Ben Zou - Academia.edu (original) (raw)

Papers by Ben Zou

Journal of Development Economics

We study the local and aggregate effects of the "Construction of Third Front" (TF), a massive yet... more We study the local and aggregate effects of the "Construction of Third Front" (TF), a massive yet short-lived industrialization campaign that established manufacturing plants in China's underdeveloped hinterland. Exploiting spatial variation from the site-selection criteria, we find that TF investment led to a long-run increase in the size of the local manufacturing sector, mostly driven by the nascent private sector. This is despite that these locations were not the most suitable sites for manufacturing plants, pointing to the importance of agglomeration forces in regional development. Using a simple model, we further discuss the distributional and efficiency implications of the TF.

Location-based policies are widely used across the world in the hope of stim-ulating particular l... more Location-based policies are widely used across the world in the hope of stim-ulating particular local economies. This dissertation consists of three chapters of empirical studies that evaluate the efficacy and efficiency of three different location-based government policy interventions. The first chapter studies the impacts of military personnel contractions on various aspects of the economies of counties in the United States. The second chapter estimates the causal effect of international aid on economic growth of recipient developing countries. The third chapter stud-ies a large-scale industrial buildup in China and its impact on long-run regional economic development. Chapter 1: The Local Economic Impacts of Military Personnel Contractions The main challenges to comprehensive evaluations of the effects of local busi-nesses on other parts of the local economy are to establish causality and to calculate the welfare impacts in a unified framework. In the first chapter, I study the e...

In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using ins... more In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using inspection results between 2007 and 2013, we show that only 58 percent of the subsequent inspections led to online grade posting. Although the disclosure rate in general declines with inspection outcome, higher-quality A restaurants are less likely to disclose than lower-quality As. After examining potential explanations, we believe the observed pattern is best explained by a mixture of signaling and countersignaling: the better A restaurants use nondisclosure as a countersignal, while worse As and better Bs use disclosure to stand out from the other restaurants.

Location-based policies are widely used across the world in the hope of stimulating particular lo... more Location-based policies are widely used across the world in the hope of stimulating particular local economies. This dissertation consists of three chapters of empirical studies that evaluate the efficacy and efficiency of three different locationbased government policy interventions. The first chapter studies the impacts of military personnel contractions on various aspects of the economies of counties in the United States. The second chapter estimates the causal effect of international aid on economic growth of recipient developing countries. The third chapter studies a large-scale industrial buildup in China and its impact on long-run regional economic development. Chapter 1: The Local Economic Impacts of Military Personnel Contractions The main challenges to comprehensive evaluations of the effects of local businesses on other parts of the local economy are to establish causality and to calculate the welfare impacts in a unified framework. In the first chapter, I study the effects on county economies of the large military personnel contractions in the United States in the 1990s. To establish causal estimates, I propose a new identification strategy that combines the synthetic control method and the instrumental variable estimator. I then put the estimated effects in a spatial general equilibrium model and calculate the welfare impacts on different agents of the local economy. I find that military personnel contractions significantly reduced local employment levels, but as people migrate, the incidence of welfare impacts was mainly on landowners, not on workers.

The aid allocation literature has devoted surprisingly little attention to strategic interaction ... more The aid allocation literature has devoted surprisingly little attention to strategic interaction among donors. This study investigates the effects of the World Bank's income threshold for IDA eligibility, and of actual IDA allocations, on the allocations of bilateral donors. Other donors might interpret the World Bank's policies and allocations across recipients as informative signals of where their own aid might be used most effectively. Alternatively, other donors might compensate for reduced IDA allocations by increasing their own aid, particularly where declines in IDA were triggered by crossing an arbitrary income threshold. We show in this paper that the former effect dominates the latter, but we also find some heterogeneity among donors. Using panel data with country fixed effects, we find that aid from the DAC bilateral donor countries - and total aid from all donors reporting to the DAC - is significantly reduced after countries cross the IDA income cutoff, controll...

