Research

Working Papers

1. Migration Restrictions and the Migrant-Native Wage Gap: The Role of Wage Setting and Sorting (with Naijia Guo, Rongjie Zhang, Ben Zou). New draft coming soon!
   • presented: RFBerlin-CReAM Workshop 2024; 2024 AMES; 2024 SOLE Annual Conference ; 2023 EWMES; 2023 HKEA Biennial Conference; 2023 AASLE Annual Conference; Invited seminar at Jinan University
   Abstract

   This study examines the factors contributing to the wage gap between migrants and natives, as well as the influence of internal mobility constraints on this gap. Using matched employer-employee panel data from a Chinese metropolis, I estimate a two-way fixed effect wage model and decompose the wage gap into group differences in skills, wage setting, and sorting. Decomposition analysis reveals that migrants tend to earn lower wages within the same employer and are less likely to be employed by companies offering high wage premiums. These two factors account for a 10 percentage-point wage penalty for migrants with comparative skills. Additionally, I investigate the impact of a policy change that restricted the "hukou" (household registration) quota to understand the mechanisms underlying the migrant-native wage gap. Following a one-third reduction in hukou quotas, wages of migrants increased relative to those of native workers, particularly in the private sector where significant quota reductions occurred, and among young migrants who have a higher demand for hukou. This effect is mainly driven by an increase in the wage premium paid by employers due to the unavailability of hukou. However, the tightening of hukou quota exacerbates the misallocation of workers, making high-ability migrants more likely to work in low-productivity public sectors.
2. Is a Better School Better for All? Evidence from Elite Education in China (with Lunyu Xie).
   • 2021 CES Annual Conference Best Student Paper: Honorable Mentions
   • presented: 2023 WEAI International Conference; 2022 AASLE Annual Conference; 2021 Symposium on Contemporary Labor Economics; 2021 CMES; 2021 CES Annual Conference
   Abstract

   The impact of elite education on academic outcomes is a topic of much debate. Utilizing the discontinuity in enrollment probability around the enrollment thresholds in the high school entrance exams, this study estimates the heterogeneous effect of elite high schools on the college entrance exam results for students with different levels of academic preparation measured by their previous academic performance. Academically well-prepared students significantly benefit more from elite high schools than under-prepared students. Peer effects partially explain the heterogeneous effect. The results imply potential misallocation of resources when using one-shot high-stakes exams to allocate educational resources.
3. Rural Labor Allocation, Risk Insurance, and Temporary Migration (with Yucheng Wang)[slides]
   • presented: 2023 AMES-Tsinghua; 2023 WEAI International Conference; 2023 CES North American Conference*
   Abstract

   Migration risks are an important barrier holding rural households back from allocating labor to urban areas. Existing literature suggests that rural households have better insurance against productivity risks and emphasizes the informal insurance network as a channel. This paper proposes local labor allocation as an alternative channel, highlighting the importance of diversified labor income sources and labor supply flexibility. Using unique and rich longitudinal data on rural households in China, we develop a formal test examining how rural households respond to both aggregate and idiosyncratic shocks and the role of migration in the risk-transmission process. 60.9% of risk insurance occurs during the transmission of agriculture income shock to total labor income, while the transmission of income shock to consumption accounts for 39.1%. This confirms that rural households respond to agricultural shocks by adjusting local labor allocation. We further support the results using annual fluctuations in weather as an exogenous agricultural productivity shock. Based on the empirical findings, we develop a dynamic model of location choice, sectoral labor allocation, and asset accumulation with borrowing constraints. We use the model to study the welfare effects of reducing moving barriers and relaxing borrowing constraints.
4. Trade Liberalization and Intergenerational Education Mobility: Evidence from China (with Jingxuan Du)[slides]
   • presented: 2023 CES Annual Conference*; 2023 China Economics Annual Conference; 2023 CES North American Conference*; 2022 International Conference on The Chinese Economy*
   Abstract

   This study examines the impact of trade liberalization on intergenerational education mobility, focusing on China’s accession to the WTO. The negative impact of export tariff reduction on educational outcomes is greater for children from low-educated families than for those from high-educated families, resulting in reduced intergenerational education mobility. Estimations of intergenerational education elasticity also support this finding. This study proposes that the opportunity cost of education alone cannot explain the results and documents another non-negligible mechanism: parents’ time inputs. Parents may reduce their time and effort on children’s education to take new job opportunities created by trade liberalization, negatively affecting children’s early childhood development.

   
   

Selected Work in Progress

1. Job Dynamics and Life-Cycle Wage Growth (with Naijia Guo and Ben Zou)
2. Growing without Gentrification: The Impact of Technology Shocks on Low- and High-skilled Migration in China (with Suqin Ge, Naijia Guo, Zibin Huang, and Junsen Zhang)
   • presented: 2024 AASLE (scheduled)

Publications

1. Across a Few Prohibitive Miles: The Impact of the Anti-Poverty Relocation Program in China (with Lunyu Xie and Xinye Zheng). 2023. Journal of Development Economics, 160, 102945.
   • previously circulated as "Moving to Opportunity: The Effects of the Targeted Poverty Alleviation Relocation Program in China"
   • presented: 2021 Asia Impact Evaluation Conference; Invited seminar at Beijing Normal Univ.; 2020 AAEA Virtual Meeting; 2019 Symposium on Contemporary Labor Economics; 2019 Sustainable Development Goals
   Abstract

   Many households are confined to remote rural villages in the developing world. This study examines the Anti-Poverty Relocation Program in China, considering the village-to-town relocation from agricultural to non-agricultural sectors induced by the program. While exploring a novel administrative data set on impoverished people in a Chinese county, we discovered that the program significantly increased the participants’ income by 9.61%, driven mainly by the increase in wage income. The empirical findings are consistent with the Roy-model perspective, which states that rural households with comparative advantage in non-agricultural sectors could benefit from relocation to nearby towns. This study provides new evidence that mobility barriers across sectors exist even on a small geographic scale in rural areas. The results of the cost–benefit analysis suggest that relocation of households in remote rural areas is a feasible policy tool for overcoming such mobility barriers.

   
   

Pre-Doctoral Publications

1. Zheng, Xinye, Yucheng Wang, and Li Zhang. Coordination between Government Departments and the Allocation of Public Resources: Theory and Empirical Evidence (In Chinese). 2019. Economic Research Journal, 10, 24-40.
   • 郑新业,王宇澄 & 张力.(2019).政府部门间政策协调的理论和经验证据. 经济研究(10),24-40.
2. Zheng, Xinye, Li Zhang, and Yangyang Zhang. Global Tax Competition and China’s Policy Choices (In Chinese). 2019. Economic Perspectives, 2, 31-46.
   • 郑新业,张力 & 张阳阳.(2019).全球税收竞争与中国的政策选择. 经济学动态(02),31-46.
3. Zheng, Xinye, and Li Zhang. The Possibilities in the Impossible Trinity of Fiscal Policy (In Chinese). 2017. Exploration and Free Views, 9, 108–116.
   • 郑新业 & 张力.(2017).财政“不可能三角”之可能. 探索与争鸣(09),108-116.

* presented by coauthor(s).