Based on knowledge combination theory, we explore the effect of the U.S. Entity List on firm breakthrough innovation, using a research sample of Chinese A-share listed firms from 2013 to 2022. Our findings reveal that the U.S. Entity List significantly inhibits these firms' breakthrough innovation. The U.S. Entity List lowers knowledge breadth while enhancing knowledge depth. However, as the impact of knowledge breadth on breakthrough innovation outweighs that of knowledge depth, the U.S. Entity List ultimately inhibits firm breakthrough innovation. Government innovation subsidies and supply chain integration capabilities of firms mitigate the negative effect of the U.S. Entity List on breakthrough innovation. Additionally, we find that the negative effect of the U.S. Entity List on breakthrough innovation is stronger in technology-intensive, regulated, and competitive industries.
Using a randomized controlled trial across 31 rural junior high schools in China, this study examines the spillover effects of providing free eyeglasses to myopic students on the visual health of their non-myopic peers. Within one school year, the intervention significantly reduced visual deterioration among non-myopic students by 0.48 lines and lowered new myopia incidence by 10 percentage points (a 24.3% decline), while also improving eye-use behaviors. These spillovers cannot be explained by conventional interaction-based or shared environmental mechanisms typically emphasized in non-infectious health interventions. Instead, they are more consistent with observational social learning: non-myopic students observe peers being diagnosed with myopia and required to wear eyeglasses, which increases their awareness of vision risks, updates their risk perceptions, and shapes their attitudes toward eyeglasses, thereby prompting protective behavioral changes. This mechanism extends positive spillover effects beyond context-specific interventions (e.g., infectious diseases) to a broader range of health interventions, and offers new insights into the prevention of non-infectious conditions such as myopia.
Studies about climate change effects on service industries in developing countries are limited. Using data from daily flights among 211 Chinese airports (2015-2017), this paper investigates the causal impacts of extreme temperatures on aviation service quality, measured by flight delays. We find that extreme low temperatures significantly increase flight delays, with additional exposure causing longer departure delays, arrival delays, and excessive travel time. Conversely, extreme high temperatures have limited effects or even improve punctuality. This discrepancy arises primarily from differing meteorological disruptions and distinct market-driven airline operational adjustments in response to cold versus hot weather conditions. Low temperatures (< 0 degrees C) impose significant social costs averaging around 0.1% of each city's GDP while reduction in arrival delays due to high temperatures (>20 degrees C) yields average monetary gains equivalent to about 0.04% of local GDP.
Drawing on U.S. global trade data from 2015 to 2023, this study empirically examines the impact of the "friend-shoring" policy on semiconductor supply chain dynamics. The analysis reveals that a one-standard-deviation improvement in bilateral political relations is associated with a 0.28 percentage point increase in the U.S. import share of semiconductors from politically aligned countries. Supply chain realignment shows considerable heterogeneity: trade in raw materials and finished components has shifted toward politically aligned partners, whereas manufacturing equipment shows weaker responsiveness due to efficiency considerations and supply-side constraints. The policy has introduced a "security premium" in import prices, especially for manufacturing equipment and imports from upper-middle-income politically aligned partners. Despite U.S. efforts to reduce dependence on China, products with high reliance on Chinese sources show no substantial disruption. Moreover, allied countries have not experienced a significant increase in their export shares to the U.S. market, while China's semiconductor exports to U.S. allies have continued to expand. These findings indicate that the friend-shoring has led to only limited restructuring within semiconductor supply chains and has not materially altered existing dependency patterns.
Government procurement is a key demand-side policy tool for state intervention in the economy, as it not only directly influences micro-corporate decision making but also shapes regional industry dynamics. Nevertheless, its industry-level impacts remain underexplored. This study adopts the perspective of firm entry and exits to investigate how government procurement shapes regional industry dynamics. We find that government procurement significantly increases the entry of new firms in regional industries while also promoting firm exit. A series of robustness tests and IV-based causal identification demonstrate the reliability of the result. Mechanism analysis reveals that, on the one hand, by raising the proportion of contracts awarded to local firms, government procurement sends a policy signal of supporting local industry, thereby encouraging both entry and exit. On the other hand, by prefer small and medium-sized enterprises (SME), it enhances market competition and stimulates firm entry and exit. Further analysis shows that: first, government procurement also generates supply-chain spillover effects, extending its influence to upstream and downstream industries; second, the distribution of procurement contracts among firms within an industry moderates the impact of procurement; third, the impact of government procurement on the entry and exit of enterprises ultimately enhances the industry's innovation capability; and finally, the effect of government procurement on firm entry and exit is stronger in regions with a better business environment. This study provides policy insights for optimizing government procurement policies to promote regional industrial development.
