Local Labor Market
Cities with Too Few Nannies: Regulated Spillovers from High-Skilled Consumption to Low-Skilled Labor Markets
(Job Market Paper)
Abstract. This paper studies how the local housing supply regulation restricts low-skilled workers from responding to local labor demand shocks. Over the past three decades, skilled-biased technology has induced the growth of college-educated workers to different extents across cities. With a high opportunity cost of time, cities with more college-educated workers generate a greater demand for low-skilled services. Depending on whether low-skilled workers are migrating into these cities, the rising demand can increase employment or increase wages of low-skilled workers, who are the primary providers of these services. In a spatial-equilibrium model, I illustrate that stringent housing supply regulations push up housing costs, discourage the migration of low-skilled workers, and, therefore, increase wages of low-skilled workers without creating many more jobs. To isolate this consumption-related mechanism from the production-side theories–including production complementarity and knowledge spillover–I divide low-skilled workers by service and non-service occupations. Using the index combined in Saks (2008) to measure housing supply regulations across cities and using Bartik-style shock to instrument the growth of college-educated population, I find that, in more regulated cities, the growth of the college-educated population is associated with larger wage growth and smaller employment growth for low-skilled service occupations comparing with in less regulated cities. Moreover, the effect of regulation is less evident for non-service occupations.
Welfare Benefits and Geographic Mobility (In Progress)
Earning Mobility in Cities and Measurement Error, with Ruli Xiao (In Progress)
(Job Market Paper)
Abstract. This paper studies how the local housing supply regulation restricts low-skilled workers from responding to local labor demand shocks. Over the past three decades, skilled-biased technology has induced the growth of college-educated workers to different extents across cities. With a high opportunity cost of time, cities with more college-educated workers generate a greater demand for low-skilled services. Depending on whether low-skilled workers are migrating into these cities, the rising demand can increase employment or increase wages of low-skilled workers, who are the primary providers of these services. In a spatial-equilibrium model, I illustrate that stringent housing supply regulations push up housing costs, discourage the migration of low-skilled workers, and, therefore, increase wages of low-skilled workers without creating many more jobs. To isolate this consumption-related mechanism from the production-side theories–including production complementarity and knowledge spillover–I divide low-skilled workers by service and non-service occupations. Using the index combined in Saks (2008) to measure housing supply regulations across cities and using Bartik-style shock to instrument the growth of college-educated population, I find that, in more regulated cities, the growth of the college-educated population is associated with larger wage growth and smaller employment growth for low-skilled service occupations comparing with in less regulated cities. Moreover, the effect of regulation is less evident for non-service occupations.
Welfare Benefits and Geographic Mobility (In Progress)
Earning Mobility in Cities and Measurement Error, with Ruli Xiao (In Progress)
Homeownership
The Effects of Home Ownership on Post-unemployment Wages
2014, R&R, Journal of Urban Economic
Abstract. Homeownership can influence labor market outcomes in several ways. Previous papers mainly study whether homeowners are less mobile or whether homeowners experience longer unemployment duration with respect to renters. Little research, however, has been done to study the relationship between homeownership and the wages. This paper shows that unemployed homeowners, compared to unemployed renters, are more likely to accept lower wages. In particular, this negative effect is more evident in distressed labor markets where unemployment rates are higher than the national level. To illustrate why homeowners accept lowers wages, particular in the distressed labor market, this paper builds a two-market job search model. The model predicts that homeowners tend to have lower reservation wages and put higher search efforts in the local market in order to be reemployed in this market. While the reservations wage effect lowers post-unemployment wages, the search effort offsets it. In a distressed labor market, the reservations wage effect is dominating, and therefore, unemployed homeowners are more likely to have lower wages.
