Stepping Down from Life-long Posts: Layoffs, Fertility, and Educational Attainment in Urban China (with Junsen Zhang and Kang Zhou), Accepted, Journal of Labor Economics
The Cultural Origins of Family Firms (with Song Yuan), Journal of Comparative Economics, Volume 53, Issue 1, March 2025, Pages 1-24
Investments and Innovation with Non-Rival Inputs: Evidence from Chinese Artificial Intelligence Startups (with Kang Zhou), Revise and Resubmit, Review of Economics and Statistics
Abstract: Large technology firms have substantial advantages in data, a key non-rival input for developing AI technology. We argue that investments by large technology firms stimulate innovation by AI startups through the sharing of data, bringing more than money to the startups. We assemble a unique dataset containing (nearly) the universe of AI-inventing firms in China to examine the innovation effects of these investments. Our difference-in-differences estimation shows that, after receiving investments from large technology firms, AI startups increase the number of AI patent applications by 62% and the number of software products by 56%, relative to their mean values prior to the investments. Using a triple-differences strategy, we further find that the innovation impact of investments by large technology firms is stronger than that of investments by other firms without data advantages. We confirm these findings using an instrumental variables approach based on recent investments by large technology firms in peer startups. Finally, we provide novel evidence that the innovation effect works mainly through sharing non-rival data by leveraging our rich information on non-AI data-related patent applications and data-related online job postings.
Dying to Survive: Unintended Consequences of Environmental Regulations on Industrial Accidents (with Xiaowei Chen, Qiyue Shen, Xuebo Wang, and Zhilong Zhang), Submitted
Abstract: We investigate the impact of environmental regulations on industrial accidents by exploiting the 2014 revision of China’s Environmental Protection Law (EPL), heralded as “the strictest environmental law in China’s history.” These tightened regulations may have significantly financially constrained pollution-intensive firms, forcing them to reduce precautionary spending on production safety in order to survive, thereby potentially increasing the risk of industrial accidents. With a difference-in-differences strategy, we compare changes in industrial accidents between pollution-intensive and non-pollution-intensive industries at the prefecture level before and after the implementation of the revised EPL. Our estimates indicate that stricter environmental regulations led to an approximately 60.4% increase in the number of industrial accidents in heavily polluting industries. Furthermore, we demonstrate that the reduction in firms’ safety investments, caused by tighter financial constraints following the stricter regulations, is a plausible underlying mechanism. Our study highlights an additional hidden cost of environmental regulations that has been overlooked in the literature, suggesting that traditional estimates of the costs of environmental regulations may have significantly underestimated their broader societal impact.
Surname Homogeneity of Entrepreneurs, Informal Institutions, and Corporate Innovation (with Bernard Yeung and Qinhong Yu), Draft available upon request
Abstract: Surname homogeneity among entrepreneurs, a measure of the extent to which entrepreneurs in the same county share a few surnames, may proxy for the strength of kinship-based informal institutions. Using registration data encompassing the universe of Chinese private enterprises and applying an entropy-based measure of surname homogeneity among entrepreneurs, we find that a one standard deviation increase in this measure is associated with a 25.5% increase in patent filings. Regarding the mechanisms, we find that greater surname homogeneity substitutes for formal institutions in providing intellectual property rights protection, offering access to finance, delivering public services, and facilitating cooperation within supply chains. We also observe that surname homogeneity among entrepreneurs increases experimentation with policy innovation, providing another channel to enhance corporate innovation. Moreover, both surname homogeneity among entrepreneurs and policy innovation contribute to economic development and foster entrepreneurship. However, the positive influence of surname homogeneity diminishes over time in China as the quality of formal institutions improves.