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The Effects of a Multifaceted Poverty-Alleviation Program on Rural Income and Household Behavior in China
Rui Li, Hong Song, Jun Zhang, Junsen Zhang, Feb 12, 2025This study examines the effects of a government-led, large-scale, multifaceted poverty-alleviation program on rural income in China. We find that the program has a positive impact on national key poor counties, with a 10.9% increase in rural income. This effect mainly arises via industrial support, agricultural development, and public service improvement. Strategies that are consistent with local comparative advantages and incentivize local officials to reduce poverty yield more significant effects. Household-level analyses suggest that the program changes household income and expenditure, and the effects are particularly substantial for the poorest households. The study provides novel insights and policy implications for China’s recent experience with poverty alleviation.
Employment Protection and Corporate Cash Holdings: Evidence from China’s Labor Contract Law
Chenyu Cui, Kose John, Jiaren Pang, Haibin Wu, Oct 13, 2021We examine whether and how employment protection influences corporate cash holdings using Chinese firm-level data. Our empirical results show that labor-intensive firms in China significantly increased their cash holdings following the enactment of China’s Labor Contract Law. Further analyses suggest that the results are generally consistent with a “labor adjustment costs” channel: employment protection...
Government as Venture Capitalists in AI
Martin Beraja, Wenwei Peng, David Yang, Noam Yuchtman, Nov 06, 2024This article discusses that government venture capital funds in China are more geographically dispersed than private venture capital, particularly in inland and less developed areas, and they are more inclined to invest in AI companies with weaker ex-ante productivity signals.
What Happens to Rural Labor Supply Following the Birth of a Son or a Daughter?
Shing-Yi Wang, Nov 20, 2019Our research shows that rural Chinese women's labor supply falls for one year following the birth of a daughter before returning to pre-birth levels while the negative impact of a son on women's labor supply is larger and persists for four years. Furthermore, there is a decrease in household cigarette consumption, and an increase in the mother's probability of being in school, her leisure time, and her participation in...
Overpricing in Municipal Bond Markets and the Unintended Consequences of Regulatory Measures: Evidence from China
Laura Xiaolei Liu, Qiao Liu, Xiaoyu Liu, Ni Zhu, Dec 03, 2024Chinese municipal bonds are considerably overpriced in the primary market, leading regulators to set a lower bound on the issuance yield spread. This paper investigates the underlying reasons for this overpricing and evaluates the effects of implementing restrictions on yield spreads. Our findings indicate that underwriters may inflate prices to receive undisclosed benefits from local governments, such as local treasury cash deposits. We further show that the lower bounds severely impede price discovery in the primary municipal bond market. Even bonds not restricted by the lower limit are priced at the reference spread, exacerbating overpricing of riskier bonds. Local governments exploit these fixed prices by increasing the bond issuance amount and extending bond maturity. Our findings suggest that regulatory interference in pricing can have unintended consequences for pricing efficiency and that attempts to rectify mispricing may result in even more severe mispricing.
