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IAR Faculty Has 3 Papers Accepted for Publication by Highly Regarded Field Journals in Economics


Assistant Professor Haoyang Li and Assistant Professor Helu Jiang recently both have papers accepted for publication by tier 2 international journals on SUFE’s list. Assistant Professor Darong Dai also had one paper published online by a tier 2 international journal.

Haoyang Li’s paper “Emission Pricing, Emission Rebound, and the Coverage Scope of Incomplete Regulations” (coauthored with Nan Wu from Central University of Finance and Economics) was accepted for publication by the Journal of Environmental Economics and Management.

Abstract: This paper studies the emissions pricing of incomplete regulations when accurate firm-level information is unavailable. In an economy with monopolistically competitive heterogeneous firms, the equilibrium can be sufficiently characterized by an aggregate statistic, which we call the “coverage scope”. Given the coverage scope, emissions leakage to the unregulated firms results in a “U-shaped” relationship between the aggregate emissions and emissions price. As the coverage scope expands, the second-best emissions price increases. Firm heterogeneity and market power, the two defining features of the monopolistically competitive economy, affect emissions pricing differently. While both of them affect the second-best emissions price indirectly through coverage scope, market power has an additional direct effect. As a result, the optimal emissions price does not always decrease in market power, which contrasts the traditional wisdom on emissions pricing under complete regulations. A multi-sector model is numerically simulated using parameters for five Chinese manufacturing sectors to be incorporated into a proposed national carbon emissions pricing program. Quantitatively, the second-best price varies substantially with coverage scope and market conditions.

Haoyang Li received his Ph.D. degree from Michigan State University and now serves as an assistant professor at Institute for Advanced Research. His research interest includes resource and environmental economics and agricultural economics. He has papers published in the Journal of Environmental Economics and Management, American Journal of Agricultural Economics, Resources, Conservation & Recycling, etc. He is also the host of a NSFC Youth project.

Helu Jiang’s paper “Skill-Biased Entrepreneurial Decline” (coauthored with Faisal Sohail from the University of Melbourne) was accepted for publication by the Review of Economic Dynamics.

Abstract: The U.S. is undergoing a long-term decline in entrepreneurship. We show that this slow-down in entrepreneurship has been more pronounced for skilled individuals – those with a college degree. We document new facts on the skill-biased nature of declining entrepreneurship and propose that it is a response to the rising worker skill premium observed over the same period. In support of this, we find that workers' earnings grew faster than entrepreneurs', particularly for skilled individuals, discouraging the pursuit of entrepreneurship. To quantify the impact of the skill premium on entrepreneurship, we develop a model of occupational choice with worker heterogeneity. In the model, a rising skill premium – driven by skill-biased technological change – contributes little in lowering entrepreneurship. Instead, around 70% of the observed decline in entrepreneurship is driven by skill-neutral technological change and a rising share of college graduates. A rise in the skill premium interacts with these forces to generate the skill-biased decline, and in doing so, shifts the composition of entrepreneurs towards the unskilled, lowering average entrepreneurial productivity. Our findings suggest an integral role for the changing income structure of workers in driving the broader decline in business dynamism in the U.S.

Helu Jiang received her Ph.D. degree from Michigan State University and now serves as an assistant professor at Institute for Advanced Research. Her research interest includes growth and development, labor economics, population economics, innovation and entrepreneurship market, etc. She is the host of a Shanghai Pujiang Talent project and participant of NSFC Major project.

Darong Dai’s paper “Voting over selfishly optimal income tax schedules with tax-driven migrations” (coauthored with Prof. Guoqiang Tian) was published online by the Social Choice and Welfare.

Abstract: We study majority voting over selfishly optimal nonlinear income tax schedules proposed by a continuum of workers who can migrate between two competing jurisdictions. Both skill level and migration cost are the private information of each worker who will propose an allocation schedule that maximizes the utility of her own type. We identify reasonable scenarios in which the first-order approach applies and hence the second-order sufficient condition for incentive compatibility is fulfilled; otherwise, we need to apply the ironing surgery developed by Brett and Weymark (Games Econ Behav 101:172-188, 2017). Under quasilinear-in-consumption preferences, we show that the tax schedule proposed by the median skill type is the Condorcet winner, and provide a complete characterization of this tax schedule. While this schedule features negative marginal tax rates for low-skilled workers, it features positive rates for high-skilled workers with small migration elasticities; the marginal tax rates at the bottom and top skill levels cannot be unambiguously signed. Moreover, we detail the conditions under which migration induces uniformly higher or lower equilibrium marginal tax rates facing both low-and high-skilled workers than their counterparts in autarky, which leads us to conclude that geographic mobility does not always limit the government’s ability to redistribute incomes via tax-transfer systems.

Darong Dai received his Ph.D. degree from Texas A&M University and now serves as an assistant professor at Institute for Advanced Research. His research interest includes public economics, tax and fiscal budget institutional design, and intellectual property rights protection. He has papers published in the Journal of Economic Behavior & Organization, Journal of Public Economic Theory, Review of Economic Design, etc. He is also the host of a NSFC Youth project and participant of NSFC Major project.