Pub Date : 2025-11-10DOI: 10.1016/j.jce.2025.10.003
Michael Bayerlein , Matthias Diermeier
In the past, the European Union was able to tame Euroscepticism through regional ‘convergence’ funding. Meanwhile, new member states became the largest recipients of EU funding, but shifted from being the most supportive of integration to showing the strongest opposition. Motivated by this puzzle, we revisit the relationship between ‘convergence’ funding and Euroscepticism. In contrast to utilitarian economic theory, our empirical analysis finds no general relationship between EU funding and support for the EU. Nevertheless, by accounting for successful post-funding convergence and awareness of EU funding, we identify under which conditions ‘convergence’ funding can tame Euroscepticism. Focusing on successfully converging regions after receiving EU funding, we uncover positive trends in EU unification preferences. Finally, we show that the EU is able to win support in Eastern Europe where people are more aware of EU investments. Rather than expanding its fiscal capacity, Brussels must focus on place-based ‘convergence’ funding that stimulates economic growth and is unambiguously associated with the EU.
{"title":"Exchanging money for love? A regional analysis of EU cohesion policy and Euroscepticism","authors":"Michael Bayerlein , Matthias Diermeier","doi":"10.1016/j.jce.2025.10.003","DOIUrl":"10.1016/j.jce.2025.10.003","url":null,"abstract":"<div><div>In the past, the European Union was able to tame Euroscepticism through regional ‘convergence’ funding. Meanwhile, new member states became the largest recipients of EU funding, but shifted from being the most supportive of integration to showing the strongest opposition. Motivated by this puzzle, we revisit the relationship between ‘convergence’ funding and Euroscepticism. In contrast to utilitarian economic theory, our empirical analysis finds no general relationship between EU funding and support for the EU. Nevertheless, by accounting for successful post-funding convergence and awareness of EU funding, we identify under which conditions ‘convergence’ funding can tame Euroscepticism. Focusing on successfully converging regions after receiving EU funding, we uncover positive trends in EU unification preferences. Finally, we show that the EU is able to win support in Eastern Europe where people are more aware of EU investments. Rather than expanding its fiscal capacity, Brussels must focus on place-based ‘convergence’ funding that stimulates economic growth and is unambiguously associated with the EU.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 1118-1132"},"PeriodicalIF":3.1,"publicationDate":"2025-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594639","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-12DOI: 10.1016/j.jce.2025.07.007
Basak Bayramoglu , Jean-François Jacques , Julie Lochard
The rise of global value chains (GVCs) in recent decades has induced significant changes in the geography of world production, with consequences for bilateral relations. What are the consequences of GVC-related bilateral trade for the allocation of bilateral foreign aid? Using data on bilateral aid from 22 donors to 127 recipient countries over 2000-2018, our findings, robust to endogeneity, show that a larger participation of the recipient country in GVCs increases the amount of aid allocated to that country. To rationalize these findings, we develop a theoretical model that provides a simple explanation for the existence of transfers among countries: foreign aid allows a donor country producing a final good to buy less expensive intermediate inputs from an upstream country. Overall, this suggests that donors allocate aid strategically to import inputs at a lower cost.
{"title":"Global value chains: Do they impact the allocation of foreign aid?","authors":"Basak Bayramoglu , Jean-François Jacques , Julie Lochard","doi":"10.1016/j.jce.2025.07.007","DOIUrl":"10.1016/j.jce.2025.07.007","url":null,"abstract":"<div><div>The rise of global value chains (GVCs) in recent decades has induced significant changes in the geography of world production, with consequences for bilateral relations. What are the consequences of GVC-related bilateral trade for the allocation of bilateral foreign aid? Using data on bilateral aid from 22 donors to 127 recipient countries over 2000-2018, our findings, robust to endogeneity, show that a larger participation of the recipient country in GVCs increases the amount of aid allocated to that country. To rationalize these findings, we develop a theoretical model that provides a simple explanation for the existence of transfers among countries: foreign aid allows a donor country producing a final good to buy less expensive intermediate inputs from an upstream country. Overall, this suggests that donors allocate aid strategically to import inputs at a lower cost.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 1001-1032"},"PeriodicalIF":3.1,"publicationDate":"2025-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594634","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-25DOI: 10.1016/j.jce.2025.07.001
Paul Castañeda Dower , Andrei Markevich
We analyze the 1917 Constituent Assembly elections – the only free universal elections in Russia before the 1990s – to estimate the effect of industrialization on the radicalization of the electorate in a late industrializing economy. Our empirical strategy exploits IV estimation based on the proximity of Carboniferous strata and other initial conditions of industrialization. We find that a larger share of industrial workers increases voting for the radical left, and the effect is stronger in places that exhibited more pronounced features of late industrialization. We also show that industrialization increases electoral polarization rather than simply shifting the electorate to the left.
