The Effect of Regulating Political Connections: Evidence from China’s Board of Directors Ban

(working paper available on SSRN)

There is a great deal of variation in how countries regulate relationships between politicians and private sector firms, but little evidence about how such policies affect firm performance. This paper examines the effects of a recent Chinese policy that bans politicians from serving on corporate boards. Using linked records of board members, government officials, and forced resignations, I find that the loss of a high-level politician significantly reduces a firm’s stock price and future profits. The analysis provides important evidence about the efficacy of a commonly used policy tool for reducing political influence in the private sector.

How Does Local Government React to Fiscal Squeeze: Evidence from China’s Agricultural Tax Abolishment

with Jiayi Xu

In 2004, China’s central government passed a new law to abolish agricultural taxes and give a specific agricultural subsidy to offset local budget losses. We exploit the fiscal change as an exogenous shock to local government revenues by using a geographical discontinuity on subsidy policy. A difference-in-difference design reveals that the abolishment of agricultural taxes brings a per-capita fiscal deficit of CNY ¥40  (USD $6) to designated county-level governments, and leads to ¥17 yuan reduction in agriculture production spending and a ¥4 reduction in social security expenditure. The estimates find no offset from other local revenues, illustrate the distributional effect of fiscal squeezes on local government spending, and provide new evidence for money stickiness on government spending.

How Fundamentalism Takes Root: A Simulation Study

with Daniel Friedman, Jonathan Gair, Sriya Iyer, Bartosz Redlicki and Chander Velu.

(working paper available on UCSC Department website)
We report agent-based simulations of religiosity dynamics in a spatially dispersed population. Agents’ religiosity responds to neighbors via pairwise interactions as well as via club goods effects. A simulation run is deemed fundamentalist if the final distribution contains a sizable minority of very high religiosity together with a majority of lesser religiosity. Such simulations are more prevalent when parameter values shift from values reflecting traditional societies towards values reflecting the modern world. The simulations suggest that the rise of fundamentalism in the modern world is boosted by greater real income, lower relative prices for secular goods, less substitutability between religious and secular goods, and less time spent with neighbors. Surprisingly, the simulations suggest little role for the rise of long distance communication and transportation.

Education, Income and Intergenerational Persistence: An Evolutionary View

with Hugo Lhuillier. Advisor: Daniel Friedman.