Xueli Tang

WHY DO CHILDREN TAKE CARE OF THEIR ELDERLY PARENTS? ARE THE JAPANESE ANY DIFFERENT?: WHY DO CHILDREN TAKE CARE?

We conduct a theoretical and empirical analysis of why children live with (or near) their parents and provide care and assistance to them using microdata from a Japanese household survey, the Osaka University Preference Parameter Study. We find that the Japanese are more likely to live with (or near) their elderly parents and/or to provide care and attention to them if they expect to receive a bequest from them, which constitutes strong support for the strategic bequest motive, but that their caregiving behavior is also heavily influenced by the strength of their altruism toward their parents and social norms.

Should We Refinance Unfunded Social Security

Within a continuous-time overlapping generations model, featuring endogenous intensive margin of the labour supply and retirement decision, we analyse the issue of passing the burden of payroll revenues onto consumption or capital. We find that large long-run welfare gains occur when pension benefits are refinanced by consumption taxes. However, the transition to the new steady state is very painful for a large fraction of existing cohorts. On the other hand, the capital base is too small to sustain pension benefits but could be made larger if capital taxes are raised. Yet that would entail significant welfare losses.

Has China displaced its competitors in high tech trade

This paper empirically investigated the extent to which China displaced its competitors in high†tech exports using disaggregated data for the period 1992–2013. To address the endogeneity problem, we used a comprehensive set of instruments for Chinese high†tech exports in relevant markets, including Chinas GDP and distances to those markets. Results of our IV regressions revealed that in most of the high†tech sectors, Chinese exports had displaced the exports of its developing competitors such as India, South American exporters like Brazil and Mexico, and South†East Asian countries like Malaysia, Singapore, Thailand and Vietnam, especially in the period prior to the 2007–08 global financial crisis. Yet, Chinese exports had been associated with more high†tech exports of developed exporters like OECD countries, South Korea and Japan. Our findings suggest that while China became the worlds top high†tech exporter, its high†tech exported products had been substitutes to those of other developing and emerging economies but complementary to that of developed economies.

Classifying Chinese bull and bear markets: indices and individual stocks

Purpose This paper aims to investigate Chinese bull and bear markets. The Chinese stock market has experienced a long period of bear cycle from early 2000 until 2006, and then it fluctuated greatly until 2010. However, the cyclical behaviour of stock markets during this period is less well established. This paper aims to answer the question why the Chinese stock market experienced a long duration of bear market and what factors would have impacted this cyclical behaviour. Design/methodology/approach By comparing the intervals of bull and bear markets between stocks and indices based on a Markov switching model, this paper examines whether different industries or A- and B-share markets could lead to different stock market cyclical behaviour and whether firm size can determine the relationship between the firm stock cycles on the market cycles. Findings This paper finds a high degree of overlapping of bear cycles between stocks and indices and a high level of overlapping between the bear market and a fraction of stock with increasing stock prices. This leads to the conclusion that the stock performance and trading behaviour are widely diversified. Furthermore, the paper finds that the same industry may have different overlapping intervals of bull or bear cycles in the Shanghai and Shenzhen stock markets. Firms with different sizes could have different overlapping intervals with bull or bear cycles. Originality/value This paper fills the literature gap by establishing the cyclical behaviour of stock markets.

Optimal progressivity of redistribution with frictions to knowledge diffusion

Benabou (2002) strengthens the so-called Efficient Redistribution Hypothesis (ERH) by demonstrating how income redistribution can promote growth and welfare by mitigating economic waste from resource misallocation that is caused by credit market frictions to production, which is subject to diminishing returns. We ask how the presence of knowledge externality in private education technology and social frictions resisting knowledge diffusion changes the optimal progressivity. In the model, the distribution of human capital of the parents generation determines the stock of nonrival knowledge through a process of diffusion which is subject to communication frictions. The output cost of inequality and the optimal progressivity increase with the degree of knowledge externality and hence with social returns to education, if and only if, frictions to diffusion outweigh frictions to production. If the inequality augmenting neighborhood effect of parental human capital is relatively large, compared to the inequality mitigating impact of the economys stock of nonrival knowledge, then the ERH fails with low communication frictions. However, if frictions and social returns to education are large, irrespective of its local or global origin, then even with endogenous growth led by constant returns to capital, the ERH survives.

Impatient in Experiments, but Patient in Simulations: A Challenge to the Heckman‐Type Model

Intertemporal labour–leisure choice models typically assume agents have a very low degree of impatience. Yet there is a lot of empirical evidence indicating a high degree of impatience. Using a life-cycle model of consumption–saving and labour–leisure choice, we show that even if an agent displays a relatively moderate degree of impatience, his labour supply choice delivers highly counterfactual patterns. We resolve this counterfactual finding by augmenting the standard model with a time-dependent marginal utility of leisure assumption that is consistent with some recent evidences from leisure studies. We also introduce various extensions and discuss their relative importance and associated challenges.