{"title":"Did Industrialization increase support for the radical left? Evidence from the 1917 Russian revolution","authors":"Paul Castañeda Dower , Andrei Markevich","doi":"10.1016/j.jce.2025.07.001","DOIUrl":"10.1016/j.jce.2025.07.001","url":null,"abstract":"<div><div>We analyze the 1917 Constituent Assembly elections – the only free universal elections in Russia before the 1990s – to estimate the effect of industrialization on the radicalization of the electorate in a late industrializing economy. Our empirical strategy exploits IV estimation based on the proximity of Carboniferous strata and other initial conditions of industrialization. We find that a larger share of industrial workers increases voting for the radical left, and the effect is stronger in places that exhibited more pronounced features of late industrialization. We also show that industrialization increases electoral polarization rather than simply shifting the electorate to the left.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 884-915"},"PeriodicalIF":3.1,"publicationDate":"2025-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-19DOI: 10.1016/j.jce.2025.07.005
Soeren C. Schwuchow
We study a model of multidimensional politics in which voting decisions are shaped not only by voters’ preferences regarding redistribution but also by their identities. In our framework, which focus on nationalism, voters can trade material gains from redistribution for immaterial benefits from identity politics (i.e. more/less nationalism). Building on this widely accepted approach, we propose a novel channel for the transnational diffusion of identity politics. Specifically, we argue that changes in identity-related policies abroad can affect domestic voting behaviour through two mechanisms: First, by changing voters’ perceptions of the social acceptability of identities, and second, by changing the perceived relative benefits of adopting particular identities. Both mechanisms yield positive spillovers from foreign to domestic identity politics that originate from the domestic voters. Based on this approach, our model shows that temporary shocks (i.e. events that induce more/less domestic identity politics) can lead to permanent changes in the composition of the domestic society and thus in domestic identity politics. This result is driven by cultural rigidity when voters are able to intentionally adopt new identities. Such rigidity helps to stabilise the society by reducing extreme swings in societal identity composition, but also prevents voters from adopting individually optimal identities. Our model also highlights the influence of identity-based groups. Even without direct political influence, they can provide intrinsic benefits to members and consolidate group power, thereby becoming catalysts for future political influence. Finally, we discuss the implications of our findings for policy making, highlighting the role of access to information and education.
{"title":"Transnational diffusion of identity politics","authors":"Soeren C. Schwuchow","doi":"10.1016/j.jce.2025.07.005","DOIUrl":"10.1016/j.jce.2025.07.005","url":null,"abstract":"<div><div>We study a model of multidimensional politics in which voting decisions are shaped not only by voters’ preferences regarding redistribution but also by their identities. In our framework, which focus on nationalism, voters can trade material gains from redistribution for immaterial benefits from identity politics (i.e. more/less nationalism). Building on this widely accepted approach, we propose a novel channel for the transnational diffusion of identity politics. Specifically, we argue that changes in identity-related policies abroad can affect domestic voting behaviour through two mechanisms: First, by changing voters’ perceptions of the social acceptability of identities, and second, by changing the perceived relative benefits of adopting particular identities. Both mechanisms yield positive spillovers from foreign to domestic identity politics that originate from the domestic voters. Based on this approach, our model shows that temporary shocks (i.e. events that induce more/less domestic identity politics) can lead to permanent changes in the composition of the domestic society and thus in domestic identity politics. This result is driven by cultural rigidity when voters are able to intentionally adopt new identities. Such rigidity helps to stabilise the society by reducing extreme swings in societal identity composition, but also prevents voters from adopting individually optimal identities. Our model also highlights the influence of identity-based groups. Even without direct political influence, they can provide intrinsic benefits to members and consolidate group power, thereby becoming catalysts for future political influence. Finally, we discuss the implications of our findings for policy making, highlighting the role of access to information and education.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 1069-1091"},"PeriodicalIF":3.1,"publicationDate":"2025-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594637","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-14DOI: 10.1016/j.jce.2025.07.009
Cevat Giray Aksoy , Antonio Cabrales , Mathias Dolls , Ruben Durante , Lisa Windsteiger
We conduct a large-scale incentivized survey experiment in nine EU countries to study how priming common economic interests (EU trade), a shared identity (EU common values), and a major health crisis (COVID-19), influences altruism, reciprocity and trust of EU citizens. We find that the COVID-19 treatment increases altruism and reciprocity towards compatriots, as well as altruism towards citizens of other EU countries. The EU common values treatment has similar effects and in addition also boosts reciprocity towards fellow Europeans. The EU trade treatment has no tangible impact on behavior. Trust in others is not affected by any treatment. Our results suggest that both a shared identity and a shared crisis can have a unifying effect among EU citizens, while shared economic interests (alone) do not significantly affect European cohesion.
