ABSTRACT The study aims to examine the economic and social impacts of oil subsidy reduction in Tunisia. The study uses the Tunisian social accounting matrix for a dynamic general equilibrium model. It then simulates a 27% drop in the oil refining subsidies and records the impact on GDP, private consumption, sectoral value‐added, and investment. The findings confirm a decline in GDP and household consumption, which diminishes in the following periods. The investment also exhibits a decline, which further falls sharply in the second period but stabilizes in the following periods. Exports and imports undergo a sharp decline initially but then trend towards stabilization, resulting in a modest cumulative increase in exports and cumulative decrease in imports over the five‐year horizon. The study also confirms that the subsidy reduction in the oil sector spills over to all economic sectors. However, the initial sharp increase in value‐added tends to reduce and move towards adjustments. The study contributes to the current literature in two ways. Methodologically, it employs a recursive‐dynamic CGE model integrated with an investment accelerator, calibrated to a current, disaggregated 2017 social accounting matrix for Tunisia. Empirically, it focuses on a specific reduction in oil‐refining subsidies rather than comprehensive fuel‐price adjustments, facilitating a thorough evaluation of both macroeconomic and sectoral adjustment trajectories. The findings suggest that policymakers should utilize various fiscal and monetary policy tools and reduce oil subsidies to facilitate a smooth transition for sectors and stabilize demand and prices.
ABSTRACT Driven by rapid population aging, declining family care, and a stark urban–rural pension gap, China's rural elderly households face a high risk of disability‐induced poverty. This study evaluates the net effect of China's pilot Long‐Term Care Insurance (LTCI) on this risk. Using 2011–2020 panel data from the China Health and Retirement Longitudinal Study (CHARLS), we employ a Propensity Score Matching (PSM) and Difference‐in‐Differences (PSM‐DID) model. The results show that LTCI significantly reduces poverty vulnerability among rural elderly households, a finding robust to various sensitivity checks, including a double machine learning (DML) approach. This effect operates by alleviating medical burdens, improving physical and psychological health, and relieving the dual constraints of intergenerational caregiving time and financial support. Heterogeneity analysis reveals that the policy's benefits are most pronounced for the most vulnerable groups, including those with lower income, advanced age, lower cognitive ability, poorer health, less education, and smaller household sizes, underscoring its role as a targeted safety net. China's experience demonstrates that LTCI is an effective institutional tool for mitigating rural poverty vulnerability, offering a valuable blueprint for other developing countries.
ABSTRACT This paper examines the impact of rising temperature on rural household expenditure in Colombia by combining high‐resolution gridded weather data with a rich longitudinal household survey. Our results show that a one‐standard‐deviation increase in average daily temperature during the rainy months significantly reduces rural household expenditure by approximately 13%. Using highly granular satellite imagery, farmers' self‐reported shock data, and local crop yields, we establish that crop losses mediate the effect of temperature on expenditure. Our analysis indicates that although rural households respond to these shocks by engaging in non‐agricultural work and selling livestock, these responses are insufficient to offset temperature‐induced income losses fully. We show that this is attributable to households' limited access to alternative risk‐coping mechanisms. Furthermore, we find that wealth and rainfall can play a crucial role in mitigating the adverse effects of temperature rise. Our estimates are robust across various specifications, alternative definitions of temperature change, and alternative weather datasets.
ABSTRACT The study analyzes the response of disaggregated level foreign direct investment (FDI) and financial structure on the CO 2 intensity of 30 high energy‐consuming OECD countries. To this end, the study applies the Method of Moment Quantile Regression (MMQR) to the data between 2013 and 2021, and the results revealed that aggregated FDI enhances CO 2 intensity, while the results vary at disaggregated levels. For example, FDI in the agriculture, forestry, and fishing sector increases CO 2 intensity, FDI in the services sector has an insignificant impact on CO 2 intensity, whereas construction, mining and quarrying, electricity and gas, finance and insurance, and manufacturing sectors curb CO 2 intensity. The coefficients between financial structure and CO 2 intensity are also positive and significant at different quantiles of the model, suggesting that a high percentage of financial expansion is associated with excessive carbon intensity. The results are re‐verified by changing quantiles, using another proxy for CO 2 , and applying a heterogeneous estimator (IVGMM).
