Ethnic Diversity and Labour Market Outcomes: Evidence from Post-Apartheid South Africa (with Sara Tonini) Job Market Paper

Abstract. This paper investigates how ethnic diversity amongst black South Africans affects their labour market outcomes in the post-Apartheid era. We find that ethnic diversity has a positive impact on the employment rate of the black South Africans, and it only affects ethnic groups with relatively large population size. To address the endogeneity of ethnic composition, we explore the location of historical “black homelands” and argue that districts equally distant to multiple homelands are ethnically diverse. In our instrumental variable regressions, a one standard deviation increase in ethnic diversity index increases employment rate by 3 (5) percentage point in 1996 (2001), which is around 8% (13%) of the average employment rate. We also disentangle the two components in the ethnic diversity index and show that the variation in our diversity index comes from the dispersion of group size. We then propose a model of a coordination game to explain these findings. A more ethnically diverse place has less dispersion of group size, which implies a higher rate of inter-ethnic communication needed to maintain the overall level of social connection. As inter-ethnic communication requires more skills than intra-ethnic connection, people in ethnically diverse districts are motivated to invest more in social skills to be able to communicate with those outside their own group. The acquisition of these social skills makes them better equipped for the labour market. The key mechanism of the model is verified by both numerical simulation and empirical evidence.

Working Papers

The Cost of Restrictions to Trade in Variety: Evidence from Ethiopia

Abstract. This paper investigates how market access affects the variety of expenditure in rural Ethiopia where traders under monopolistic competition and free entry conditions carry goods from the central market to sell in remote villages. In my theoretical model, variety of expenditure decreases with distance to the central market as traders do not sell in villages where the transportation cost is too high. The model also predicts that rich households rely less on traders than poor ones when households can endogenously choose whether to buy from the market or traders. I explore a panel data from rural Ethiopia to test these predictions. The empirical strategy comes from two quasi-experiments. The baseline quasi-experiment, which is used to test the change of variety across distance, is based on the purposeful design of a survey to make sure survey areas only differ in distance to the market. The second quasi-experiment, which is used to test households’ endogenous choice between traders and the market, relies on an exogenous crackdown on traders. Finally, I conduct welfare analysis of the crackdown on traders by calculating the cost of living and CV/EV as percentage of overall expenditure. In all of the three measures, the welfare loss is larger in the treatment group and poor households, and the change in variety contributes a lot to the welfare loss. The results also shed light on the rise of the formal market in response to the increase in household wealth in developing countries.

Higher Education Expansion and Intergenerational Mobility in Contemporary China

Abstract. There has been a convergence in educational achievements between children from upper-class and middle-class families in contemporary China. The convergence in occupational status across these two groups is even faster. In this paper, I explain this phenomenon by calculating occupational returns to education among children from different social backgrounds. Occupational status is measured by the widely-accepted ISEI scaling system ranging from 16 to 90 points. I take advantage of an exogenous college expansion policy in 1999 as a natural experiment and find that having a father with a middle-class occupation, compared with having a father with an upper-class job, provides an additional advantage of 0.684 points (2.582 points) along the ISEI scale in children’s occupational returns to education in OLS (IV) regressions. This stimulates the intergenerational occupational mobility of middle-class children.

Work in Progress

Returns to Education, Marital Sorting and Family Background in South Africa (with Patrizio Piraino)

Abstract. This paper investigates whether father-in-law’s background has a stronger explanatory power than father’s background for male wages in South Africa. We also investigate the heterogeneity of the effects of father and father-in-law’s background at different educational levels and between different population groups. After correcting for potential measurement errors in both earnings and education, we find that, consistent with existing studies on Brazil, father-in-law’s schooling is more correlated with male workers’ labour market earnings than own father’s schooling. This pattern exists at each level of parental education. Father’s background plays a more important role in explaining labour market income of black South African males compared to white males, while this gap between the black and the white does not hold for father-in-law’s background. Furthermore, we find that family background and martial sorting are also related to other labour market outcomes, such as employment and labour force participation.

Franchise Extension and Redistribution: Evidence from the United Kingdom 1802-1913 (with Toke Aidt and Stanley Winer)

 

Publication of Pre-Doctoral Work

Rural Banking in China: A Case of Centralization? 2017. Area Development and Policy 2 (2): 173-191 (with Godfrey Yeung and Canfei He)

Rural Banking in China: Geographically Accessible But Still Financially Excluded? 2017. Regional Studies 51 (2): 297-312 (with Godfrey Yeung and Canfei He)

Agglomeration Economies and Firm R&D Efforts: An Analysis of China’s Electronics and Telecommunications Industries. 2014. The Annals of Regional Science 53: 671-701 (with Canfei He and Yifei Sun)

Depressive Symptoms and SES among the Mid-aged and Elderly in China: Evidence from the China Health and Retirement Longitudinal Study National Baseline. 2014. Social Science & Medicine 120: 224-232 (with Xiaoyan Lei, Xiaoting Sun, John Strauss and Yaohui Zhao)