{"title":"Calamities, common interests, shared identity: What shapes social cohesion in Europe?","authors":"Cevat Giray Aksoy , Antonio Cabrales , Mathias Dolls , Ruben Durante , Lisa Windsteiger","doi":"10.1016/j.jce.2025.07.009","DOIUrl":"10.1016/j.jce.2025.07.009","url":null,"abstract":"<div><div>We conduct a large-scale incentivized survey experiment in nine EU countries to study how priming common economic interests (EU trade), a shared identity (EU common values), and a major health crisis (COVID-19), influences altruism, reciprocity and trust of EU citizens. We find that the COVID-19 treatment increases altruism and reciprocity towards compatriots, as well as altruism towards citizens of other EU countries. The EU common values treatment has similar effects and in addition also boosts reciprocity towards fellow Europeans. The EU trade treatment has no tangible impact on behavior. Trust in others is not affected by any treatment. Our results suggest that both a shared identity and a shared crisis can have a unifying effect among EU citizens, while shared economic interests (alone) do not significantly affect European cohesion.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 1049-1068"},"PeriodicalIF":3.1,"publicationDate":"2025-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594636","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-13DOI: 10.1016/j.jce.2025.07.006
Manuel Oechslin
With information-gathering devices like smartphones and drones proliferating, the likelihood that acts of government incompetence or wrongdoing leave relevant traces in the public domain steadily rises. The current paper proposes an applied game-theoretic model to explore how an incumbent politician with reelection concerns responds to this rise in open-source information. The analysis shows that an inherent aspect of the rise is a tendency towards heightened repression. In the model, if executive power is not sufficiently checked, the incumbent escalates hidden repression against free speech. Consequently, the electorate receives less, rather than more, information about the type of the incumbent – and the prospect of electoral defeat due to incompetence diminishes. The model’s predictions align with recent global trends in freedom of expression. The analysis stresses the rising importance of fortifying institutions that safeguard free speech and warns that international bodies like the European Union will be subject to growing centrifugal forces.
{"title":"Open-source information and repression","authors":"Manuel Oechslin","doi":"10.1016/j.jce.2025.07.006","DOIUrl":"10.1016/j.jce.2025.07.006","url":null,"abstract":"<div><div>With information-gathering devices like smartphones and drones proliferating, the likelihood that acts of government incompetence or wrongdoing leave relevant traces in the public domain steadily rises. The current paper proposes an applied game-theoretic model to explore how an incumbent politician with reelection concerns responds to this rise in open-source information. The analysis shows that an inherent aspect of the rise is a tendency towards heightened repression. In the model, if executive power is not sufficiently checked, the incumbent escalates hidden repression against free speech. Consequently, the electorate receives less, rather than more, information about the type of the incumbent – and the prospect of electoral defeat due to incompetence diminishes. The model’s predictions align with recent global trends in freedom of expression. The analysis stresses the rising importance of fortifying institutions that safeguard free speech and warns that international bodies like the European Union will be subject to growing centrifugal forces.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 1034-1048"},"PeriodicalIF":3.1,"publicationDate":"2025-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594635","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-11DOI: 10.1016/j.jce.2025.07.010
Seda Basihos
I study how the concentration of market power among a restricted set of corporates leads to a concentration of political power that ultimately undermines democracy. Despite being a topic of longstanding discussion, this type of mechanism lacks empirical confirmation or rejection. My paper addresses this gap by shedding light on two global trends: increasing aggregate markups and democratic backsliding. Using panel data covering 80 countries (1990–2019), I identify a negative relationship between market power and democracy. After correcting for potential endogeneity, counterfactual estimates reveal that around a quarter of the recent democratic decline can be attributed to the concentration of market power. A detailed firm-level analysis confirms that the democracy-weakening effect is driven by the increasing political influence of high-markup firms at the very top of the size distribution. The findings show that this concentration of power undermines democracy directly through institutional erosion—by increasing corruption in electoral processes and across multiple dimensions of democratic governance, such as policy-making, implementation, and regulation.
