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Going Bankrupt in China

Bo Li, Jacopo Ponticelli, Aug 26, 2020

We use a new case-level dataset to document a set of stylized facts on bankruptcy in China and study how the introduction of specialized courts across Chinese cities affected insolvency resolution and the local economy. We find that specialized courts hire better-trained judges and are 35% faster at dealing with bankruptcy cases than civil courts within the same city. We also find evidence that their introduction benefited the local economy by fostering firm entry, increasing average capital productivity, and favoring the reallocation of employment out of "zombie" firm–intensive sectors.

Going Green in China: Firms’ Responses to Stricter Environmental Regulations

Haichao Fan, Joshua Graff Zivin, Zonglai Kou, Xueyue Liu, Huanhuan Wang, Apr 29, 2020

Evidence from China shows that firms respond to stricter enforcement of the emission reduction target by reducing their pollution. This effect is stronger for firms in industries with higher pollution intensity. Stricter environmental regulations also lead to sharp declines in firms’ profits, capital, and labor. A sequence of tests of the underlying mechanisms reveals...

The Quiet Revolution in Women’s Human Capital and the Gender Earnings Gap in the People’s Republic of China

Zhengyang Li, Guochang Zhao, Jul 08, 2020

Since the 1980s, girls’ educational attaintment increased more quickly than boys’. As a result, the gender education gap decreased and even reversed in China. How does the gender earnings gap change in the face of increasing female human capital? What are the implications for the Chinese gender earnings gap in the future? This column will shed light on this interesting topic within and across cohorts.

Higher Education and Corporate Innovation

Dongmin Kong, Bohui Zhang, Jian Zhang, Jul 22, 2020

This paper investigates the impact of higher education on corporate innovation using a difference-in-differences approach. We find that Chinese firms in skilled industries generate better innovation outcomes, especially firms headquartered in provinces with more science and engineering college graduates, young firms that are more likely to hire young graduates, and firms located near universities. Also, we show that technological innovation is a mechanism...

Tax Policy and Lumpy Investment Behavior: Evidence from China’s VAT Reform

Zhao Chen, Xian Jiang, Zhikuo Liu, Juan Carlos Suárez Serrato, Daniel Yi Xu, Apr 01, 2020

To stimulate investment and promote production efficiency, the Chinese government has undertaken a series of value-added tax (VAT) reforms. One of those reforms, in 2009, reduced not only the purchasing price of equipment, but also investment frictions, i.e., the price gap imposed by the pre-reform VAT system between new and used equipment. We find that this reform increased equipment investment by 36%...