocation of employment and market share between heavy-polluting and non-heavy-polluting industries. Empirical results show that the EPT reform significantly reduces employment in heavy-polluting industries while moderately increasing aggregate employment. Moreover, the reform drives green investment primarily in non-heavy-polluting industries. To complement these findings, we develop a structural model that quantifies employment reallocation and green investment dynamics before and after the reform. The model reveals that higher labor substitutability and consumer responsiveness to environmental policies enhance the positive employment effects while moderating the decline in welfare. These results offer valuable policy insights for economies seeking to balance environmental governance with sustainable economic development.

Selected Work in Progress

Fiscal Decentralization and Local Economic Growth


Household Consumption and the Targeted Poverty Alleviation Strategy with Xia Li


Political Connections, Tax Refund Acquisition, and Resource Misallocation: Insights from China's Tax Bureau Merger Reform  with Renjie Zhao


Estimating Speculative Demand: Evidence from Spillover Effects of China’s Housing Purchase Restriction Policy with Meng-Ting Chen


The Impact of Eliminating Pecuniary Externality in China's Housing Market with Meng-Ting Chen


The economic consequences of drifting wildfire smoke with Meng-Ting Chen and Shiyan Zhang