Journal of Comparative Economics最新文献

This paper studies the effect of foreign direct investment (FDI) on industrial agglomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI affects industrial agglomeration negatively. As FDI brings technological spillovers and various agglomeration benefits, other forces must be at work to drive this empirical finding. We propose a simple theory that FDI may discourage industrial agglomeration due to fiercer competition pressure. We find various evidence of this competition mechanism. We also find that FDI deregulation is conducive to industrial growth, but the dispersion induced by FDI deregulation reduces the positive effect of FDI on the growth rate by 8 to 14%.

This paper examines how far an increase in the intangible capital-to-output ratio contributes to changes in labour share. We focus on a selection of OECD countries using industry-level data from 1995 to 2017. We show that the relationship between intangible capital and labour share is heterogeneous, and whether it is positive or negative depends on the types of intangibles and the growth regime of the national economy. In the Nordic countries, whose growth regimes balance domestic demand and exports of high-value services, the net effect of intangible capital on the labour share is tiny but positive. In contrast, it is negative for countries with high-quality manufacturing exporting sectors, such as Germany, Belgium and Austria. The evidence suggests that there are counteracting impacts in the USA and the UK, although the net effect is positive. We examine the bidirectional causality between the labour share and intangibles, showing that those behave as gross complements in the Nordic countries and as gross substitutes in the high-quality manufacturing export-led regimes; in the rest of the regimes, it depends on the asset.

Environmental regulations have both bright and dark consequences, and understanding the dark side is critical for policymakers. This paper investigates whether and how environmental regulation exacerbates the wage inequality between skilled and unskilled labor. Employing a triple difference-in-differences (DDD) estimation method on Chinese urban household survey data, we find a 1.7% increase in the wage gap after the implementation of a regional-specific environmental regulation. We show that the enlarged wage gap is mainly due to the intensive margin’s change and is dominated by the polluting sector rather than the non-polluting one. More importantly, the unappealing effect on wage inequality lasts in the long run and is not China-specific, according to our numerical simulation of a general equilibrium model. Finally, we also propose a non-environmental policy instrument to alleviate the negative impact. Overall, our work highlights that environmental regulation may have an unintended wage inequality cost, and our study is of generic policy implications to other economies.

This paper empirically analyzes whether television (TV) can influence individuals’ decisions to start businesses. To identify TV's effects, we rely on a unique quasi-natural experiment related to the division of Germany after WWII until 1990 into West Germany with a free market economy and the socialist East Germany where starting one's own business was not permitted. Despite this division, Western TV was exogeneously available since the 1960s in some, but not all East German regions and conveyed images and attitudes conducive to entrepreneurship. We use both regional-level and geo-referenced individual-level data and show that since starting a business in East Germany became possible thanks to the reunification in 1990, entrepreneurship incidence is higher in East German regions that had Western TV signal. This indicates a first-order effect on directly exposed individuals. We show that this is due to the effects of Western TV on attitudes and value orientations associated with entrepreneurship, particularly independence. We find no indication that the differences in the entrpreneurship incidence of East German regions with and without Western TV disappear. Instead, we find that successive cohorts and descendants of directly exposed individuals who were not directly exposed themselves more frequently wish to become entrepreneurs. The latter findings are consistent with second-order effects due to intergenerational transmission of an entrepreneurial mindset and suggest that a self-sustaining entrepreneurial culture can be formed. This can cause long-lasting differences between treated and non-treated population groups or regions.

This paper evaluates the worker-level effects of a historically large and permanent increase in the minimum wage in Lithuania. Our identification strategy leverages variation in workers’ exposure to the new minimum wage, and exploits the fact that there has been no increase in the minimum wage in previous years, to account for heterogeneous labor market prospects of low-wage workers relative to high-wage workers. Using detailed administrative records to track workers before and after the policy change, we show that the minimum wage hike significantly increased the earnings of low-wage workers. This direct effect was amplified by wage spillovers reaching the median of the pre-policy income distribution. Overall, we find no negative effects on the employment prospects of low-wage workers. However, we provide suggestive evidence that young workers, highly exposed municipalities, and tradable sectors may be more negatively affected. In contrast, labor market concentration or the presence of envelope wages appear to be associated with lower job losses. Taken together, our findings imply an employment elasticity with respect to the minimum wage of −0.021, and an own-wage elasticity of −0.033, suggesting that wage gains dominated employment losses.

This study provides empirical evidence for the joint workings of property rights and contracting institutions as fundamental causes of growth. In a two-step panel estimation procedure that uses data from 130 countries over the period 2005–2015, I find that the income effects of legal reforms in property rights institutions vary with the prevalent quality of legal contracting institutions and vice versa. Decomposing the interaction effects for groups of countries with different quality combinations reveals that the quality fit of the two types of institutions matters for not only the size but also the direction of the interaction effects. In countries with absent or bad legal institutions, legal reforms considering only one type can even reduce income. Piecemeal reforms work best when they close quality gaps and they can backfire when the gap widens. The findings remain robust after tackling endogeneity issues, extending the period of analysis, estimating alternative models, and using alternative estimators. The findings imply that legal reforms have to be coordinated across different types of institutions and consider possible interferences with extra-legal rules and practices.

We examine why rational voters support risky “policy gambles” over a safe status quo, even when such policies are detrimental to welfare. In a model of electoral competition, investors finance domestic projects in exchange for a stake in future output, while voters receive the remaining output. Government policy influences the riskiness of projects’ output. However, when investors invest, the incumbent cannot pre-commit to retain the status quo policy into the future. Instead, future policy is determined subsequently in an election where voters can increase their expected output by voting for policy gambles. Our analysis highlights how investors’ self-fulfilling beliefs interact with the distribution of output in abandoning the status quo. We argue that institutions that foster political consensus can eliminate the gamble equilibrium and raise welfare.

Economic and sociological research that touches upon the determinants of alcohol consumption is mostly centered on the traditional factors of human capital (e.g., education). While much attention is given to education as a valid instrument to reduce alcohol misuse, less is given to the impact of non-cognitive skills. Data are collected from a nationally representative Russian panel survey, 2016–2018. We estimate a random-effects probit model for the probability of abstinence and a random-effects tobit model with a Heckman correction for the volume of alcohol consumption. Non-cognitive skills are consistent predictors of drinking in Russia. In both genders, conscientiousness and extraversion have strong connections to the probability and the volume of alcohol consumption, while openness to experience and neuroticism only affect the volume. The estimates for education differ substantially when the Big Five variables are excluded from the model, which suggests that a major part of the effect of education on alcohol consumption patterns may be mediated through non-cognitive skills. Although educational interventions are often seen as a method of solving excessive drinking problems, introducing personality traits into the analysis raises the question of the effectiveness of such interventions.

A growing literature connects labor market hardships to stronger preferences for government welfare and redistribution programs. Potential preference shifts with respect to other types of state involvement in the economy, however, have gone unexplored. We draw on both longitudinal and pseudo-panel data from Russia to explore how labor market hardships relate to preferences for public sector employment and employers. In fixed effects specifications, we demonstrate that recent feelings of job insecurity, experiences with wage arrears, and spells of unemployment all increase the attractiveness of work in the public sector. Pseudo-panel data provide evidence that labor market hardships, particularly when experienced at times of economic crisis and social upheaval, can shape preferences over the longer run.