SSRN Electronic Journal, 2021

SSRN Electronic Journal, 2016

This paper studies the local economic impacts of the U.S. military personnel contractions between... more This paper studies the local economic impacts of the U.S. military personnel contractions between 1988 and 2000. I propose a novel empirical strategy combining synthetic control and instrumental variables methods, and jointly estimate the causal effects on the equilibrium quantities and prices of local labor, housing, and product markets. Military personnel contractions substantially reduced local civilian employment, but mainly through reductions in in-migration, local population adjusted quickly, resulting in small changes in wages and large declines in rental prices. Relating these empirical findings to a simple spatial equilibrium model, I show that the welfare cost on workers is small while that on landowners is sizable.

In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A , B , C , D). Using ... more In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A , B , C , D). Using inspection results between 2007 and 2013, we show that only 58 percent of the subsequent inspections led to online grade posting. Although the disclosure rate in general declines with inspection outcome, higher-quality A restaurants are less likely to disclose than lower-quality A s. After examining potential explanations, we believe the observed pattern is best explained by a mixture of signaling and countersignaling: the better A restaurants use nondisclosure as a countersignal, while worse A s and better B s use disclosure to stand out from the other restaurants.

SSRN Electronic Journal, 2015

This paper studies the long-run impacts of industrial investment on the structural transformation... more This paper studies the long-run impacts of industrial investment on the structural transformation of agrarian local economies. We exploit a massive industrialization campaign in China known as the "Third Front Movement," which invested heavily in the industrial sector in China's remote and largely agrarian areas (the Third Front Region) in the 1960s and 1970s. Exploiting the quasi-randomness in the geographic distribution of the Movement's investment, we find that local economies that received more investment continue to have larger and faster-growing modern sectors over two decades after the Movement ended. Urbanization is mainly accounted for by rural-to-urban transformation within the same local economy, rather than interregional migration. Therefore, the effects of the Movement are captured by the local residents. We find that the persistent effects are sustained by positive spillovers to a fast-growing non-state sector and explore several channels through which those spillovers take place. Finally, we discuss the welfare implications of the Movement at the national level.

SSRN Electronic Journal, 2015

Domestic trade costs imply more restricted access to consumption varieties in smaller and less co... more Domestic trade costs imply more restricted access to consumption varieties in smaller and less connected cities. By eliminating the fixed cost of firm entry and reducing the effect of distance on trade costs, e-Commerce might disproportionately improve these cities' access to varieties, and reduce the associated real income inequality across cities. The implication of this hypothesis is that residents in small and remote cities purchase more intensively online. Using unique data from China's leading e-Commerce platform, we show that online expenditure share is negatively correlated with population and market potential. We then build a multiregion general-equilibrium model to quantify the welfare gains from e-Commerce. We find the welfare gains from e-Commerce to be 1.6 percent. Furthermore, e-Commerce reduces the elasticity of real income with respect to population by 1.9% and the elasticity with respect to market potential by 4.1%.

Policy Research Working Papers, 2014

The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

SSRN Electronic Journal, 2014

The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Economics Letters, 2013

We use individual-level data to show that divorce is pro-cyclical on average, a finding robust to... more We use individual-level data to show that divorce is pro-cyclical on average, a finding robust to the inclusion of a wide range of controls. Pro-cyclical divorce is concentrated among women who married young and/or do not have a college degree.

Galiani, Sebastian and Knack, Stephen and Xu, Lixin Colin and Zou, Ben, The Effect of Aid on Growth: Evidence from a Quasi-Experiment (March 23, 2015). Available at SSRN: https://ssrn.com/abstract=2400752 or http://dx.doi.org/10.2139/ssrn.2400752, 2015

The literature on aid and growth has not found a convincing instrumental variable to identify the... more The literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. This paper exploits an instrumental variable based on the fact that since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59 percent on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A one percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points. Results suggest that increased physical investment is an important channel through which aid promotes growth.

