ESSAYS ON THE CHINESE ECONOMY

Abstract

This dissertation consists of three chapters on Chinese Economy. Chapter 1 (coauthored with Qianmiao Chen, Qingyang Huang and Chang Liu) studies the role of local Chinese leaders’ career incentives in decisions regarding the COVID-19 pandemic. Most local leaders were reluctant to impose lockdowns at the beginning of the pandemic, because their promotions rely on posting strong numbers for economic growth in their region, while lockdowns can suppress growth. Once the nation’s top leader warned that local leaders who failed to control the disease would be removed from office, many rapidly implemented resolute measures. However, we find that local leaders with larger promotion incentives were still more likely to downplay the virus by avoiding or minimizing lockdowns. Chapter 2 (coauthored with Chang Liu) presents the first causal evidence on the relationship between maternal education and fertility desire in China. Our triple-difference strategy exploits the staggered implementation and disparate enforcement intensity of China’s Compulsory Schooling Law (CSL) in urban and rural areas. We find that CSL promotes maternal education but decreases the fertility desire of the affected cohorts. Our instrumental variable estimate further gauges that one additional year of education would decrease a woman’s fertility desire by 0.28. We present evidence consistent with the popular argument that higher maternal education raises the opportunity costs of childbearing and induces the quantityquality tradeoff. Chapter 3 studies the consumption behavior of China’s urban households during 2002-2009. We first document the increase of inequality as measured by households’ incomes and consumption, and then we test and reject the null hypothesis of perfect insurance by employing two strategies: Firstly, we show that the life-cycle cross-sectional variance inconsumption is increasing, which is consistent with the permanent income hypothesis or other models with incomplete markets; Secondly, we construct a synthetic panel data set and consider the regression of consumption changes on income changes, and we show that the coefficient is significantly different from zero. Our results reject the perfect insurance null hypothesis for every consumption item except curative care.