Pub Date : 2026-01-01Epub Date: 2025-11-22DOI: 10.1016/j.asieco.2025.102075
Liang Chang , Bingyan Zheng , Na Tan , Haobin Zheng
This study investigates how financial constraints affect firms’ environmental decisions and how costly the resulting social externalities are in emerging economies. Using a novel text-based index of financial constraints and data on Chinese listed firms from 2000 to 2020, we find that greater financial constraints significantly reduce firms’ environmental investment. The impact is more pronounced for non-SOEs and manifests more strongly in regions with lower public environmental concern and stricter regulation intensity. Exploiting the policy shock of China’s Property Rights Law in 2007, we find that firms affected by the law have a higher degree of financial constraint mitigation and increase their environmental investments by about 24 % on average. This investment increase potentially reduces the probability of environmental penalties by 3 % and penalty amounts by 0.07–0.22 million yuan per firm, while potentially increasing the firm’s market value by 0.96–1.92 billion yuan and avoiding social losses of 3.1–9.5 million yuan.
{"title":"Unlocking green capital: Financial constraints and environmental investments in China","authors":"Liang Chang , Bingyan Zheng , Na Tan , Haobin Zheng","doi":"10.1016/j.asieco.2025.102075","DOIUrl":"10.1016/j.asieco.2025.102075","url":null,"abstract":"<div><div>This study investigates how financial constraints affect firms’ environmental decisions and how costly the resulting social externalities are in emerging economies. Using a novel text-based index of financial constraints and data on Chinese listed firms from 2000 to 2020, we find that greater financial constraints significantly reduce firms’ environmental investment. The impact is more pronounced for non-SOEs and manifests more strongly in regions with lower public environmental concern and stricter regulation intensity. Exploiting the policy shock of China’s Property Rights Law in 2007, we find that firms affected by the law have a higher degree of financial constraint mitigation and increase their environmental investments by about 24 % on average. This investment increase potentially reduces the probability of environmental penalties by 3 % and penalty amounts by 0.07–0.22 million yuan per firm, while potentially increasing the firm’s market value by 0.96–1.92 billion yuan and avoiding social losses of 3.1–9.5 million yuan.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102075"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145600358","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-12-09DOI: 10.1016/j.asieco.2025.102100
Mei Li, Chengkui Liu, Shibiao Zhou
Artificial intelligence (AI) is a pivotal technology driving future innovation, yet empirical evidence on how tax incentives foster corporate intelligent transformation remains scarce. This study addresses this gap by examining the impact of China’s VAT Credit Refund Policy (VATCRP) on corporate intelligent transformation. Using panel data from Chinese A-share listed companies (2014–2022) and the difference-in-differences model, we find that the VATCRP significantly promotes intelligent transformation. Mechanism analysis reveals this effect operates through two channels: resource effects, by easing liquidity constraints and expanding investment capacity, and innovation effects, by stimulating R&D and AI-related technological innovation. This positive impact is more pronounced for state-owned firms, larger firms, manufacturing firms, and more competitive industries. Further analysis shows that intelligent transformation optimizes employee structure, enhances productivity and management efficiency. Our findings offer crucial insights into how fiscal policies can effectively promote technological upgrading, providing valuable lessons for other developing economies navigating similar transitions.
