Working Papers

Markups, Labor Share, and Wage Dispersion Job Market Paper

Market powers can affect firm behaviors in labor market. This paper argues that the decrease in the overall wage since 2000 is caused by both rising product markup and falling labor markdown. The significant decrease in wages among lower percentiles has led to an increase in wage dispersion and a decrease in the aggregate labor share. I build a heterogeneous firm model to demonstrate that the decline in wages, especially among the lower percentiles, can be attributed mainly to the monopsony power of firms, which explains the rise in wage inequality and the fall in labor share.

Intangible Assets, Corporate Taxes and the Relocation of Pharmaceutical Establishments: The case of Puerto Rico with Zadia M. Feliciano (NBER WP29107)

NBER Featured Working Papers Archive Dec. 13 (Link)

Puerto Rico operated as a tax haven under U.S. Internal Revenue Code (IRC) Section 936. Firms in the pharmaceutical industry accounted for approximately 50% of tax credits awarded and 20% of employment under the program. The U.S. Congress eliminated the tax exemption program in 2006, creating a natural experiment on the elimination of corporate taxation of intangible assets. We use panel data on establishments from the Quarterly Census of Employment and Wages and a difference in difference methodology to measure the impact of the elimination of IRC Section 936 on pharmaceutical and medical devices using establishments with low, medium and high participation in the program as controls. Survival rates of all manufacturing establishments declined after the phaseout and elimination of the tax exemption program but pharmaceutical and medical devices establishments experienced an additional 6.9% decline. Approximately 50% of the 34% decline in pharmaceutical and medical devices establishments in Puerto Rico from 1995 to 2017 can be attributed to the elimination of IRC Section 936. Employment in pharmaceutical and medical devices establishments, which also declined by 34%, decreased at the same rate as that of other industries. Plant closings accounted for most of the decline in their employment.

Carbon emissions from the perspective of regional competition: Evidence from China’s low-carbon city policy with Jiakai Zhang (Paper)

Global warming poses a prominent challenge to every country. China, being one of the largest developing countries, has undergone a rapid economic transformation in its endeavor to achieve sustainable development. This paper delves into a quasi-natural environmental experiment conducted in China, specifically focusing on the low-carbon city program initiated between 2010 and 2011. Our study uncovers the phenomenon of regional competition among Chinese local governments concerning carbon emissions, which in turn generates spillover effects stemming from the policy. To identify the effects of the low-carbon city policy on both economic and environmental development, we employ the spatial difference-in-differences (SDID) approach. Our analysis suggests that reductions in carbon emissions in the pilot cities will decrease carbon emissions and economic performance in the surrounding areas. Finally, by exploring firm-level data, we find that the policy significantly impacts large private firms operating in non-secondary industries.

How Does Land Use Policy Affect Local Labor Market and Housing Market? with Jiakai Zhang (Paper)

This paper examines the impact of land use policy on the local labor market and housing market in China. There are two primary land use purposes: residential land and commercial land. We found that the more commercial land that the Chinese local government grants, the lower the regional unemployment rates, the higher the regional wages, and the higher the housing prices. We then built a model to investigate the mechanism behind the aforementioned empirical facts. Higher commercial land use attracts more firms and creates more jobs but reduces the land available for building houses. The combination of rising housing demand and reducing housing supply brings up the housing prices in high commercial land use areas.

Working in Progress

Import Prices and Pass-Through: Consumer Goods vs. Intermediate Goods


環境汙染、疾病傳播與經濟成長 (與謝智源、陳智華), 經濟論文叢刊, 50(4) 395-422, 2022 (Paper)

Political Hierarchy Spillovers: Evidence from China with Jiakai Zhang, Economic Inquiry (2023) (Paper)

Book Chapter

On the Effectiveness of Capital Controls: A Synthetic Control Method Approach with Richard J Nugent III, International Finance Review Volume 22: Fintech, Pandemic, and the Financial System: Challenges and Opportunities  (Paper)