This paper investigates the impact of extreme heat on household consumption using data from the 2013-2019 China Household Finance Survey. We find that extreme heat significantly suppresses total consumption, where each additional day of extreme high temperature leads to a 0.20% decline in total expenditures. This effect is more pronounced among rural, high-dependency-ratio, and credit-constrained households. Mechanism analyses reveal that extreme heat operates through two distinct channels: an income channel, whereby agricultural and labor earnings are reduced, and a risk channel, characterized by heightened risk aversion and increased precautionary savings. Crucially, we document a systematic budget reallocation within the household consumption basket. While subsistence spending remains rigid, defensive expenditures on healthcare and communication significantly increase, forcing households to sharply curtail discretionary and hedonic spending on entertainment, durables, tourism, and luxuries. These findings highlight how climate shocks degrade quality of life by shifting resources from welfareenhancing to survival-oriented necessities.
Historical institutions shape culture, which continues to influence the present. In traditional China, clans-an alternative to litigation for resolving disputes-have shaped a culture of litigation aversion that persists today and affects litigation choices in China. The empirical results show that the prosperity of clans throughout history has led to significant litigation aversion in civil dispute resolution, mainly owing to the persistence of norms and beliefs of harmony and renqing, among other factors, influencing the demand for legal litigation. This study contributes to a deeper understanding of the legal culture that prevails in East Asia and Africa.
Conventional wisdom holds that environmental regulation directly spurs innovation within polluting firms, enabling them to comply with standards while boosting competitiveness. Using China's Water Pollution Prevention and Control Action Plan as a quasi-experiment, we ask instead whether regulation primarily induces innovation in regulated firms or in their upstream suppliers. We find no statistically significant increase in water-related green patenting among regulated polluters, but a pronounced rise among their upstream suppliers. This upstream response is stronger in regions with higher wastewater discharge intensity, greater innovation capacity, and stronger intellectual property protection, and is concentrated among competitive, non-stateowned, and larger firms. Innovation mainly targets pollution control rather than preventive technologies. Regulated firms comply chiefly by purchasing external abatement solutions, rather than through knowledge spillovers that enhance their own inventive activity. These findings reveal a demand-driven supply-chain channel through which environmental regulation reshapes the locus and direction of green innovation by creating markets for environmental technologies.
This paper develops a text-based measure of firms' climate transition risk management by constructing a dedicated dictionary and applying it to annual reports of Chinese listed firms over the period 2011-2021. Using this measure, we examine how corporate digital transformation relates to firms' management of climate transition risk. We find that digital transformation is positively associated with firms' engagement in climate transition risk management, with stronger effects for manufacturing and non-high-tech firms, and in particular for adopters of advanced digital technologies such as artificial intelligence, cloud computing and big data. To address concerns of endogeneity, we employ a staggered difference-in-differences design and propensity score matching. Moreover, our evidence shows that digital transformation is associated with observable transition-related actions, including environmental investment and green patent output. While we do not find consistent evidence that digital transformation improves short-term profitability, stronger climate transition risk management is positively associated with firm value.
This study investigates the impact of corporate collaboration culture on firms' integration into global innovation networks. Using the number of firms' cross-border co-patents to measure global innovation integration, we find that the collaboration culture positively affects it. The positive effects are more pronounced for firms with lower risk-taking and higher information transparency. Moreover, the collaboration culture encourages firms to disclose more innovation-related information. These results reveal that the collaboration culture facilitates integration into global innovation networks by compensating for insufficient risk-taking and enhancing information transparency. Further analyses show that the collaboration culture improves the quality of cross-border co-patents. Strategically, firms prioritize co-patents related to the digital economy and green energy. The cooperation typically follows the pattern of Chinese applicants with foreign inventors. Taken together, these results underscore that corporate unity catalyzes longevity, enabling firms to achieve competitive endurance through integration into global innovation ecosystems.
