Three essays in labor economics

THREE ESSAYS IN LABOR ECONOMICS XIE HUIHUA NATIONAL UNIVERSITY OF SINGAPORE 2014 THREE ESSAYS IN LABOR ECONOMICS XIE HUIHUA (B.S., SHANGHAI UNIVERSITY OF FINANCE AND ECONOMICS) A THESIS SUBMITTED FOR THE DEGREE OF PHD OF ECONOMICS DEPARTMENT OF ECONOMICS NATIONAL UNIVERSITY OF SINGAPORE 2014 ACKNOWLEDGEMENTS Upon the submission of my PhD thesis, I cannot help looking over my PhD journey and remembering all those great individuals and family who have helped and supported me along this fulfilling road. First and foremost, I must thank my two supervisors, A/P. Lu Yi and A/P. Tsui Ka Cheng, Albert. Their enthusiasm, encouragement, and immense knowledge were key motivations throughout my PhD. A/P. Lu Yi has been my mentor and guiding me to grow as a researcher step by step. I am truly thankful for his steadfast integrity and selfless dedication to both my academic and personal development. A/P. Tsui Ka Cheng, Albert is a revered scholar, who has been always patient and encouraged me to pursue various projects. Though our co-projects are not included in this thesis, yet, what I've learned from him, especially his attitude and consistence of being a real researcher. It's a great and unique fortune for me to have such inspirational, supportive and patient supervisors, and I hope that I can in turn pass on the research values they have given to me. I would like to acknowledge Dr. Gong Jie, with whom I wrote two chapters of this thesis. Dr. Gong Jie has supported me not only by offering excellent discussions and helpful suggestions on our work, but also emotionally in different stages of my PhD. In addition, special thanks to Professors Liu Haoming, Nina GUYON, Slesh A. SHRESTHA, Zhong Songfa and others for their valuable comments and suggestions on my work. To my PhD colleagues and friends, thank you for your friendship, support, chats and laughs along the way. Thanks Long Ling for your continued care and help. Thanks Lu Yunfeng, Liu Zhengning, Zhou Yingke and ii Jiangwei for all the inspirational conversations and debates. Thanks Li Jingping, Qian Neng, Wang Peng, Yang Songtao and others for all the encouragements and joys. Also, I must acknowledge the financial, academic and technical support of National University of Singapore and its staff. I really enjoy my PhD life in NUS. Lastly, I would like to give my deep and sincere gratitude to my family for their continuous and unparalleled love, support and unwavering belief in me. I cannot thank my parents enough for always letting me explore new directions in life and seek my own destiny. I would also like to thank my uncles for all useful suggestions and guidance when I needed. In the end, I would like to dedicate this thesis to the memory of my grandfather who kept encouraging me till the last days of his life. I hope he would have been proud. iii Table of Contents DECLARATION i ACKNOWLEDGEMENTS . ii Table of Contents . iv Summary vii List of Figures . ix List of Tables . x Chapter One . Telecommunication Externality on Migration: Evidence from Chinese Villages 1.1 Introduction . 1.2 Background . 1.2.1 Rural-to-Urban Migration in China . 1.2.2 Development of Landline Phones in China . 1.3 Model 11 1.4 Empirical Strategy . 13 1.4.1 Placement and Timing of Landline Phone Installation 14 1.4.2 Augmented Estimation Specification and Robustness Checks 18 1.5 Data and Variables 19 1.6 Empirical findings . 21 1.6.1 Main Results 21 1.6.2 Robustness Checks . 23 1.6.3 Two Placebo Tests . 24 1.6.4 Using IV Estimation 25 1.6.5 Using DID Matching 26 1.6.6 Mechanism . 27 1.7 Conclusion . 29 Chapter Two . 31 Rusticated Youth: the Send-down Movement and Beliefs . 31 2.1 Introduction . 31 iv 2.2 Estimation Strategy . 36 2.2.1 The Send-down Movement 36 2.2.2 Framework . 38 2.2.3 Estimation Particulars 39 2.2.4 Potential Manipulation . 42 2.3 Data and Variables 45 2.4 Empirical Findings 48 2.4.1 First Stage 48 2.4.2 Family and Relationships . 49 2.4.3 Success . 50 2.4.4 Society 51 2.4.5 Robustness Checks . 52 2.5 Interpretation of Empirical Results and Competing Hypotheses 53 2.5.1 Life of the Sent-down Youths 53 2.5.2 Competing Hypotheses 56 2.6 Heterogeneous Effects . 59 2.7 Conclusion . 63 Chapter Three 65 Adolescent Adversity and Long-run Health 65 3.1 Introduction . 65 3.2 Estimation Strategy . 70 3.2.1 The Send-down Movement 70 3.2.2 Life of the Sent-Down Youths . 