ABSTRACT We develop a tractable general equilibrium model to quantify the long‐run aggregate productivity gains from adjusting the public‐sector premium and the size of the public sector to their productivity‐maximizing levels. The model incorporates an endogenous choice between market and non‐market activities for women. We calibrate the model to the Arab Republic of Egypt, a country with a disproportionately large share of workers, especially women, in public employment. Conditional on an elasticity of private output with respect to public goods of 0.1, we find that lowering the average public‐sector premium from 22% to its productivity‐maximizing level of 13%, and thereby reducing the public‐sector employment share, generates long‐run gains of 12% in output per worker and 8% in TFP. Notably, a reduced female public‐sector premium fosters greater female labor force participation in market activities: female entrepreneurship rises from 16% to 20%, increasing the demand for production labor and driving wages up, while the share of women in home production falls from 52% to 29%.
ABSTRACT This study investigates the link between Global Value Chain (GVC), Digital Adoption Index, and Green Transformation Index across 89 Belt and Road (B&R) countries during 2004–2019. The study employs a multi‐regional input–output framework and the System Generalized Method of Moments test to empirically examine the differential influences of GVCs Position Index (GVCs‐PI), forward and backward GVCs modes on digital and green outcomes and controlling for reverse causality and endogeneity. The study revealed that upgrading the GVCs‐PI fosters the Digital Adoption Index and Green Transformation Index. Considering GVCs heterogeneity, forward GVCs positively affect digital adoption and green transformation, particularly in higher‐income economies. In contrast, backward GVCs participation is negatively linked with digital growth and green transformation outcomes, especially in emerging and developing economies. These findings are indicative of the perils of technological and environmental lock‐in for economies that have participated in GVCs without upgrading their positions. The study contributes to the current literature on ICT, Resources‐Based‐View and Transaction‐Cost‐Economics by offering economy‐specific policy implications, such as targeted investment in digital infrastructures, green and clean technologies transfer programs, and Research and Development incentives that foster sustainable growth in B&R initiative.
ABSTRACT Measuring inequality of financial opportunity is important for understanding disparities in financial resource allocation and their fairness implications. This study employs machine learning techniques to deliver a data‐driven assessment of financial opportunity inequality in China. The findings show that, based on conditional inference forest estimates, the inequality of opportunity is 0.359 in financial breadth, 0.478 in core financial depth, and 0.623 in comprehensive financial depth. In addition, FIOP follows a life‐cycle pattern, peaking at middle age and declining in later life. Opportunity tree analysis identifies mother's education, father's education, and household registration type as the primary factors for financial breadth, core financial depth, and comprehensive financial depth, respectively. Specifically, individuals with lower parental education levels and agricultural household registration face the greatest barriers to accessing financial resources.
This study examines men's attitudes toward women's education in Afghanistan across primary, secondary, and tertiary levels, as well as women pursuing studies in other provinces or abroad. Using nationally representative repeated cross-sectional survey data from over 69,000 respondents collected by the Asia Foundation (2014-2021) across all 34 provinces, we apply multivariate regression analysis to assess attitudinal patterns. We find that men's attitudes are largely negative, particularly in rural areas. Women's financial contributions to their households are significantly associated with more supportive attitudes toward women's education, particularly at the secondary and tertiary levels, and when studying outside their home province. Perceived insecurity exacerbates negative attitudes, though this effect is less pronounced when women contribute financially. These findings highlight the role of economic empowerment in reshaping gender norms and advancing educational equity in Afghanistan. Our results are robust across multiple sensitivity checks and alternative specifications.