The Effects of Home Ownership on Unemployment
2014
Abstract. There is a growing concern among U.S. policymakers that home ownership may inhibit labor market matching because it restricts homeowners’ ability to relocate for non-local job vacancies. This paper argues that this concern is misplaced because it neglects the fact that homeowners are more likely to accept local job offers and be employed. I examine the effects of home ownership on unemployment by developing and estimating a dynamic job search model that distinguishes between local and non-local job offers. The overall unemployment duration is estimated by summing the spells that end with the acceptance of local jobs and those end with non-local jobs. The estimation results show that home ownership decreases unemployment duration by about nine days. Young workers with low education levels are most likely affected—their unemployment durations are shortened by about 14 days. Counterfactual experiments show that eliminating the mortgage interest deduction is not an efficient policy for reducing unemployment and actually increases unemployment duration by three days.
Why has Homeownership Fallen among the Young? Location Choice Matters, with Gary Painter (In Progress)
2014, R&R, Journal of Urban Economic
Abstract. Homeownership can influence labor market outcomes in several ways. Previous papers mainly study whether homeowners are less mobile or whether homeowners experience longer unemployment duration with respect to renters. Little research, however, has been done to study the relationship between homeownership and the wages. This paper shows that unemployed homeowners, compared to unemployed renters, are more likely to accept lower wages. In particular, this negative effect is more evident in distressed labor markets where unemployment rates are higher than the national level. To illustrate why homeowners accept lowers wages, particular in the distressed labor market, this paper builds a two-market job search model. The model predicts that homeowners tend to have lower reservation wages and put higher search efforts in the local market in order to be reemployed in this market. While the reservations wage effect lowers post-unemployment wages, the search effort offsets it. In a distressed labor market, the reservations wage effect is dominating, and therefore, unemployed homeowners are more likely to have lower wages.
The Effects of Home Ownership on Unemployment
2014
Abstract. There is a growing concern among U.S. policymakers that home ownership may inhibit labor market matching because it restricts homeowners’ ability to relocate for non-local job vacancies. This paper argues that this concern is misplaced because it neglects the fact that homeowners are more likely to accept local job offers and be employed. I examine the effects of home ownership on unemployment by developing and estimating a dynamic job search model that distinguishes between local and non-local job offers. The overall unemployment duration is estimated by summing the spells that end with the acceptance of local jobs and those end with non-local jobs. The estimation results show that home ownership decreases unemployment duration by about nine days. Young workers with low education levels are most likely affected—their unemployment durations are shortened by about 14 days. Counterfactual experiments show that eliminating the mortgage interest deduction is not an efficient policy for reducing unemployment and actually increases unemployment duration by three days.
Why has Homeownership Fallen among the Young? Location Choice Matters, with Gary Painter (In Progress)
China's Economy
Market Facilitation by Local Government and Firm Efficiency: Evidence from China
with Robert Cull, Lixin Colin Xu, Li-An Zhou and Tian Zhu, forthcoming, Journal of Corporate Finance
Environmental Compliance and Firm Performance: Evidence from China
with Yang Yao, 2012, Oxford Bulletin of Economics and Statistics, 74(3), 397-424
The Impact of Labor Migration on Children’s Health: Evidence from Rural China
with Xiaochen Xu, 2014, under review
Abstract. Labor migration, which frequently results in family separations, is widely known as one of the main ways of alleviating poverty in developing countries. In China, migrant workers helped build the Chinese dream in cities across the country. But for their children, who are left behind in the countryside, the potential health problems of their physical and social development is becoming a national issue. This study uses data collected as part of the China Health and Nutrition Survey (CHNS) in 2000, 2004, 2006, and 2009 to identify the impact of parents' migration on the health outcomes of children in rural China. The measurements of child health outcomes are weight-for-age Z-score (WAZ), height-for-age Z-score (HAZ), nutrient intake (consumption of calories and protein), the number of immunization shots that children get in the survey year and child-care. To identify the effect of parental migration on child health, we instrumented parents' migration status with county level historical average migration rates. We found there were few significant effects of parents' migration on child health outcomes.