{"title":"Tax incentives and corporate intelligent transformation: Evidence from China’s VAT Credit Refund Policy","authors":"Mei Li, Chengkui Liu, Shibiao Zhou","doi":"10.1016/j.asieco.2025.102100","DOIUrl":"10.1016/j.asieco.2025.102100","url":null,"abstract":"<div><div>Artificial intelligence (AI) is a pivotal technology driving future innovation, yet empirical evidence on how tax incentives foster corporate intelligent transformation remains scarce. This study addresses this gap by examining the impact of China’s VAT Credit Refund Policy (VATCRP) on corporate intelligent transformation. Using panel data from Chinese A-share listed companies (2014–2022) and the difference-in-differences model, we find that the VATCRP significantly promotes intelligent transformation. Mechanism analysis reveals this effect operates through two channels: resource effects, by easing liquidity constraints and expanding investment capacity, and innovation effects, by stimulating R&D and AI-related technological innovation. This positive impact is more pronounced for state-owned firms, larger firms, manufacturing firms, and more competitive industries. Further analysis shows that intelligent transformation optimizes employee structure, enhances productivity and management efficiency. Our findings offer crucial insights into how fiscal policies can effectively promote technological upgrading, providing valuable lessons for other developing economies navigating similar transitions.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102100"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737295","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-12-31DOI: 10.1016/j.asieco.2025.102109
Zuofeng Wu , Huayu Shen , Jing Jiao
This study empirically examines the nexus between Chinese Fiscal Policy Uncertainty (CFPU) and corporate total factor productivity (CTFP) using a panel dataset of Chinese listed firms covering the period 2011–2023. The core results demonstrate that CFPU exerts a robustly negative impact on CTFP, with financial constraints serving as a primary mediating channel: heightened CFPU exacerbates firms’ financing frictions, which in turn constrain productivity growth. Supplementary mechanism tests further corroborate that CFPU undermines CTFP by suppressing corporate innovation investment and inducing inefficient underinvestment behaviors. Heterogeneity analyses reveal notable cross-firm variations in this relationship: state-owned enterprises (SOEs) and firms with a higher shareholding ratio of the largest shareholder exhibit greater resilience to CFPU’s adverse productivity effects, owing to their stronger risk-bearing capacity and privileged resource access. In contrast, firms with CEO duality suffer more severe CTFP losses due to impaired internal governance and decision-making oversight. To mitigate endogeneity concerns and verify result robustness, the study employs a battery of identification strategies, including instrumental variable regression, alternative model specifications, substitutions of the CTFP proxy, and dual clustering regressions. All robustness checks confirm the validity of the core findings. This research advances the literature by clarifying the microeconomic implications of fiscal policy uncertainty and its multi-channel transmission to firm productivity, while offering actionable implications for policymakers to enhance fiscal policy stability and for enterprises to optimize governance and financing strategies amid policy volatility.
{"title":"Chinese fiscal policy uncertainty and corporate total factor productivity","authors":"Zuofeng Wu , Huayu Shen , Jing Jiao","doi":"10.1016/j.asieco.2025.102109","DOIUrl":"10.1016/j.asieco.2025.102109","url":null,"abstract":"<div><div>This study empirically examines the nexus between Chinese Fiscal Policy Uncertainty (<em>CFPU</em>) and corporate total factor productivity (<em>CTFP</em>) using a panel dataset of Chinese listed firms covering the period 2011–2023. The core results demonstrate that <em>CFPU</em> exerts a robustly negative impact on <em>CTFP</em>, with financial constraints serving as a primary mediating channel: heightened <em>CFPU</em> exacerbates firms’ financing frictions, which in turn constrain productivity growth. Supplementary mechanism tests further corroborate that <em>CFPU</em> undermines <em>CTFP</em> by suppressing corporate innovation investment and inducing inefficient underinvestment behaviors. Heterogeneity analyses reveal notable cross-firm variations in this relationship: state-owned enterprises (SOEs) and firms with a higher shareholding ratio of the largest shareholder exhibit greater resilience to CFPU’s adverse productivity effects, owing to their stronger risk-bearing capacity and privileged resource access. In contrast, firms with CEO duality suffer more severe <em>CTFP</em> losses due to impaired internal governance and decision-making oversight. To mitigate endogeneity concerns and verify result robustness, the study employs a battery of identification strategies, including instrumental variable regression, alternative model specifications, substitutions of the <em>CTFP</em> proxy, and dual clustering regressions. All robustness checks confirm the validity of the core findings. This research advances the literature by clarifying the microeconomic implications of fiscal policy uncertainty and its multi-channel transmission to firm productivity, while offering actionable implications for policymakers to enhance fiscal policy stability and for enterprises to optimize governance and financing strategies amid policy volatility.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102109"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145884281","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01DOI: 10.1016/j.asieco.2025.102113
Xinghua Guan , Ruixue Han , Jie Mao
The financing crowding-out effect of local public debt on microeconomic entities is a long-term, structural, and institutional issue that currently constrains China's economy from transitioning to a high-quality development stage. Based on the guarantee data collected manually, our study constructs the guarantee networks of the local government financing vehicles (LGFVs) from 2014 to 2022 using the complex network analysis method, and examines the influence of guarantee networks on the debt level of non-LGFV local firms. The results show that the expansion of the scale of the LGFVs' guarantee networks reduces the debt level of the non-LGFV local firms. This effect is particularly prominent in short-term liabilities, as well as non-state-owned enterprises, and areas with a poor social credit environment or higher network connectivity. Research on economic consequences indicates that the financing crowding-out effect of guarantee networks on non-LGFV local firms compels these firms to adjust their debt financing structure—specifically by increasing secured debts and advance receipts—and to alter their investment strategies, including reducing innovation investment. This research not only provides new evidence from a micro perspective on the impact of LGFVs' guarantee networks on corporate leverage but also offers valuable policy insights for optimizing local public debt management, improving financial market mechanisms, and promoting high-quality economic development.