Climate change is reshaping economic opportunities, yet researchers still understand little about its gendered consequences, especially for women entrepreneurs operating in climate-sensitive and resource-constrained environments. Building on this logic, this study investigates how climate vulnerability (CVI) affects female entrepreneurship (FEP) and whether banking sector development (BSD) can offset these adverse effects. The analysis employs panel data for South and Southeast Asian economies over the period of 1995 to 2023. The empirical analysis was conducted using the cross-sectionally augmented ARDL (CS-ARDL) model and robustness was verified through FMOLS. The results show that CVI constrains female entrepreneurial activity by increasing economic uncertainty, disrupting local markets, and intensifying household and care burdens on women. In contrast, stronger BSD supports FEP by easing financing constraints and enabling adaptive responses to shocks. Notably, BSD moderates the adverse effects of climate exposure, allowing women entrepreneurs to adjust, rebuild, and sustain business activities in climate-stressed environments. By highlighting the climate-gender-finance nexus, the study emphasizes that climate risks can widen gender gaps in economic participation if institutional buffers are weak. Therefore, strengthening financial and governance structures can contribute to social inclusion, livelihood stability, and women's economic empowerment under climate stress. Practically, the findings suggest that climate adaptation policies should be integrated with financial inclusion strategies for women. For this, expanding access to credit, resilience-oriented financial products, and digital banking can help women entrepreneurs cope with environmental shocks and maintain productive engagement in the economy. This study contributes novel evidence by jointly examining CVI and BSD in shaping FEP within a unified moderation framework.
Improving grain productivity is critical to food security in developing economies facing tightening resource and environmental constraints. Yet productivity gains remain uneven across regions and cannot be accounted for by farm-level scale expansion alone. Using nationally representative panel data on Chinese maize-farming households from 2012 to 2021, this study examines whether village-level specialised maize cultivation (VSMC) is associated with household-level maize total factor productivity (HMTFP). We find that VSMC is positively and robustly related to HMTFP. Additional evidence is consistent with the view that this relationship operates through a village-level knowledge-heterogeneous labour pool: productivity is higher in villages with larger maize labour pools, and the estimated association is stronger where those labour pools have greater explicit-knowledge intensity. Because these mechanism measures proxy the conditions for knowledge exchange rather than knowledge flows themselves, the mechanism evidence should be interpreted as suggestive rather than definitive. The productivity gains associated with VSMC are also larger among initially less efficient farmers and in digitally connected or topographically constrained areas, but are not evident in ecologically fragile regions. Overall, the findings highlight the importance of village-level production organisation and local conditions in shaping agricultural productivity.
Trade liberalization generates efficiency gains but can expose rural households in specialized cash-crop regions to import competition and income volatility. This paper examines how Brazilian sugar import shock affects production, income, and consumption among rural households in China's major sugarcane-producing regions. Using a panel of rural households from these regions over 2007-2015 and a shift-share research design based on baseline sugarcane production shares, the analysis documents that greater exposure to Brazilian sugar imports leads to sizable reductions in sugarcane participation, output, and farm earnings at the regional household level. By contrast, estimated effects on total household income and consumption for all rural households in sugarcane-producing regions are small and statistically imprecise, suggesting that trade-induced losses in sugarcane activities do not translate one-for-one into declines in overall living standards. Mechanism results indicate that households respond through a combination of crop diversification into alternative cash crops, reallocation of labor from agriculture to local and off-farm non-agricultural work, and balance-sheet adjustments that draw down cash, bank deposits, and productive fixed assets, with some evidence of increased borrowing. These findings imply that rural households in exposed regions smooth income and consumption in the short run by actively adjusting production, labor, and financial portfolios, but at the cost of depleting buffers that may heighten vulnerability to future shocks.