Urban Housing Privatization and Household Saving in China
2015
Abstract. During the past three decades, housing market in China has transformed from an employer based public housing system to a private market. This transformation has been carried out in a gradual approach ever since 1978. It was then terminated by a radical reform in 1998 which suddenly prohibits the provision of public housing. This paper studies how the 1998 reform and the resulted rapid housing price growth contributes to China’s economic imbalance by significantly raising the saving rates of urban households. It has three sets of main results: First, urban households raise their saving rate by 1.4% shortly after the 1998 reform. Particularly, difference-in-difference estimations show that households with SOE members and who live in houses of poor conditions save 1.7% more than other groups of households. Second, the implementation of the 1998 reform has large regional variations. Cities with even rapid privatization are associated with higher household saving rates during the reform period and higher housing price growth after the reform period. Third, higher housing prices impose a larger financial burden on urban households and induce them to save more.
How Risky are Chinese Housing Markets? Evidence from Urban Housing Vacancy Rates (In Progress)
with Robert Cull, Lixin Colin Xu, Li-An Zhou and Tian Zhu, forthcoming, Journal of Corporate Finance
Environmental Compliance and Firm Performance: Evidence from China
with Yang Yao, 2012, Oxford Bulletin of Economics and Statistics, 74(3), 397-424
The Impact of Labor Migration on Children’s Health: Evidence from Rural China
with Xiaochen Xu, 2014, under review
Abstract. Labor migration, which frequently results in family separations, is widely known as one of the main ways of alleviating poverty in developing countries. In China, migrant workers helped build the Chinese dream in cities across the country. But for their children, who are left behind in the countryside, the potential health problems of their physical and social development is becoming a national issue. This study uses data collected as part of the China Health and Nutrition Survey (CHNS) in 2000, 2004, 2006, and 2009 to identify the impact of parents' migration on the health outcomes of children in rural China. The measurements of child health outcomes are weight-for-age Z-score (WAZ), height-for-age Z-score (HAZ), nutrient intake (consumption of calories and protein), the number of immunization shots that children get in the survey year and child-care. To identify the effect of parental migration on child health, we instrumented parents' migration status with county level historical average migration rates. We found there were few significant effects of parents' migration on child health outcomes.
Urban Housing Privatization and Household Saving in China
2015
Abstract. During the past three decades, housing market in China has transformed from an employer based public housing system to a private market. This transformation has been carried out in a gradual approach ever since 1978. It was then terminated by a radical reform in 1998 which suddenly prohibits the provision of public housing. This paper studies how the 1998 reform and the resulted rapid housing price growth contributes to China’s economic imbalance by significantly raising the saving rates of urban households. It has three sets of main results: First, urban households raise their saving rate by 1.4% shortly after the 1998 reform. Particularly, difference-in-difference estimations show that households with SOE members and who live in houses of poor conditions save 1.7% more than other groups of households. Second, the implementation of the 1998 reform has large regional variations. Cities with even rapid privatization are associated with higher household saving rates during the reform period and higher housing price growth after the reform period. Third, higher housing prices impose a larger financial burden on urban households and induce them to save more.
How Risky are Chinese Housing Markets? Evidence from Urban Housing Vacancy Rates (In Progress)
Other
Developing Confidence Intervals for Rental Market Forecasts: the Bootstrap Method
with Richard Green, 2015
Abstract. This study evaluates the rental market forecasting models. In these models, forecast errors no longer follow the normal distribution, and the prediction intervals calculated based on the traditional method are no longer consistent. This paper applies the bootstrap method to solve this problem. Comparing forecast intervals calculated from the two methods, we find that the traditional method tends to underestimate forecast errors and produces narrower confidence intervals.
The Origins of Land Use Regulations: Evidence from LA County, with Sarah Mawhorter (In Progress)
with Richard Green, 2015
Abstract. This study evaluates the rental market forecasting models. In these models, forecast errors no longer follow the normal distribution, and the prediction intervals calculated based on the traditional method are no longer consistent. This paper applies the bootstrap method to solve this problem. Comparing forecast intervals calculated from the two methods, we find that the traditional method tends to underestimate forecast errors and produces narrower confidence intervals.
The Origins of Land Use Regulations: Evidence from LA County, with Sarah Mawhorter (In Progress)