In societies with pronounced gender inequality, attractive women are often perceived as less competent leaders or confined to ornamental roles. Drawing on social role theory, institutional theory, and Upper Echelons theory, and integrating insights from research on gender inequality, beauty effects, and corporate philanthropy, we argue that attractive female CEOs strategically engage in philanthropy to counteract gender-based stereotypes, using such actions to signal compassion and social responsibility-qualities consistent with societal expectations of effective leadership. We further propose that the relationship between female CEO attractiveness and corporate philanthropy is moderated by contextual factors. Specifically, weaker gender stereotypes and more competitive markets that reward managerial talent should reduce the need for such compensatory behavior. Using data on Chinese firms, we examine the link between the physical attractiveness of female CEOs and corporate donations. The results show that attractive female CEOs engage more actively in philanthropy, contributing larger donations than their less attractive peers, particularly in regions with stronger gender stereotypes and less market-oriented economies.
Developmental delays during early childhood are common in low- and middle-income countries (LMICs). Parenting training programs can effectively support early childhood development, but caregivers' participation rate in these programs has been relatively low. Conditional cash transfers (CCTs) have been shown to increase participation in many LMICs, but they have not been used in previous programs in rural China. This study investigates the factors associated with participation in a parenting training program in rural Zhejiang, China and evaluates the effect of a CCT intervention on participation. Quantitative data from a baseline survey and participation records were used to examine the associations between household characteristics and participation and estimate the effect of CCTs. Child gender, the level of child development, family economic status, and the home environment were associated with participation. The participation rate among recipients of CCTs was 59% while the CCTs were implemented, and it remained at 53% after they ended. Qualitative data from interviews with caregivers were used to identify barriers to participation. Limited awareness of early development, time constraints, and limited familial support hindered participation. Although the CCTs increased participation, only a minority of the frequent participants reported that the cash incentives motivated their participation. To increase engagement with parenting training in rural China, practitioners should combine financial incentives with efforts to build awareness for early development and to improve familial and social support for participation.
Using the minimal group paradigm (MGP) and a public goods game, we examine cooperative behavior among children and adolescents aged 9-16 across varying treatments of group identity in China. We find that cooperative behavior differs significantly across group identity configurations, consistent with a pattern of in-group favoritism. Further analysis reveals age-group differences in cooperation, with higher contribution levels observed among older children, but only for in-group treatments. Girls show higher and more consistent levels of cooperation than boys do in contexts of heterogeneous group identity. Only children display stronger behavioral responses to heterogeneous group identity than children with siblings do. Additionally, left-behind children (LBC) and children with experiences of bullying exhibit lower levels of in-group cooperation than their peers do, suggesting that the trust-dependent effects of group belonging may be associated with early adverse social experiences. We further link individuals' responsiveness to changes in group identity with real-life behavioral indicators and find that children who respond more strongly to changes in group identity tend to report lower subjective evaluations of social relationships, experience more frequent peer conflicts, and exhibit weaker cognitive performance. These findings suggest that our experimental design effectively captures individual differences in social adaptability and cognitive functioning in real-life contexts. Our study provides empirical evidence of the developmental patterns of cooperative behavior among children in various social identity contexts and highlights the role of group identity and the social environment in shaping behavior.
China officially implemented an environmental protection tax in January 2018. This policy ranks among the most comprehensive environmental regulations worldwide, particularly due to its extensive coverage of enterprise pollution sources. However, the manner in which polluting enterprises respond to this environmental protection tax remains unclear. Using China's A-share listed enterprises in heavily polluting industries from 2008 to 2021 as our sample, we conduct an in-depth analysis of the adaptive behaviors of polluting enterprises to this reform. Our findings show that the reform significantly encourages polluting enterprises to reduce emissions, with the most pronounced effects observed in wastewater reduction. The mitigation effect intensifies initially but gradually diminishes over time. In addition, this study clarifies and structures the mechanisms through which reforms affect the emission reductions of enterprises by analyzing source prevention, process modification, and end-of-pipe treatment. The study indicates that businesses predominantly depend on green innovations—particularly green utility model innovations—to mitigate emissions in response to the environmental protection tax. Heterogeneity tests reveal that the pollution reduction effect of the reform is more pronounced among enterprises with higher expected benefits but less evident among those facing higher expected penalty costs. These findings help us understand the adaptive behaviors of polluting enterprises in developing countries under the Pigovian tax.