Journal of Development Economics

We study the local and aggregate effects of the "Construction of Third Front" (TF), a massive yet... more We study the local and aggregate effects of the "Construction of Third Front" (TF), a massive yet short-lived industrialization campaign that established manufacturing plants in China's underdeveloped hinterland. Exploiting spatial variation from the site-selection criteria, we find that TF investment led to a long-run increase in the size of the local manufacturing sector, mostly driven by the nascent private sector. This is despite that these locations were not the most suitable sites for manufacturing plants, pointing to the importance of agglomeration forces in regional development. Using a simple model, we further discuss the distributional and efficiency implications of the TF.

Location-based policies are widely used across the world in the hope of stim-ulating particular l... more Location-based policies are widely used across the world in the hope of stim-ulating particular local economies. This dissertation consists of three chapters of empirical studies that evaluate the efficacy and efficiency of three different location-based government policy interventions. The first chapter studies the impacts of military personnel contractions on various aspects of the economies of counties in the United States. The second chapter estimates the causal effect of international aid on economic growth of recipient developing countries. The third chapter stud-ies a large-scale industrial buildup in China and its impact on long-run regional economic development. Chapter 1: The Local Economic Impacts of Military Personnel Contractions The main challenges to comprehensive evaluations of the effects of local busi-nesses on other parts of the local economy are to establish causality and to calculate the welfare impacts in a unified framework. In the first chapter, I study the e...

In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using ins... more In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using inspection results between 2007 and 2013, we show that only 58 percent of the subsequent inspections led to online grade posting. Although the disclosure rate in general declines with inspection outcome, higher-quality A restaurants are less likely to disclose than lower-quality As. After examining potential explanations, we believe the observed pattern is best explained by a mixture of signaling and countersignaling: the better A restaurants use nondisclosure as a countersignal, while worse As and better Bs use disclosure to stand out from the other restaurants.

Location-based policies are widely used across the world in the hope of stimulating particular lo... more Location-based policies are widely used across the world in the hope of stimulating particular local economies. This dissertation consists of three chapters of empirical studies that evaluate the efficacy and efficiency of three different locationbased government policy interventions. The first chapter studies the impacts of military personnel contractions on various aspects of the economies of counties in the United States. The second chapter estimates the causal effect of international aid on economic growth of recipient developing countries. The third chapter studies a large-scale industrial buildup in China and its impact on long-run regional economic development. Chapter 1: The Local Economic Impacts of Military Personnel Contractions The main challenges to comprehensive evaluations of the effects of local businesses on other parts of the local economy are to establish causality and to calculate the welfare impacts in a unified framework. In the first chapter, I study the effects on county economies of the large military personnel contractions in the United States in the 1990s. To establish causal estimates, I propose a new identification strategy that combines the synthetic control method and the instrumental variable estimator. I then put the estimated effects in a spatial general equilibrium model and calculate the welfare impacts on different agents of the local economy. I find that military personnel contractions significantly reduced local employment levels, but as people migrate, the incidence of welfare impacts was mainly on landowners, not on workers.

The aid allocation literature has devoted surprisingly little attention to strategic interaction ... more The aid allocation literature has devoted surprisingly little attention to strategic interaction among donors. This study investigates the effects of the World Bank's income threshold for IDA eligibility, and of actual IDA allocations, on the allocations of bilateral donors. Other donors might interpret the World Bank's policies and allocations across recipients as informative signals of where their own aid might be used most effectively. Alternatively, other donors might compensate for reduced IDA allocations by increasing their own aid, particularly where declines in IDA were triggered by crossing an arbitrary income threshold. We show in this paper that the former effect dominates the latter, but we also find some heterogeneity among donors. Using panel data with country fixed effects, we find that aid from the DAC bilateral donor countries - and total aid from all donors reporting to the DAC - is significantly reduced after countries cross the IDA income cutoff, controll...

