Publications

A country’s national income broadly depends on the quantity and quality of workers and capital. But how well these factors are managed within and between firms may be a key determinant of a country’s productivity and its GDP. Although social scientists have long studied the role of management practices in shaping business performance, their primary tool has been individual case studies. While useful for theory-building, such qualitative work is hard to scale and quantify. We present a large, scalable dataset measuring structured management practices at the business level across multiple countries. We measure practices related to performance monitoring, target-setting, and human resources. We document a set of key stylized facts, which we label “the international empirics of management”. In all countries, firms with more structured practices tend to also have superior economic performance: they are larger in scale, are more profitable, have higher labor productivity and are more likely to export. This consistency was not obvious ex-ante, and being able to quantify these relationships is valuable. We also document significant variation in practices across and within countries, which is important in explaining differences in the wealth of nations. The positive relationship between firm size and structured management practices is stronger in countries with more open and free markets, suggesting that stronger competition may allow firms with more structured management practices to grow larger, thereby potentially raising aggregate national income.

This paper examines the correlation between cognitive ability and firm creation. Drawing on administrative college admissions data and firm registration records in China, we investigate who had created firms by their mid-30s. We find a clear pattern of entrepreneurial reluctance: Given the same backgrounds, individuals with higher college entrance exam scores are less likely to create firms. Through an exploration of firm performance, alternative career trajectories, and variations across regions, we propose an explanation: The ability represented by exam scores is useful across occupations, yet higher-scoring individuals are attracted to waged jobs, particularly those of the state sector.

This paper studies the unintended effect of English language requirement on educational inequality by investigating how the staggered rollout of English listening tests in China’s high-stakes National College Entrance Exam (NCEE) affected the rural-urban gap in college access. Leveraging administrative data covering the universe of NCEE participants between 1999 and 2003, we find that the introduction of English listening tests significantly lowered rural students’ exam score percentile ranks relative to their urban counterparts, resulting in a 30% increase in the rural-urban gap in college access. Our back-of-the-envelope calculations suggest that, as a result of this policy change, more than 54,000 rural students lost college seats to their urban peers between 1999 and 2003, and another 11,000 rural students who elite colleges could have admitted ended up in non-elite colleges, causing them significant future income losses.

This study examines the level and equity of household education spending in China using representative microdata. The findings reveal that education expenditure constitutes a substantial portion of household income, averaging around 17.1%. Moreover, there is an inverse relationship between household income and the fraction of income spent on education, with the top quartile spending 10.6% of their income on education, while the bottom quartile spends a staggering 56.8%. Regression analysis indicates an income elasticity of 0.306, implying that education is a necessity good in China. These results underscore the excessive financial burden imposed by education expenditure, particularly on families in the lower income bracket. To promote equal opportunities and achieve broad, long-term economic benefits, it is imperative to implement new public policies in China that improve the affordability of education for a broader segment of the population.

China's higher education system has undergone a rapid expansion over the last two decades. By drawing on hand-collected data, we explore students' experiences in college and in the labor market post-graduation in the wake of this expansion. According to our data, the largest employer of college graduates in the labor market was the state sector, followed by the domestic private sector. To explain the returns to college education in China, we explore three mechanisms: human capital, social networks, and signaling. We find that human capital measures, apart from a student's college English test scores, cannot explain the college wage premium, whereas both social networks (for example, membership of the Communist Party) and signaling matter significantly. This seems to indicate that in China, connections are crucial for student success in the labor market, whereas the higher education system itself is more a system for selecting talented individuals than it is for educating them. Finally, students allocate their time accordingly, for example, by spending more time studying English in college than any other subject.

Significance
One fundamental issue in economic, psychological, and social sciences is whether and how much income truly brings happiness. This paper draws on twins data to examine whether income indeed affects happiness and estimates the size of such an effect. We control for unobserved genetic factors that may impact both income and happiness using identical twins, address measurement error bias, and conduct a series of robustness checks. Income has a much larger effect than previous estimates: doubling income boosts the four-scale happiness value by 0.26 scales or 0.37 SDs. Heterogeneity analyses suggest that income matters most for males and the middle-aged. Our findings emphasize the importance of income maintenance for individuals’ well-being.

Abstract
We estimate the causal effect of income on happiness using a unique dataset of Chinese twins. This allows us to address omitted variable bias and measurement errors. Our findings show that individual income has a large positive effect on happiness, with a doubling of income resulting in an increase of 0.26 scales or 0.37 SDs in the four-scale happiness measure. We also find that income matters most for males and the middle-aged. Our results highlight the importance of accounting for various biases when studying the relationship between socioeconomic status and subjective well-being.

China has witnessed rapid increases in the skill premium over the last few decades. In this paper, we study the short-run effect of capital goods imports on skill premium in China. The surge in capital goods imports, which embody advanced technology, can explain the rising demand for skill in China. We exploit regional variations in capital goods import exposure stemming from initial differences in import structure and instrument for the capital goods import growth using exchange rate movements. A city at the 75th percentile of the distribution of capital goods imports growth has a higher skill premium by 5 percentage points (0.38 standard deviation) over the one at the 25th percentile. To explore the underlying mechanism, we provide firm-level evidence and show that imported capital goods are skill-complementary.

China’s college enrollment system came to a sudden halt as the Cultural Revolution started. Virtually no students were admitted to colleges from 1966 to 1969. We estimate a marked downward shift in college completion rates for the affected cohorts. Using a regression discontinuity approach, we show that these individuals experienced a sizable reduction in labor supply, earnings, and wealth after some 30 years, which can be attributed to the loss of access to college education. Our results also suggest that the affected generation had made efforts to make up for their loss of education later in life.

We study how an elite college education affects social mobility in China. China provides an interesting context because its college admissions rely mainly on the scores of a centralized exam, a system that has been the subject of intense debate. Combining the data from a large-scale college graduate survey and a nationally representative household survey, we document three main findings. First, attending an elite college can change one's fate. It significantly raises the child's rank in the income distribution. Nevertheless, it does not change the intergenerational relationship in income ranks or guarantee one's entry into an elite occupation or industry. Second, although access to elite colleges increases with parental income, the income gradient is much flatter than in the United States. Third, the score-based cutoff rule in elite college admission is income neutral. Overall, these findings reveal the efficacy and limitations of China's elite colleges in shaping social mobility.