Research

Working Papers

Place-Based Policy and Entrepreneurship: Evidence from Theme Park Openings (JMP)
with Chun-Yu Ho

Abstract: This paper examines the economic impacts of large theme park openings in China from 2000 to 2020 using a newly compiled dataset on county-level theme parks and entrepreneurship. Leveraging the staggered openings of theme parks across various counties, we document three main findings. First, theme park openings lead to a 14% increase in entrepreneurial activities, especially in tourism-related service sectors. This result is robust to the instrumental variable approach, the heterogeneous treatment effect, alternative specification and measurement, and propensity score matching. Second, theme park openings generate spillover effects on neighboring counties within a 50-75 kilometer radius. Third, we identify tourism and agglomeration as the potential mechanisms driving these economic impacts. Back-of-the-envelope calculations suggest that theme park openings promote employment by 11% and overall economic activities by 2%-3%. This study sheds new light on the evaluation of the effectiveness of tourism-related place-based policies.

Air Connectivity and International Travel: Evidence from Cross-border Card Payments
with Chun-Yu Ho, Haruka Takayama, and Li Xu

Abstract: Many countries seek to attract foreign travelers. How do direct flight connections affect the spending of international visitors? A novel dataset on card payments made by Chinese travelers through point-of-sale (POS) terminals enables us to investigate that question. We instrument for the frequency of direct flights between Chinese cities and foreign countries by exploiting overseas airport expansions as exogenous shocks. Our IV estimates indicate that a 1% increase in the weekly frequency of direct flights leads to a 2% increase in cross-border card transaction value. This suggests that in a city with the average frequency, adding one extra weekly direct flight increases the value of transactions by 52% to the destination country. While improving air connectivity promotes international travel, we find that negative shocks to consumer preferences for destination countries, such as boycotts, diminish the positive impact of air connectivity.

Competitive Effects of Regional Airline Exit: Evidence from the COVID-19 Pandemic
with Chun-Yu Ho, Patrick McCarthy, and Li Xu, R&R

Abstract: We examine the competitive effects of regional airline exits in the U.S. from April 2019 through December 2020, leveraging the first wave of COVID-19 as a natural experiment. Using propensity score matching and difference-in-differences, we find consumers are worse off after exits, with a 16% decrease in flight availability and a 6% rise in fares. Longer-haul markets and those dominated by full-service carriers experience less impact. Exits also increase connecting flight prices by 2%. Incumbent airlines expand services and raise fares, while competing regional airlines and those with greater cash reserves seize market share, with less impact on on-time performance.

Supply-induced Litigation and the Role of Informal Institutions
with Chun-Yu Ho, Shaoqing Huang, and Mingda Zhang, submitted

Abstract: Access to justice is argued to be an integral part of sustainable development and inclusive growth. This paper examines how litigation demand responds to an increased supply of legal professionals, i.e. supply-induced litigation, in a developing economy using a newly constructed city-level panel dataset of litigation rate, law firms, and socioeconomic variables from China throughout 2013-23. Our empirical analysis reaches several conclusions. We find that an increase in the number of law firms has a positive and significant effect on the litigation rate, which supports supply-induced litigation. This result is robust to the instrument variable (IV) estimation. Further, we employ social trust, ethnic diversity, and religiosity as measures for informal institutions and find that supply-induced litigation is more pronounced for cities with higher social trust and lower ethnic diversity. In other words, there is a complementary between formal and informal institutions in driving the use of the judicial system.

Publications (*pre-doctoral work)

Ho, Chun-Yu, Li, Dan, Peng, Tingting, Xiao, Zhijia (2025) Endowment, Market Potential, and Spatial Dynamics of Industrial Locations: Evidence from Global Shipbuilding. Economics Letters, 248, 112114.

*Liang Zhang, Bin Qiu, Lamei Wu, Tingting Peng. “Human Capital Accumulation, Trade, and China’s Firms Innovation.” China Economic Quarterly 24, no. 2 (2024), in Chinese

*Lin Chen, Tingting Peng, Yanan Lv, Liang Zhang. “China’s Agricultural Exports to Belt and Road Countries: A Perspective Based on the Extensive and Intensive Margins,” Journal of Agrotechnical Economics, no. 6 (2018), in Chinese

Work in Progress

Export Destination and Input Quality: the Role of Processing Trade

Abstract: I study how processing trade affects the relationship between export destination and input price using Chinese customs data from 2000 to 2013. First, to address the unobserved shocks endogenous issue, I construct an instrumental variable (IV) by interacting the real exchange rate in a destination with the firm’s share of exports to that destination. My IV estimates show that the relationship between destination income and input price is negative and significant. Specifically, a 10 percent increase in average destination GDP per capita is associated with approximately a 0.06 percent decrease in average input prices at the firm level. Second, I find that this relationship becomes larger for those firms that have a higher share of processing trade. Specifically, a 10 percent increase in average destination GDP per capita is associated with approximately a 0.07 percent decrease in average input prices for firms with a larger share of processing trade. My results reveal the important role of processing trade in understanding the effects of exporting on firms’ behaviors in the economy mainly driven by manufacturing industries.