We develop measures for technology decoupling and dependence between the U.S. and China based on combined patent data. The first two decades of the century witnessed a steady increase in technology integration (or less decoupling), but China’s dependence on the U.S. increased (decreased) during the first (second) decade. Decoupling in a technology field predicts China’s growing dependence on U.S. technology, which, in turn, predicts less decoupling further down the road...
This study documents women’s declining relative wages and labor force participation in China over the last two decades, in contrast with the predictions of the structural transformation literature, suggesting that rising service sector share is associated with narrowing gender gaps. We show that women’s labor supply elasticity to spouse’s wages increased dramatically between 1995 and 2013, which is consistent with a U-shaped relationship between economic development and women’s...
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%...
We explore the consequences of a 2004 tax change in China that reduced the value-added tax (VAT) on equipment investment. While the goal was to encourage technology upgrades, we find little evidence that the reform achieved its intended results. Although firms shifted the composition of investment toward machinery, actual investment rates were unaffected. Firms replaced labor with machinery, leading employment to fall significantly in the treated provinces and sectors. Our results suggest that the primary impact of the policy was to induce labor-saving investment.
We propose a method to estimate the perceived likelihood of an uncertain increase in tariffs using the rise in trade flows in advance of the uncertainty resolution. We apply this framework to the uncertainty surrounding the U.S.’s annual renewal of China’s most-favored-nation (MFN) status in the 1990s. By matching the observed rise in imports in advance of U.S. Congress votes on the renewal, we find that the probability...