ABSTRACT This article analyzes the effect of the structure of bank credit on the balance of payments in the WAEMU over the period 1997–2023. By using an error correction model estimated through the Pooled Mean Group method, the study distinguishes between short‐ and long‐term effects. The results show that, in the short term, the structure of bank credit has no significant effect on the balance of payments. In contrast, in the long term, an increase in credit granted to the primary, secondary, or tertiary sectors contributes to a deficit in the balance of payments, reflecting the strong dependence of the region's economies on imports, even when credit finances productive sectors. These findings indicate that the structure of bank credit influences the external balance. From a policy standpoint, the issue is not to increase the overall volume of credit, but rather to promote a more strategic allocation. Monetary authorities and banks should prioritize activities with strong local content, capable of reducing import needs and diversifying exports, particularly agro‐industrial value chains, light manufacturing industries, and renewable energies, thus transforming bank credit into a lever for external competitiveness and the sustainable reduction of external imbalances.
This paper builds general equilibrium models to explore the influence of capital tax competition on the disparity between skilled and unskilled wages. In an ideal labor market scenario, as competition among jurisdictions intensifies, the capital tax rate decreases, resulting in wage growth. The direction of inequality, however, depends on the relative capital intensities across different sectors. Additionally, this paper incorporates the impact of labor market frictions through informality and minimum wage policies. The situations of regime switching, rural-urban migration, and a dynamic modeling framework are also taken into consideration. The main findings are contingent upon the capital intensities specific to each sector and the frictions inherent in the labor market. Besides, the empirical results using panel data in China from 2010 to 2019 and the results from numerical simulations strongly testify to our findings predicted by the theoretical models. The analysis reveals the bidirectional relationship between tax competition and inequality, highlighting the nuanced implications that arise when taking labor market dynamics into account alongside the traditional tax competition literature. By examining the intersection between capital and labor markets within the context of tax competition, this paper provides novel insights into the dynamics of inequality.
Artificial intelligence (AI) is reshaping labor markets at an unprecedented pace. Existing studies on the impact of AI on labor markets primarily focus on extensive margin effects, while its influence on intensive margin labor remains underexplored. This study empirically examines the effect of AI exposure on work intensity in Chinese publicly listed firms by integrating satellite nighttime lights, firm employee occupational structures, and occupation-level AI exposure data. The results show that AI exposure significantly increases firm work intensity. This finding remains robust after using an instrumental variable approach constructed from AI patent text analysis. Substitution effects, complementarity effects, and adjustment frictions are potential channels through which AI raises firm work intensity. Heterogeneity analysis shows that the above effect is more pronounced in non-state-owned enterprises, industries with more intense market competition, service-sector firms, settings with weaker labor bargaining power, and regions with higher labor market segmentation. This study not only uncovers the complex impact of technological progress on work intensity but also provides important policy implications for building fairer and more sustainable labor relations in the AI era.
A persistent disparity has been observed in the social and economic development of women, particularly evident in South Asia's lower female labor force participation. This study investigates how mobile phone ownership helps overcome this challenge. Using an instrumental variable approach and nationally representative household panel data from rural Bangladesh, this study finds robust evidence that the women's mobile phone ownership significantly increases their off-farm income. The income increase can be attributed to an enhancement in their probability of off-farm employment. Moreover, the findings demonstrate that the benefits of mobile phone ownership are distributed similarly across age, wealth, and remoteness to towns. However, educated women can better leverage mobile phone ownership for higher off-farm income via salaried off-farm employment. The findings underscore that developing economies should promote the digital accessibility and digital literacy of disadvantaged groups to improve their well-being.
China's pilot free trade zones (PFTZs) in various cities represent a form of institutional trade openness. This paper employs the staggered establishment of PFTZs as a quasi-natural experiment to investigate the impact of such zones on urban per capita consumption. The empirical results show that per capita consumption is significantly lower in PFTZ cities than in non-PFTZ cities. This negative effect operates through rising housing prices and declining wage income, both of which suppress urban consumption. Furthermore, heterogeneity in geographical locations and institutional innovation levels can account for the divergent consumption effects across cities. By documenting the unintended negative consequences of PFTZs on urban consumption in developing economies, this paper enriches the literature on institutional trade openness.