72 3.2.3 Estimation Framework . 74 3.3 Data and Variables 77 3.4 Empirical Results 83 3.4.1 Potential Manipulation . 83 3.4.2 Send-Down Probability and Birth Cohorts 86 3.4.3 Physical Health 88 3.4.4 Mental Health . 89 3.4.5 Robustness Checks . 90 3.5 Mechanism 91 3.5.1 Health Conditions during the Send-Down Period . 92 v 3.5.2 City Violence . 94 3.5.3 Post-Send-Down Life Outcomes . 96 3.6 Heterogeneous Effects . 97 3.6.1 Gender Difference 97 3.6.2 Sibling Difference 97 3.7 Conclusion . 99 Figures and Tables for Chapter One . 101 Figures and Tables for Chapter Two . 111 Figures and Tables for Chapter Three 132 Bibliography . 164 1. Chapter One 164 2. Chapter Two 169 3. Chapter Three 173 Appendices 181 Figure A1. Distribution of Birth Cohort Using 1982 Census Data 181 Figure A2. Distribution of Birth Cohort Using 1990 Census Data 182 Figure A3. Distribution of Birth Cohort Using 2000 Census Data 183 vi Summary This thesis consists of three empirical essays within the broad field of labor economics. All three essays are self-contained and can be read independently of the others. They include: (a) Telecommunication Externality on Migration: Evidence from Chinese Villages; (b) Rusticated Youth: the Send-down Movement and Beliefs; and (c) Adolescent Adversity and Long-run Health. The first chapter examines the telecommunications externality on migration. It uses a unique experiment in Chinese villages to investigate whether access to telecommunications—in particular, landline phones—increases the likelihood of outmigration. By using regional and time variations in the installation of landline phones, the difference-in-difference estimation shows that the access to landline phones increases the ratio of out-migrant workers in China. It also confirms that landline phones affect outmigration through two channels: information access on job opportunities and timely contact with left-behind family members. The second chapter investigates whether a difficult environment in early life shape people's core beliefs and values. We examine the long-term impact of the send-down movement during China’s Cultural Revolution, when urban educated youths were forced out of cities to work and live in undesirable rural areas. The mandatory policy applied to urban youth who graduated from junior or senior high school between 1966 and 1976. We identify the senddown effect by regression discontinuity, comparing individuals who graduated just before and just after the implementation of the policy. Using individualvii level survey data, we find that rusticated individuals value family and relationships more highly, are less likely to believe in luck as the most important factor for success, and support social equality more strongly. The last chapter exploits the effect of early life environment on long-run health outcomes. By using variation in the living conditions experienced by rusticated youths after being sent down to rural areas during China's Cultural Revolution, this paper finds that rusticated youths—who lived in a disadvantaged environment with poor sanitary and nutrition conditions for years—were more likely to develop chronic diseases and mental problems. We also find that these effects are similar across gender, but stronger for individuals with fewer siblings. 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[63] Rasmussen, Astrid Wurtz (2010). “Increasing the Length of Parents’ Birth-related Leave: The Effect on Children’s Long-term Educational Outcomes,” Labour Economics, 17 (1), 91–100. 179 [64] Sanbonmatsu, Lisa, Jeffrey Kling, Greg Duncan, and Jeanne Brooks-Gunn (2006). “Neighborhoods and Academic Achievement: Results from the Moving to Opportunity Experiment,” Journal of Human Resources, 41 (4), 649–691. [65] Tanaka, Sakiko (2005). “Parental Leave and Child Health across OECD Countries*,” The Economic Journal, 115 (501), F7-F28. 180 Appendices Figure A1. Distribution of Birth Cohort Using 1982 Census Data 181 Figure A2. Distribution of Birth Cohort Using 1990 Census Data 182 Figure A3. Distribution of Birth Cohort Using 2000 Census Data 183 [...]