Title: Location, Location, Location: How Favorable Shocks Can Be Bad for You
Speaker: Chao He, China Economic Research Institute, Liaoning University
Abstract: Conventional wisdom suggests that regions more exposed to favorable industry shocks should experience better labor market outcomes. This study challenges that view using data on China’s inland regions during WTO accession. Contrary to expectations, greater exposure to positive shocks decreased industry employment and wages, regional employment, and the employment rate, with no evidence that inland industries were crowded out. We reconcile these patterns with a parsimonious model: favorable industry or aggregate shocks induce high-productivity entrepreneurs in disadvantaged regions to invest in advantageous areas to better capitalize on the shocks, lowering local labor demand. We present evidence that supports the theory.
Zoom Meeting: https://anu.zoom.us/j/86842064933?pwd=CFHpJjVO4k4CV91fLjJbFggtAwJcLL.1
Meeting ID: 868 4206 4933， Password: 501868