{"title":"Guarantee networks and financial resource allocation: Firm-level evidence from China","authors":"Xinghua Guan , Ruixue Han , Jie Mao","doi":"10.1016/j.asieco.2025.102113","DOIUrl":"10.1016/j.asieco.2025.102113","url":null,"abstract":"<div><div>The financing crowding-out effect of local public debt on microeconomic entities is a long-term, structural, and institutional issue that currently constrains China's economy from transitioning to a high-quality development stage. Based on the guarantee data collected manually, our study constructs the guarantee networks of the local government financing vehicles (LGFVs) from 2014 to 2022 using the complex network analysis method, and examines the influence of guarantee networks on the debt level of non-LGFV local firms. The results show that the expansion of the scale of the LGFVs' guarantee networks reduces the debt level of the non-LGFV local firms. This effect is particularly prominent in short-term liabilities, as well as non-state-owned enterprises, and areas with a poor social credit environment or higher network connectivity. Research on economic consequences indicates that the financing crowding-out effect of guarantee networks on non-LGFV local firms compels these firms to adjust their debt financing structure—specifically by increasing secured debts and advance receipts—and to alter their investment strategies, including reducing innovation investment. This research not only provides new evidence from a micro perspective on the impact of LGFVs' guarantee networks on corporate leverage but also offers valuable policy insights for optimizing local public debt management, improving financial market mechanisms, and promoting high-quality economic development.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102113"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145925166","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-12-06DOI: 10.1016/j.asieco.2025.102099
Birendra B. Budha
This paper investigates whether Nepal’s inflation converges with India’s inflation and examines the effect of India’s prices on Nepal’s price level using monthly data for the period 1974–2024. The paper finds that Nepal’s inflation converges with India’s inflation, and the effect of India’s CPI persists up to 10 months on Nepal’s CPI, and up to 22 months on Nepal’s food CPI. The mechanisms of inflation convergence include high trade integration, high labor mobility and wage convergence, and the peg of the Nepalese Rupee with the Indian Rupee. The paper also finds the convergence in wage growth between Nepal and India. These findings imply that the current exchange rate peg is working well as a nominal anchor of Nepal’s monetary policy in maintaining monetary stability.