SSRN Electronic Journal, 2021

SSRN Electronic Journal, 2016

This paper studies the local economic impacts of the U.S. military personnel contractions between... more This paper studies the local economic impacts of the U.S. military personnel contractions between 1988 and 2000. I propose a novel empirical strategy combining synthetic control and instrumental variables methods, and jointly estimate the causal effects on the equilibrium quantities and prices of local labor, housing, and product markets. Military personnel contractions substantially reduced local civilian employment, but mainly through reductions in in-migration, local population adjusted quickly, resulting in small changes in wages and large declines in rental prices. Relating these empirical findings to a simple spatial equilibrium model, I show that the welfare cost on workers is small while that on landowners is sizable.

In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A , B , C , D). Using ... more In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A , B , C , D). Using inspection results between 2007 and 2013, we show that only 58 percent of the subsequent inspections led to online grade posting. Although the disclosure rate in general declines with inspection outcome, higher-quality A restaurants are less likely to disclose than lower-quality A s. After examining potential explanations, we believe the observed pattern is best explained by a mixture of signaling and countersignaling: the better A restaurants use nondisclosure as a countersignal, while worse A s and better B s use disclosure to stand out from the other restaurants.

SSRN Electronic Journal, 2015

This paper studies the long-run impacts of industrial investment on the structural transformation... more This paper studies the long-run impacts of industrial investment on the structural transformation of agrarian local economies. We exploit a massive industrialization campaign in China known as the "Third Front Movement," which invested heavily in the industrial sector in China's remote and largely agrarian areas (the Third Front Region) in the 1960s and 1970s. Exploiting the quasi-randomness in the geographic distribution of the Movement's investment, we find that local economies that received more investment continue to have larger and faster-growing modern sectors over two decades after the Movement ended. Urbanization is mainly accounted for by rural-to-urban transformation within the same local economy, rather than interregional migration. Therefore, the effects of the Movement are captured by the local residents. We find that the persistent effects are sustained by positive spillovers to a fast-growing non-state sector and explore several channels through which those spillovers take place. Finally, we discuss the welfare implications of the Movement at the national level.

SSRN Electronic Journal, 2015

Domestic trade costs imply more restricted access to consumption varieties in smaller and less co... more Domestic trade costs imply more restricted access to consumption varieties in smaller and less connected cities. By eliminating the fixed cost of firm entry and reducing the effect of distance on trade costs, e-Commerce might disproportionately improve these cities' access to varieties, and reduce the associated real income inequality across cities. The implication of this hypothesis is that residents in small and remote cities purchase more intensively online. Using unique data from China's leading e-Commerce platform, we show that online expenditure share is negatively correlated with population and market potential. We then build a multiregion general-equilibrium model to quantify the welfare gains from e-Commerce. We find the welfare gains from e-Commerce to be 1.6 percent. Furthermore, e-Commerce reduces the elasticity of real income with respect to population by 1.9% and the elasticity with respect to market potential by 4.1%.

Policy Research Working Papers, 2014

The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

SSRN Electronic Journal, 2014

The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Economics Letters, 2013

We use individual-level data to show that divorce is pro-cyclical on average, a finding robust to... more We use individual-level data to show that divorce is pro-cyclical on average, a finding robust to the inclusion of a wide range of controls. Pro-cyclical divorce is concentrated among women who married young and/or do not have a college degree.

Galiani, Sebastian and Knack, Stephen and Xu, Lixin Colin and Zou, Ben, The Effect of Aid on Growth: Evidence from a Quasi-Experiment (March 23, 2015). Available at SSRN: https://ssrn.com/abstract=2400752 or http://dx.doi.org/10.2139/ssrn.2400752, 2015

The literature on aid and growth has not found a convincing instrumental variable to identify the... more The literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. This paper exploits an instrumental variable based on the fact that since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59 percent on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A one percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points. Results suggest that increased physical investment is an important channel through which aid promotes growth.