... with landline phones in our data increased from 35 in 1993 to 58 in 2000 (panel A) Except for Gansu province, all villages in the other provinces in our data had access to landline phones by the end of 2000 (panel B) Finally, the timing of installing landline phones varies across our sample villages and time (panel C) For example, most landline phones in Hubei province were installed in the early years... landline phones in 1993 and more likely to install landline phones earlier, while villages located in mountainous areas were less likely to have landline phones in 1993 and more likely to install landline phones later None of the remaining determinants are statistically significant In particular, the ratio of out-migrant workers in 1991 and proxies for potential migrant workers are consistently insignificant,... (2006) in controlling for a flexible time trend in outmigration generated by the preexisting village characteristics Specifically, we interact a second-order polynomial function of time with the village’s average income per capita in 1991, total population (in logarithm form) in 1991, the “poor village” status in 1991, the “disadvantaged village” status in 1991, the indicator of being in mountainous... results in adults largely leaving their families and migrating alone (Wong 2012) Using the data of the National Fixed Point Survey conducted by the Ministry of Agriculture of China in 1993 and 1995–2000, we exploit regional and time variations in the installation of landline phones to identify the causal effect of landline phones on outmigration Out of 61 villages in our sample, 35 had landline phones in. .. installation of landline phones leads to an increase in the ratio of out-province migrant workers in total rural labor force by 1.5-2.1 percentage points, or 39-54 percent of the sample mean The results are robust to a battery of validity checks, such as using DID coupled with matching, using county-average gradient as IV for landline phone installation, controlling for pretreatment effect, and using a flexible... in 1991, the “poor village” status in 1991, the “disadvantaged village” status in 1991, the indicator of being in mountains area, the distance to the nearest county or municipal (or prefecture) government, the number of firms in 1993, the percentage of non -labor force in 1993, the sex ratio in 1993, the percentage of electrified households in the village in 1993, the number of newspapers and magazines... of out-province migrant workers as dependent variable, and an indicator of installation of landline phones as a regressor of interest In National Fixed Point Survey, labors or workers is defined as males with ages 16-60 and females with ages 16-55, which is the official one used by the National Bureau of Statistics of China In the survey, a labor is classified as the migrant worker if the individual... networks in China (Wu 2008), and almost all subscribers were living in urban areas while people in remote rural parts of China remained unconnected For a long time before the late 1990s, the Ministry of Posts and Telecommunications was the regulator and main operator of telecom services, and telecom monopoly seriously constrained the development of the industry In the late 1990s, partly following the... for which we cannot trace Among the remaining 61 villages, 35 villages had landline phones in 1993 11 12 The results are available upon request Surveys were not conducted in 1992 and 1994 because of financial reasons 19 (incumbent villages); 23 villages installed landline phones during the sample period (switching villages); and 3 villages had no landline phones installed even at the end of our sample... village (including out-village and within-county, out-county and within-province, out-province and within-China, and overseas) for most of the time of a year 13 Table 1.2 reports the summary statistics of our key variables During the sample period (1993, 1995–2000), the overall ratio of out-province migrant workers to total labor force is 3.9 percent, and the overall ratio of out-village, within-county . THREE ESSAYS IN LABOR ECONOMICS XIE HUIHUA NATIONAL UNIVERSITY OF SINGAPORE 2014 THREE ESSAYS IN LABOR ECONOMICS XIE HUIHUA. villages in our sample, 35 had landline phones in 1993 (i.e., our initial year), 23 installed landline phones at different times during the sample period, and 3 remained without access to landline. the difference -in- difference (DID) approach, we find that the installation of landline phones leads to an increase in the ratio of out-province migrant workers in total rural labor force by