{"title":"Does Nepal’s inflation converge with India’s inflation?","authors":"Birendra B. Budha","doi":"10.1016/j.asieco.2025.102099","DOIUrl":"10.1016/j.asieco.2025.102099","url":null,"abstract":"<div><div>This paper investigates whether Nepal’s inflation converges with India’s inflation and examines the effect of India’s prices on Nepal’s price level using monthly data for the period 1974–2024. The paper finds that Nepal’s inflation converges with India’s inflation, and the effect of India’s CPI persists up to 10 months on Nepal’s CPI, and up to 22 months on Nepal’s food CPI. The mechanisms of inflation convergence include high trade integration, high labor mobility and wage convergence, and the peg of the Nepalese Rupee with the Indian Rupee. The paper also finds the convergence in wage growth between Nepal and India. These findings imply that the current exchange rate peg is working well as a nominal anchor of Nepal’s monetary policy in maintaining monetary stability.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102099"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737299","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Chinese government has implemented Vocational Skills Training through Public Employment Services (VST-PES) to facilitate rural labor’s off-farm employment participation and quality. However, the empirical evidence on the effectiveness of these initiatives remains limited. This study investigates the implementation of VST-PES in rural China and assesses its impact on rural labor’s off-farm employment participation rate and quality. Using the 2023 data of 4447 rural labor from a national representative sample across 100 villages in 5 provinces, we employ Probit/OLS regression, Propensity Score Matching method, and Heckman two-step model. The results consistently reveal that VST-PES implementation in rural China suffered from limited coverage, short duration, inadequate incentives, and supply-demand mismatches. While VST-PES significantly increased off-farm employment participation rate, particularly for females and middle-aged rural labor, it had no significant impact on off-farm employment quality. These findings suggest that the Chinese government should enhance the implementation of VST-PES in rural areas to increase the inclusiveness of labor market and pay high attention to improve its effects on off-farm employment quality among rural labor.
{"title":"The impact of Vocational Skills Training of Public Employment Services on off-farm employment: Evidence from rural China","authors":"Xuanye Zeng , Yunli Bai , Jiaojiao Wu , Yutong Qiu , Linxiu Zhang","doi":"10.1016/j.asieco.2025.102095","DOIUrl":"10.1016/j.asieco.2025.102095","url":null,"abstract":"<div><div>The Chinese government has implemented Vocational Skills Training through Public Employment Services (VST-PES) to facilitate rural labor’s off-farm employment participation and quality. However, the empirical evidence on the effectiveness of these initiatives remains limited. This study investigates the implementation of VST-PES in rural China and assesses its impact on rural labor’s off-farm employment participation rate and quality. Using the 2023 data of 4447 rural labor from a national representative sample across 100 villages in 5 provinces, we employ Probit/OLS regression, Propensity Score Matching method, and Heckman two-step model. The results consistently reveal that VST-PES implementation in rural China suffered from limited coverage, short duration, inadequate incentives, and supply-demand mismatches. While VST-PES significantly increased off-farm employment participation rate, particularly for females and middle-aged rural labor, it had no significant impact on off-farm employment quality. These findings suggest that the Chinese government should enhance the implementation of VST-PES in rural areas to increase the inclusiveness of labor market and pay high attention to improve its effects on off-farm employment quality among rural labor.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102095"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145685475","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-11-27DOI: 10.1016/j.asieco.2025.102088
Le Wen , Abdelrahman Ali , Zhipeng Zhou
This study investigates the impact of rising housing rents on marriage formation among migrants in urban China, a pressing issue in the context of the country's rapid urbanization and escalating housing market pressures. Using data from the multi-year China Migrants Dynamic Survey (CMDS), we adopt an instrumental variable (IV) approach to address potential endogeneity and mainly assess how increasing rental costs affect the timing of marriage and spouse selection among migrants. Our empirical findings reveal that rising housing rents significantly delay migrants' marriages and decrease their likelihood of marrying a native spouse. Specifically, a 10 % increase in housing rents postpones marriage by approximately half a year and decreases the likelihood of marrying a native spouse by 5.837 percentage points. These effects are more pronounced among lower-income and inter-provincial migrants. Besides, the delaying effect of rising rents is stronger for male migrants and for those who eventually marry native spouses. Moreover, rising rents significantly lower the overall likelihood of marriage entry among migrants. The study highlights the need to improve housing affordability and implement targeted support measures for vulnerable migrant populations to alleviate these impacts and promote more inclusive urban development.