{"title":"(Market) power is (political) power! The pressure of declining competition on democracy","authors":"Seda Basihos","doi":"10.1016/j.jce.2025.07.010","DOIUrl":"10.1016/j.jce.2025.07.010","url":null,"abstract":"<div><div>I study how the concentration of market power among a restricted set of corporates leads to a concentration of political power that ultimately undermines democracy. Despite being a topic of longstanding discussion, this type of mechanism lacks empirical confirmation or rejection. My paper addresses this gap by shedding light on two global trends: increasing aggregate markups and democratic backsliding. Using panel data covering 80 countries (1990–2019), I identify a negative relationship between market power and democracy. After correcting for potential endogeneity, counterfactual estimates reveal that around a quarter of the recent democratic decline can be attributed to the concentration of market power. A detailed firm-level analysis confirms that the democracy-weakening effect is driven by the increasing political influence of high-markup firms at the very top of the size distribution. The findings show that this concentration of power undermines democracy directly through institutional erosion—by increasing corruption in electoral processes and across multiple dimensions of democratic governance, such as policy-making, implementation, and regulation.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 1092-1117"},"PeriodicalIF":3.1,"publicationDate":"2025-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594638","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-08DOI: 10.1016/j.jce.2025.07.004
Vimal Balasubramaniam , Apurav Yash Bhatiya , Sabyasachi Das
Voters participate in multiple elections across governance tiers, often on the same day. We investigate how synchronizing two salient elections influences voter behavior and electoral outcomes, leveraging variation in the timing of national and state elections in India. We find that synchronized elections, compared to closely timed but asynchronous elections, increase political parties’ salience among voters, boosting straight-ticket voting with a small increase in turnout. These effects result in a 21% higher probability of the same political party winning across tiers, without altering candidate composition. While synchronization significantly influences state government formation, it does not affect development outcomes. We provide suggestive evidence that voters’ cognitive constraints and increased party campaigning are likely mechanisms. A synchronized election design in decentralized democracies like India can therefore affect the relative importance of parties vis-a-vis candidates during elections and potentially shape the nature of political decentralization.
{"title":"Synchronized elections strengthen party salience: Evidence from a decentralized democracy","authors":"Vimal Balasubramaniam , Apurav Yash Bhatiya , Sabyasachi Das","doi":"10.1016/j.jce.2025.07.004","DOIUrl":"10.1016/j.jce.2025.07.004","url":null,"abstract":"<div><div>Voters participate in multiple elections across governance tiers, often on the same day. We investigate how synchronizing two salient elections influences voter behavior and electoral outcomes, leveraging variation in the timing of national and state elections in India. We find that synchronized elections, compared to closely timed but asynchronous elections, increase political parties’ salience among voters, boosting straight-ticket voting with a small increase in turnout. These effects result in a 21% higher probability of the same political party winning across tiers, without altering candidate composition. While synchronization significantly influences state government formation, it does not affect development outcomes. We provide suggestive evidence that voters’ cognitive constraints and increased party campaigning are likely mechanisms. A synchronized election design in decentralized democracies like India can therefore affect the relative importance of parties vis-a-vis candidates during elections and potentially shape the nature of political decentralization.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 916-936"},"PeriodicalIF":3.1,"publicationDate":"2025-08-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594630","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-06DOI: 10.1016/j.jce.2025.07.011
Gustavo Mellior
This paper analyses quantitatively the effect that higher education funding policies have on welfare and inequality. We evaluate five different higher education financing schemes with a heterogeneous agent model in continuous time. When educational costs are small, differences in outcomes across systems are negligible. As the cost of education and the share of debtors in society rises, it becomes preferable to fund education with subsidies, instead of student loans, as there is a pecuniary externality that arises with debt. Although subsidies can generate large steady state welfare gains, transition costs can be large enough to justify the status quo. The exception, full subsidy with graduate taxes, yields substantial welfare gains, even when taking into account transitional dynamics.
