I am an Assistant Professor at the Economics and Management School, Wuhan University.
RESEARCH INTEREST
International Trade, Chinese Economy, Development Economics
RESEARCH INTEREST
International Trade, Chinese Economy, Development Economics
WORKING PAPERS
1. Putting Comparative Advantage to Work within the Multi-Product Firm, JOB MARKET PAPER
Abstract: This paper analyzes how comparative advantage can directly affect the allocation of activity across products within multi-product firms in a novel way. By constructing product-level comparative advantage index, we map a country's comparative advantage into individual multi-product firms. We first document three basic facts. Firms' product sales are skewed towards their comparative advantage products. Firms reduce (expand) their produce scope by dropping (adding) more comparative disadvantage products and shift sales towards (away from) comparative advantage products over time. In markets where they sell fewer products, firms drop comparative disadvantage products and shift sales towards comparative advantage products. To rationalize these facts, we extend Bernard, Redding, and Schott (2011) to include variable markups and comparative advantage. Our model predicts that firms' core competence is in their comparative advantage products which also features higher sales and higher markups. Increased competition from a positive demand shock or an appreciation of Home currency induces firms to drop their comparative disadvantage products on the extensive margin and shift their sales towards comparative advantage products on the intensive margin. The predictions are consistent with the documented facts and are confirmed by exploiting variations from the removal of MFA quotas on textiles and apparel industry and from exchange rate fluctuations.
2. "Equilibrium Assignment Patterns in Knowledge-based Hierarchy Model: Evidence from China" (with Albert Park)
Abstract: This paper studies the internal organization of Chinese manufacturing firms using a unique matched employer-employee survey data. Employees of each firm are divided into four layers: high-level managers, middle-level managers, white-collar workers, and blue-collar workers. We have several import findings. Firstly, firms with more layers are larger, pay higher wages, and form hierarchies; workers in upper layers perform more complicated, labor-intensive, repetitive tasks, supervise more subordinates, and earn more. Secondly, the assignment of employees features scale of operations effects, positive assortative matching, cross-matching, and stratification. Thirdly, both the wage gaps between managers and workers within firms and the wage gaps between firms due to firm size increase with spans of control. Our results give support to matching models with hierarchical production functions.
3. "Trade-Induced Changes in Product Mix and Firm Productivity: Evidence from Chinese Exporters"
Abstract: Theoretically, trade induced changes in product mix and product scope can have an immediate impact on firm-level productivity. We construct a plausibly exogenous firm-level demand shock and empirically capture this impact using Chinese manufacturing firm data over 2000--2007. We show a strong and immediate impact of the demand shock on firm-level productivity, and that this impact is not contaminated by firms' responses to future and past shocks. We also confirm this impact using a large sub-sample of pure exporters where firms only respond to foreign demand shocks and don't reallocate their sales across domestic and foreign markets. We further show an increase in foreign demand induces an strong increase in firm-level exports, but this increase is highly concentrated on firms' existing products. At last, we show firms skew their scales towards their best performing products in response to an increase in foreign demand, and there exists a strongly positive correlation between changes in sales concentration and changes in firm-level productivity.
Abstract: This paper analyzes how comparative advantage can directly affect the allocation of activity across products within multi-product firms in a novel way. By constructing product-level comparative advantage index, we map a country's comparative advantage into individual multi-product firms. We first document three basic facts. Firms' product sales are skewed towards their comparative advantage products. Firms reduce (expand) their produce scope by dropping (adding) more comparative disadvantage products and shift sales towards (away from) comparative advantage products over time. In markets where they sell fewer products, firms drop comparative disadvantage products and shift sales towards comparative advantage products. To rationalize these facts, we extend Bernard, Redding, and Schott (2011) to include variable markups and comparative advantage. Our model predicts that firms' core competence is in their comparative advantage products which also features higher sales and higher markups. Increased competition from a positive demand shock or an appreciation of Home currency induces firms to drop their comparative disadvantage products on the extensive margin and shift their sales towards comparative advantage products on the intensive margin. The predictions are consistent with the documented facts and are confirmed by exploiting variations from the removal of MFA quotas on textiles and apparel industry and from exchange rate fluctuations.
2. "Equilibrium Assignment Patterns in Knowledge-based Hierarchy Model: Evidence from China" (with Albert Park)
Abstract: This paper studies the internal organization of Chinese manufacturing firms using a unique matched employer-employee survey data. Employees of each firm are divided into four layers: high-level managers, middle-level managers, white-collar workers, and blue-collar workers. We have several import findings. Firstly, firms with more layers are larger, pay higher wages, and form hierarchies; workers in upper layers perform more complicated, labor-intensive, repetitive tasks, supervise more subordinates, and earn more. Secondly, the assignment of employees features scale of operations effects, positive assortative matching, cross-matching, and stratification. Thirdly, both the wage gaps between managers and workers within firms and the wage gaps between firms due to firm size increase with spans of control. Our results give support to matching models with hierarchical production functions.
3. "Trade-Induced Changes in Product Mix and Firm Productivity: Evidence from Chinese Exporters"
Abstract: Theoretically, trade induced changes in product mix and product scope can have an immediate impact on firm-level productivity. We construct a plausibly exogenous firm-level demand shock and empirically capture this impact using Chinese manufacturing firm data over 2000--2007. We show a strong and immediate impact of the demand shock on firm-level productivity, and that this impact is not contaminated by firms' responses to future and past shocks. We also confirm this impact using a large sub-sample of pure exporters where firms only respond to foreign demand shocks and don't reallocate their sales across domestic and foreign markets. We further show an increase in foreign demand induces an strong increase in firm-level exports, but this increase is highly concentrated on firms' existing products. At last, we show firms skew their scales towards their best performing products in response to an increase in foreign demand, and there exists a strongly positive correlation between changes in sales concentration and changes in firm-level productivity.
WORK IN PROGRESS
1. "Comparative Advantage and Exchange Rate Fluctuations"
2. "The Role of Capital Intensity in Facilitating Trade: Evidence from China"
3. "Industrial Upgrading, Technology Adoption, and Firm Performance"
2. "The Role of Capital Intensity in Facilitating Trade: Evidence from China"
3. "Industrial Upgrading, Technology Adoption, and Firm Performance"