{"title":"Rising housing rents and migrants' marriage formation: Evidence from China","authors":"Le Wen , Abdelrahman Ali , Zhipeng Zhou","doi":"10.1016/j.asieco.2025.102088","DOIUrl":"10.1016/j.asieco.2025.102088","url":null,"abstract":"<div><div>This study investigates the impact of rising housing rents on marriage formation among migrants in urban China, a pressing issue in the context of the country's rapid urbanization and escalating housing market pressures. Using data from the multi-year China Migrants Dynamic Survey (CMDS), we adopt an instrumental variable (IV) approach to address potential endogeneity and mainly assess how increasing rental costs affect the timing of marriage and spouse selection among migrants. Our empirical findings reveal that rising housing rents significantly delay migrants' marriages and decrease their likelihood of marrying a native spouse. Specifically, a 10 % increase in housing rents postpones marriage by approximately half a year and decreases the likelihood of marrying a native spouse by 5.837 percentage points. These effects are more pronounced among lower-income and inter-provincial migrants. Besides, the delaying effect of rising rents is stronger for male migrants and for those who eventually marry native spouses. Moreover, rising rents significantly lower the overall likelihood of marriage entry among migrants. The study highlights the need to improve housing affordability and implement targeted support measures for vulnerable migrant populations to alleviate these impacts and promote more inclusive urban development.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102088"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145685476","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-11-26DOI: 10.1016/j.asieco.2025.102087
Huilong Liu , Yifei Wang , Jing Xie , Jun Yin
Leveraging a judicial reform in China as a quasi-natural experiment, this study employs a staggered difference-in-differences (DiD) design to investigate the causal effect of judicial independence on firm-level labor share. The results indicate that enhanced judicial independence increases labor share by 7.65 % relative to the standard deviation. This effect is driven primarily by improved labor rights protection rather than changes in labor demand. Heterogeneity analyses reveal stronger impacts in regions with weaker legal environments, labor-intensive industries, non-state-owned enterprises (non-SOEs), firms with higher proportions of low-skilled employees, and reform implementation with greater intensity. The reform also reduces intra-firm wage gaps and inter-firm labor share disparities. These findings underscore the importance of judicial independence as a critical institutional mechanism for promoting more equitable income distribution.
{"title":"Judicial independence and firms’ labor share: Evidence from a quasi-natural experiment in China","authors":"Huilong Liu , Yifei Wang , Jing Xie , Jun Yin","doi":"10.1016/j.asieco.2025.102087","DOIUrl":"10.1016/j.asieco.2025.102087","url":null,"abstract":"<div><div>Leveraging a judicial reform in China as a quasi-natural experiment, this study employs a staggered difference-in-differences (DiD) design to investigate the causal effect of judicial independence on firm-level labor share. The results indicate that enhanced judicial independence increases labor share by 7.65 % relative to the standard deviation. This effect is driven primarily by improved labor rights protection rather than changes in labor demand. Heterogeneity analyses reveal stronger impacts in regions with weaker legal environments, labor-intensive industries, non-state-owned enterprises (non-SOEs), firms with higher proportions of low-skilled employees, and reform implementation with greater intensity. The reform also reduces intra-firm wage gaps and inter-firm labor share disparities. These findings underscore the importance of judicial independence as a critical institutional mechanism for promoting more equitable income distribution.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102087"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145617101","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-12-29DOI: 10.1016/j.asieco.2025.102106
Dixit Poudel, Munisamy Gopinath
The growing adoption of digitalization, particularly in information and communication technology (ICT), has become a key driver of value creation for firms. However, concerns persist about potential job losses or stagnating employment growth, especially with rapid advancements in artificial intelligence. This study leverages micro-level data from both formal and informal sectors to assess the benefits of digitalization in Indian manufacturing—a critical hub for global supply chain diversification—and explores whether these gains come at the cost of employment growth. For this purpose, digital capital is considered to be an input in production since it provides firms with comparative advantages. Moreover, digital capital can substitute or complement other inputs, such as physical capital. By measuring digital capital as the accumulation of weighted ICT investments, this study estimates a value-added function for firms and plants using a nested CES model, uniquely capturing the substitutability between physical and digital capital. Semi-parametric estimation methods, accounting for simultaneity between inputs and productivity, reveal significant digital gains for Indian manufacturing firms and plants in both sectors from 2010 to 2021. The formal sector experienced relatively higher digital gains, accompanied by greater elasticity of substitution between physical and digital capital. Contrary to common assumptions, increased digital capital intensity correlates with higher labor and skilled-labor intensity in formal industries. Globally, when combined with industry formalization efforts, digitalization can drive both value addition and employment growth.