{"title":"Higher education funding, welfare and inequality in equilibrium","authors":"Gustavo Mellior","doi":"10.1016/j.jce.2025.07.011","DOIUrl":"10.1016/j.jce.2025.07.011","url":null,"abstract":"<div><div>This paper analyses quantitatively the effect that higher education funding policies have on welfare and inequality. We evaluate five different higher education financing schemes with a heterogeneous agent model in continuous time. When educational costs are small, differences in outcomes across systems are negligible. As the cost of education and the share of debtors in society rises, it becomes preferable to fund education with subsidies, instead of student loans, as there is a pecuniary externality that arises with debt. Although subsidies can generate large steady state welfare gains, transition costs can be large enough to justify the status quo. The exception, full subsidy with graduate taxes, yields substantial welfare gains, even when taking into account transitional dynamics.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 1133-1172"},"PeriodicalIF":3.1,"publicationDate":"2025-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594640","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-31DOI: 10.1016/j.jce.2025.07.002
Zibin Huang , Yinan Liu , Mingming Ma , Leo Yang Yang
Shadow education in China is a significant social issue and a leading factor in exacerbating education inequality that fosters over-competition. In July 2021, the Chinese government implemented the Double Reduction Policy, which banned for-profit academic private tutoring. We estimate the economic consequences of this policy on the education industry in China by employing two novel datasets containing online job postings and firm registration information. We find that within four months after the policy implementation, online job postings for tutoring-related firms decreased by 89%, tutoring-related firm entries decreased by 50%, and their exits tripled. Cities with 10,000 (2%) more children lost 50 (2.2%) more education-related job opportunities, experienced 0.4 (2.8%) fewer firm entries, and 0.03 (0.8%) more firm exits per month. Surprisingly, not only academic tutoring firms were impacted, but also untargeted businesses involving in arts and sports tutoring were heavily struck, although they were encouraged by the policy to promote children’s non-academic ability. This negative spillover can be partly explained by the interconnected ownership structure among academic and non-academic tutoring firms. Back-of-the-envelope calculations show that this policy led to 3 million job losses in four months and at least 11 billion RMB Value Added Tax losses in 18 months nationally.
{"title":"Biting the hand that teaches: Unraveling the economic impact of banning private tutoring in China","authors":"Zibin Huang , Yinan Liu , Mingming Ma , Leo Yang Yang","doi":"10.1016/j.jce.2025.07.002","DOIUrl":"10.1016/j.jce.2025.07.002","url":null,"abstract":"<div><div>Shadow education in China is a significant social issue and a leading factor in exacerbating education inequality that fosters over-competition. In July 2021, the Chinese government implemented the Double Reduction Policy, which banned for-profit academic private tutoring. We estimate the economic consequences of this policy on the education industry in China by employing two novel datasets containing online job postings and firm registration information. We find that within four months after the policy implementation, online job postings for tutoring-related firms decreased by 89%, tutoring-related firm entries decreased by 50%, and their exits tripled. Cities with 10,000 (2%) more children lost 50 (2.2%) more education-related job opportunities, experienced 0.4 (2.8%) fewer firm entries, and 0.03 (0.8%) more firm exits per month. Surprisingly, not only academic tutoring firms were impacted, but also untargeted businesses involving in arts and sports tutoring were heavily struck, although they were encouraged by the policy to promote children’s non-academic ability. This negative spillover can be partly explained by the interconnected ownership structure among academic and non-academic tutoring firms. Back-of-the-envelope calculations show that this policy led to 3 million job losses in four months and at least 11 billion RMB Value Added Tax losses in 18 months nationally.</div></div>","PeriodicalId":48183,"journal":{"name":"Journal of Comparative Economics","volume":"53 4","pages":"Pages 954-976"},"PeriodicalIF":3.1,"publicationDate":"2025-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145594632","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}