Whether favorable population structures can be translated into sustained demographic dividends remains uncertain and context dependent. Using panel data for BRICS from 1990 to 2022, this study develops a demographic-economic dual system framework to examine how population opportunity and economic conditions jointly shape demographic dividend outcomes. We construct a composite Demographic Dividend Index (DDI) using a combined CRITIC-entropy weighting method. The results reveal substantial cross-country heterogeneity and dynamic adjustment patterns. China and Brazil maintain relatively high demographic dividends despite population aging, reflecting strong economic absorption capacity, whereas India fails to fully realize its demographic potential due to persistent labor market constraints. Russia's recent improvement appears policy-driven and fragile, while South Africa remains trapped in a low-level demographic-economic equilibrium. A typological analysis further identifies distinct transition paths and sustainability challenges across countries. Overall, the findings indicate that demographic dividends are conditional on economic structure and policy coordination, underscoring the importance of targeted labor market, industrial, and human capital policies in emerging economies.
This article examines the causal impact of educational attainment on natives' attitudes toward internal migrants in China, a question central to understanding the social foundations of integration in rapidly urbanizing societies. Using nationally representative data from the China Migrants Dynamic Survey (CMDS), we find that higher education significantly improves natives' perceptions and behaviors toward migrants, fostering more inclusive social environments. To address endogeneity, we implement a regression discontinuity design (RDD) that exploits exogenous variation from the 1986 Compulsory Education Law. The results reveal a robust positive effect of education on pro-migrant attitudes. We identify multiple underlying mechanisms, including improved Mandarin proficiency, reduced perceived job competition, greater interpersonal trust, enhanced mental well-being, and increased recognition of migrants' contributions to local development. Notably, the language and cultural channel serves as the primary mechanism in explaining this effect. These effects are more pronounced in cities with larger migrant populations and in regions experiencing economic shocks. Our findings underscore the role of human capital development in shaping social attitudes and highlight education policy as a strategic lever for strengthening social cohesion and promoting migrant integration in urban China.
In this paper, we examine the causal effects of ICT-aided learning on non-farm employment based on the implementation of the "Modern Distance Education Program" (MDEP) in rural China. By leveraging the heterogenous timing of MDEP introduction at the county level, we find that ICT-aided learning increases non-farm employment by 14.1%. The positive effects remain stable across cohorts after 2 years of exposure. Notably, individuals with limited educational resources, insufficient family support, and potential exposure to gender discrimination gained advantages in non-farm employment, highlighting MDEP's role in advancing educational equity. The new non-farm jobs were characterized by reduced unemployment risk, improved job autonomy, and low work pressure, while the economic returns barely increased. Mechanism tests reveal that the improvement of ICT-related skills outweighs that of academic skills, indicating the unintended consequence of educational technology adoption on cognition formation in the context of China.
Industrialization remains a crucial strategy for structural transformation in Sub-Saharan Africa (SSA), yet progress has been hindered by persistent constraints. This paper evaluates the effects of remittances and human capital on industrialization across 35 SSA countries over the period 2010-2021. We employ the Feasible Generalized Least Squares (FGLS) and Driscoll-Kraay Standard Errors (DKSE) estimators to account for interdependence and serial correlation; the System Generalized Method of Moments (System GMM) to mitigate reverse causality; and Method of Moments Quantile Regression (MMQR) to assess effects across the spectrum of industrial development. The results robustly show that remittances and human capital are both individually significant drivers of industrialization and are complementary. Remittances supply the financial capital needed for investment and expansion, while human capital provides the skilled labor essential for operating and managing modern industrial systems. Their interaction is positive and statistically significant across all estimation techniques, indicating that the industrializing effect of remittances is amplified in environments with higher human capital and vice versa. These findings suggest the need to devise strategies to bolster remittances and invest massively in human capital for improved industrial development in SSA.