This study examines the comparative associations between household and neighbor income and subjective well-being (SWB) while considering the adaptations of income aspiration and reference income. To characterize the adaptations, we leverage the quasi-experimental design in which farmlands were pre-allocated to households according to household size during China’s initial rural reforms in the 1980s. Our designed survey covers 11 entire neighborhoods in China and alleviates concerns about sorting into neighborhoods, occupational effects, and survey participation bias. We find that reference income adapts almost perfectly to the neighborhood and is positively correlated with SWB, measured by life satisfaction. Conversely, income aspiration adapts perfectly to the household’s income, and is negatively correlated with life satisfaction. Adjusted with the adaptations, the association between household income and life satisfaction outperforms that of neighbor income. Doubling the income of all households within the neighborhoods increases life satisfaction by around 0.3-0.5. Our approach yields the most conservative estimates of SWB gains compared with existing common approaches.
Rapid higher education expansion has significantly altered the distribution of human capital investment across genders in developing countries. This paper exploits geographic and temporal variation in new campus openings during China's large-scale higher education expansion to examine its gendered effects on local human capital investment. Exposure to new campuses increases average schooling by 0.43 years, with most gains accruing to women. The effects spill over to neighboring counties and are stronger in regions with greater initial gender inequality. Mechanism analysis suggests that men benefit primarily through expanded local supply of vocational college seats, while women's gains across all education levels are driven by rising demand for female education. Rural women benefit mainly at the vocational level, whereas urban women gain disproportionately in university access. Our findings highlight the need for gender-specific approaches to promote equitable access to educational opportunities in higher education expansion policy designs.
China has introduced the GTP III system, an advanced digital technology aimed at enhancing tax collection efficiency. However, the system's rollout has varied across provinces, leading to disparities in tax collection capabilities nationwide. This variation has provided conglomerates with opportunities to engage in tax planning by adjusting their capital structure. This paper examines the strategies employed by conglomerates in response to stricter tax enforcement, focusing on how they reallocate interregional debt and expenses. Our findings indicate that conglomerates allocate deductible debts and expenses to provinces where the GTP III system is operational, resulting in significant tax savings. This behavior is more pronounced when conglomerates have strong motivations for tax planning or engage in more aggressive tax strategies. Additionally, conglomerates adjust their debt management strategies, increasing short-term debt to reduce tax liabilities while limiting long-term debt to maintain a well-balanced capital structure.
This paper provides a comprehensive analysis of the labor market challenges faced by college graduates in China. Analyzing five decades of census and survey data, we document that rising unemployment, declining labor force participation, and persistently high and increasing levels of underemployment (where graduates hold jobs that do not require a college degree) have emerged as the three key features of the labor market for college graduates following the expansion of higher education in the late 1990s. Collectively, these adverse employment outcomes affect more than half of Chinese college graduates. They also persist over the life course and have intensified across successive cohorts. Moreover, graduate employment outcomes are stratified by individual and family background characteristics, particularly gender and parental socioeconomic status, reflecting enduring structural inequalities that shape employment opportunities. Finally, to examine the mechanisms underlying these patterns, we conduct field experiments in 2022 and 2024 that assess how employers evaluate college graduates with different employment histories. We randomized key applicant attributes and submitted fictitious resumes to real job postings. The results indicate that employers capitalize on the oversupply of graduates by favoring applicants with credentials exceeding job requirements (overqualification preference) while penalizing those with prior adverse employment experiences. Together, these dynamics constrain graduates' upward mobility and help explain the prevalence and persistence of adverse employment outcomes.
This study investigates information leverage in Hong Kong's housing market in the context of public rehabilitation projects. Analyzing transaction dynamics across two waves of public rehabilitation schemes, we find that rehabilitation projects yield positive price premiums, with a much stronger effect after completion, suggesting that market opacity and delayed information diffusion contribute to underpricing during the announcement phase. Categorizing rehabilitation intensity into Externally Observable (street-level repairs), Internally Observable (interior upgrades), and Structurally Embedded (non-visible upgrades), we uncover market asymmetries, where informed buyers, particularly those aware of Structurally Embedded Rehabilitation, strategically acquire properties at undervalued prices before these gains are realized in the housing market, leveraging their information advantage. Additionally, based on visibility network analysis of building orientation and sewage infrastructure mapping, we show information extends beyond individual transactions to shape neighborhood-wide housing market dynamics through aesthetic and amenity effects, with visual enhancement insufficient to fully account for the neighborhood effect and the limited sensitivity to distance preserving the role for information leverage.
