Research

The Political Roots of China's Housing Vacancies (Job Market Paper)

Abstract: China has a vast number of unsold and unoccupied homes. Can incentives faced by local politicians explain this puzzle? In China, local governments are monopolists in selling land use-rights, which is a key input for the housing market. City managers, the leader of local governments, are promoted based on the performance of the local economy. They also use land revenues to fund local government expenditures. I develop and estimate a dynamic, infinite-horizon model of land supply. In this model, forward- looking city managers choose how much land to make available for the private sector, in order to both boost local economic growth and generate local government revenues. Due to political concerns such as achieving GDP growth rate targets, city managers tend to allocate more land to the private sector than the revenue-maximizing level. By estimating the structural model of equilibrium land supply with manager-city-year level data, I infer city managers’ weights on career advancement relative to land revenues. Using the parameter estimates from the model, I then estimate the impact of political incentives on land allocation. Overall, city managers sell 7.4% more land between 2003 and 2012 relative to the counterfactual in which city managers have no GDP growth incentives. This land oversupply is 12.5% in smaller cities and 3.7% in larger cities. Finally, converting land to housing construction, the estimated impacts explain 23.2% to 27.7% of unsold homes.

Do Judge-Lawyer Relationships Influence Case Outcomes?
with David H. Zhang
Revise & Resubmit at Journal of Legal Studies

Abstract: We examine whether law school alumni relationships between the lawyers and judges affect case outcomes. We show that in the context of medical malpractice lawsuits in Florida, the plaintiff lawyer sharing the same law school as the judge increases the chances of recovery by 2%. Furthermore, the effect is confined to younger lawyers who see a 4% increase in the likelihood of recovery from having been to the same law school as the judge, and is absent in older lawyers. We interpret our results as evidence that lawyers gain school-specific human capital from their law schools which helps in their interactions with judges that graduated from the same school, and that this school-specific human capital become less important further on in the lawyers’ careers.

Millionaire or Tiger Parents
with Yang You

Abstract: Children in China enroll in elite schools if their parents are homeowners in the school district, or they achieve academic excellence. In 2014, the China Education Ministry permanently terminated primary school admissions by talent screening to enforce a pure neighborhood schooling system. Exploiting the fact that renters are not eligible for neighborhood schooling, we first document elite school housing premiums and price changes due to the admission regime shift. Then, we propose a simple general equilibrium model of the pre-reform hybrid admission system to connect housing premiums to household characteristics. On the empirical side, we conducted a retrospective survey and assembled unique data on the joint decisions of housing, schooling, and education spending. Finally, we estimate a structural model of households' residential and school preferences. Based on immediate reduced-form housing price responses, we simulate the counterfactual school matching outcomes and infer the reduction in transportation cost and mitigation of admission arms race.