Yang Wang

Ph.D. Candidate

Research Statement

Research Statement

Job Market Paper

"Skill Complementarity in Teams: Matching, Sorting and Agglomeration in China"

This paper models and quantifies the importance of within-firm skill complementarity in explaining cross-city productivity gaps in China. I argue that skill complementarity is an important driver of skill concentration which augments these productivity gaps with agglomeration economies. I develop a spatial general equilibrium model that captures an economy inhabited by heterogeneous individuals who form production teams through assortative matching and sort across cities in these teams. Using restricted firm-level census data, I structurally estimate the model through the simulated method of moments. Through counterfactual analysis, I find that within-firm skill complementarity accounts for 18% of cross-city productivity gaps in China. I further examine the general equilibrium effects of trending place-based policies in China: subsidizing skilled individuals to reside in second-tier cities. The simulated equilibrium shows local gains from such policies at the expense of other cities, suggesting an equity-efficiency trade-off in a spatial economy.

Publications

"Railways and the Local Economy: Evidence from Qingzang Railway." Economic Development and Cultural Change. 2015. (with Binzhen Wu) Press Coverage: [The Economist]

This article empirically examines the causal effect of railway infrastructure on local economic development using the construction of Qingzang railway as a natural experiment. We apply the difference-in-difference method and find that the Qingzang railway significantly stimulated the economy of the counties along its path (railway counties). The local GDP per capita increased by about 33% after the railway had begun to operate. The effect manifested primarily through the positive railway effect on the manufacturing industry. In addition, the effect did not vary significantly with the initial economic status of the railway counties. The GDP per capita of the off-railway counties that are adjacent to the railway counties was not significantly affected.

Working Papers

"What We Learn from a Failed RD: Consequences of Retaking in High-Stakes Tests"

Many high-stakes tests allow students to retake. While retaking insures students against "bad day" low performance, it also perturbs incentives to learn especially at score thresholds. Using a survey data on college students in China, I draw evidence from a national English test and exploit a manipulated regression discontinuity at the passing cutoff for certificates. I find that 1) There is a 10% jump in starting salary after graduation for those who barely pass the test; 2) Students bunch just above the score threshold due to low cost of retaking; 3) Among students at risk of failing English test, retakers are positively selected in terms of abilities unrelated to English skills. Overall, the language certificate is perceived as a signal of other abilities around the cutoff. Due to asymmetric information on retaking, the labor market punishes students who fail to pass under retaking. I provide further discussion on the retaking policy and exam design in terms of their labor market consequences.

"Talents on the Move: Income Gains from Internal Migration in China"

Using a survey data on college graduates in China, I empirically estimate the income gains from migrating for jobs after graduation. To overcome the endogeneity of migration decisions, I first apply propensity score matching and compare students who have similar propensity to move but end up with different locations. I then construct home-education-work transitions and instrument job migration with the distance from home to college, controlling for education and family background. Under both strategies, I find 12%-15% gains in starting salary from this geographic mobility. The effect does not vary significantly across family background and education. Further analysis on mechanisms suggests that the migration premium is mainly attributed to local agglomeration factors at the destination. The results suggest potential gains from reducing migration barriers and background discrimination in the labor market.

Research in Progress

"Maternal Stress, Birth Weight and School Performances: Evidence from the 2003 SARS Outbreak"

Mental stress during pregnancy has received more and more attention in testing the fetal origin hypothesis. Using the 2003 outbreak of Severe Acute Respiratory Syndrome (SARS) as a natural experiment, I estimate the impact of maternal mental stress on children's birth weight and long-term school performances in China. I apply the difference-in-difference strategy and compare children whose mothers were exposed to disturbing news of infections and deaths during pregnancy to those who were not. I rely on exogenous variation in exposure across time, pregancy stages and regions to produce causal estimates.

"New Faces in Africa: Local Employment and Skill Transfer in Ethiopia"

China's massive investments in Africa have been filling infrastructure and technology gaps on the continent. This long-run project examines labor use and skill transfer among Chinese firms in Ethiopia through field surveys and company records. Miscommunication, lack of management, and asymmetric information are considered to be crucial barriers in boosting the productivity and skills of local workers.

"Skill Dispersion and Wage Inequality in China"

"Avoiding the Air Pollution: Evidence from Bike-Sharing" (with Chu Dang)

"Parental Time Investment and School Performance"(with Wei Chi and Binzhen Wu)