{"title":"Digital gains and employment pains? Evidence from Indian manufacturing","authors":"Dixit Poudel, Munisamy Gopinath","doi":"10.1016/j.asieco.2025.102106","DOIUrl":"10.1016/j.asieco.2025.102106","url":null,"abstract":"<div><div>The growing adoption of digitalization, particularly in information and communication technology (ICT), has become a key driver of value creation for firms. However, concerns persist about potential job losses or stagnating employment growth, especially with rapid advancements in artificial intelligence. This study leverages micro-level data from both formal and informal sectors to assess the benefits of digitalization in Indian manufacturing—a critical hub for global supply chain diversification—and explores whether these gains come at the cost of employment growth. For this purpose, digital capital is considered to be an input in production since it provides firms with comparative advantages. Moreover, digital capital can substitute or complement other inputs, such as physical capital. By measuring digital capital as the accumulation of weighted ICT investments, this study estimates a value-added function for firms and plants using a nested CES model, uniquely capturing the substitutability between physical and digital capital. Semi-parametric estimation methods, accounting for simultaneity between inputs and productivity, reveal significant digital gains for Indian manufacturing firms and plants in both sectors from 2010 to 2021. The formal sector experienced relatively higher digital gains, accompanied by greater elasticity of substitution between physical and digital capital. Contrary to common assumptions, increased digital capital intensity correlates with higher labor and skilled-labor intensity in formal industries. Globally, when combined with industry formalization efforts, digitalization can drive both value addition and employment growth.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102106"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145925164","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-12-09DOI: 10.1016/j.asieco.2025.102101
Jiawu Dai , Juan Li , Qiong Zhang
China’s dramatic expansion of higher education since the late 1990s has significantly impacted its labor market. Utilizing firm-level microdata and a difference-in-differences model, this paper reveals that the expansion notably reduced labor market distortions. This finding remains consistent even after various robustness checks. Our heterogeneity analysis further indicates that the expansion's mitigating effect on labor market distortions was more evident in regions and industries with lower intensities of higher education expansion, as well as among large and medium-sized enterprises, those with a high market share, and state-owned enterprises. Additionally, our mechanism analysis demonstrates that the expansion primarily eased labor market distortions through wage convergence effect among different groups. Based on these findings, we recommend that China vigorously pursues the high-quality advancement of both higher and vocational education, facilitates the establishment of a nationally unified labor market through market-driven reforms of production factors, and elevates the overall level of human capital. Other developing economies facing institutional constraints can also draw lessons from this path to achieve synergistic improvements in human capital accumulation and market efficiency.
{"title":"Higher education expansion and labor market distortions: Micro evidence and possible mechanisms","authors":"Jiawu Dai , Juan Li , Qiong Zhang","doi":"10.1016/j.asieco.2025.102101","DOIUrl":"10.1016/j.asieco.2025.102101","url":null,"abstract":"<div><div>China’s dramatic expansion of higher education since the late 1990s has significantly impacted its labor market. Utilizing firm-level microdata and a difference-in-differences model, this paper reveals that the expansion notably reduced labor market distortions. This finding remains consistent even after various robustness checks. Our heterogeneity analysis further indicates that the expansion's mitigating effect on labor market distortions was more evident in regions and industries with lower intensities of higher education expansion, as well as among large and medium-sized enterprises, those with a high market share, and state-owned enterprises. Additionally, our mechanism analysis demonstrates that the expansion primarily eased labor market distortions through wage convergence effect among different groups. Based on these findings, we recommend that China vigorously pursues the high-quality advancement of both higher and vocational education, facilitates the establishment of a nationally unified labor market through market-driven reforms of production factors, and elevates the overall level of human capital. Other developing economies facing institutional constraints can also draw lessons from this path to achieve synergistic improvements in human capital accumulation and market efficiency.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"102 ","pages":"Article 102101"},"PeriodicalIF":3.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737302","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
扫码关注我们
求助内容：
应助结果提醒方式：
京公网安备 11010802042870号