Pacific Economic Review

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Latest documents

• Editor's introduction to the special issue on ‘The Impact of Government Policies on Household Welfare in Asia’
• Issue Information
• Family bargaining over parental leave: A collective household model with endogenous gender power

  Although existing studies have suggested that men's leave‐taking positively affects children's development and their involvement in childcare and household chores in the long run, the underlying mechanism remains unclear. To shed light on this ambiguity, this study develops a dynamic collective household model and analyses household decisions on parental leave‐sharing between spouses, resource allocation, home production, and labour supply. We demonstrate that gender equality in bargaining positions within families before leave‐taking is crucial in explaining the positive impacts of men's leave‐taking. Specifically, if women's intrahousehold bargaining power before taking parental leave is sufficiently low, their husbands are unlikely to take leave, and women's positions may deteriorate after leave. Consequently, households may allocate fewer resources to children, and men may not actively participate in childcare and household chores. Our model suggests that implementing parental leave policies for both genders may not be sufficient; simultaneous measures to increase women's bargaining power are necessary to encourage men to take parental leave and maximize the policies' benefits.

• Impacts of enterprise zones on local households in Vietnam

  We examine the possible impacts of enterprise zones (EZs) on local Vietnamese households between 2002 and 2008, using differences‐in‐differences and a panel‐event study. We layer four waves of household surveys using a census of EZs in 2007, based on the same commune identity for our household and individual analyses. Within 5 years of EZ establishment, we find they are associated with higher household incomes, an increase in private property prices, and an increase in working hours. However, we do not find a significant impact on household living expenditure or school attendance/working probabilities among members aged between 7 and 17 years. Neither do we find a significant impact on health outcomes.

• Risk attitude, risky behaviour and price determination in the sex market: A case study of Yangon, Myanmar

  Commercial sex is a prevalent but risky profession in many countries, including Myanmar. Although risk attitude is a potentially important factor in determining risky behaviour of female sex workers (FSWs), few studies have explicitly investigated the issue. This is one of the first studies to elicit the risk attitude of FSWs using a simple risk game. We conducted the risk game with FSWs in Yangon, Myanmar, where the average GDP per capita is very low, to study how risk attitude is related with observable characteristics and with risky behaviour related to the use of condoms in the commercial sex market. We found that risk attitude is relatively independent of observable characteristics and the decision to use a condom. However, transaction prices were directly associated with risk attitude.

• The causal effects of working time on mental health: The effectiveness of the law reform raising the overtime wage penalty

  The present paper reexamines the causal effect of working hours on workers’ mental health. We utilize Japan's 2010 reform of the Labor Standards Act as a social experiment to examine how the increased wage penalty for long overtime work affects working hours and workers’ mental health. Utilizing a unique panel dataset containing health behaviours as well as individual, household and workplace characteristics of male workers, we find that the wage penalty reform indeed succeeded in reducing overtime hours and total working hours and that the reductions contributed to better mental health of workers. Further empirical investigation suggests that the reduction effect of the reform on working time is homogeneous among age groups; however, the harmful effect of working time on mental health is large and statistically significant among young workers. Our results suggest that setting a high wage penalty for long overtime work effectively reduces overtime work and improves workers’ health outcomes, particularly for young people.

• Immigration and inequality: Analysis of Mainland Chinese spouses during the early stages of their time in Taiwan

  In this study on Mainland Chinese women in Taiwan, I examined the effect of immigration‐related disruption on the assimilation of these women into the Taiwanese labour market during 2005–2015. Accordingly, I used a unique dataset obtained by linking three administrative registers to measure the assimilation process. In addition, I employed the nearest‐neighbour matching estimator to assess heterogeneous effects on each Mainland Chinese woman. The results indicated narrowing immigrant–native gaps in labour supply (full‐time employment rates) and real monthly insured wages for their first traceable job in favour of Mainland Chinese women. In general, I found that Mainland Chinese women assimilated into the Taiwanese workforce at levels comparable with those of Taiwanese women.

• Score manipulation, density continuity and intent‐to‐treat effect for regression discontinuity

  Regression discontinuity (RD) is widely used in many disciplines of science to find treatment effect when the treatment is determined by an underlying running variable (‘score') S crossing a cutoff c or not. The main attraction of RD is local randomization around c, which is, however, often ruined by manipulation on S. To detect manipulation, the continuity of score density function fSs at c is routinely tested in practice. In this paper, we examine how informative fS is for RD, and show the following. First, for incumbency effect in election to which RD has been heavily applied, fS may have no information content. Second, for RD in general, the fS continuity is neither necessary nor sufficient for RD validity. Third, if the treatment cannot be implemented without manipulation of S, then the manipulation had better be considered as part of the treatment effect, much as in ‘intent‐to‐treat effect’ for clinical trials. These findings call for relying less on fS continuity tests and, instead, thinking more about how subjects react to the treatment to modify their S, how to design the treatment to lessen manipulation, and what to take as the desired treatment effect.

• Employment and output effects of federal regulations on small business

  This paper examines the disparate impact of US federal regulations on small businesses. Using a two‐sector dynamic general equilibrium model, we obtained two implications of higher regulation on small firms that have yet to be empirically tested in the published literature. First, as regulations increase, small firms’ share of employment shrinks. Second, as regulations rise, small firms’ share of total output falls. Using a panel of industry‐specific US regulatory restrictions, we found that a 10% increase in federal regulations was associated with an approximate 0.8% reduction in small firms’ share of industry employment and a nearly 1.5% decline in small firms’ share of industry output.

• Determinants of Taiwan's outward investment in Southeast Asia: Economic factors and institutional issues

  This paper investigates the economic and institutional determinants of Taiwan's outward direct investment in six Southeast Asian countries from 1998 to 2017, applying the panel ARDL–Pooled Mean Group estimation. We specially examine the effects of institutional quality with five dimensions inclusively, using the Worldwide Governance Indicators. The results show the locational economic factors are the primary determinants in the long run. The tight and historic trading relation with Southeast Asia has a long‐run positive effect. On the contrary, the institutional quality of the host countries has strong positive effects in both the long run and short run. Further, the paper displays the dynamics of this investment in the last 20 years. These results are important for Taiwan and Southeast Asia policy‐makers in setting up the short‐run and long‐run policies to sustain their diversified economic growth.

Featured documents

• Laying the Tracks for Successful Science, Technology, Engineering and Mathematics Education: What Can We Learn from Comparisons of Immigrant–Native Achievement in the USA?

  This paper examines the immigrant–native achievement gap in science, technology, engineering, and mathematics (STEM) fields in college in the USA. Using student survey data from the Beginning Postsecondary Longitudinal Studies 2004/09, I find that on average immigrant students have significantly...

• An Optimal Currency Basket to Minimize Output and Inflation Volatility: Theory and an Application to Hong Kong

  In this paper we develop a theoretical model of an optimal currency basket for a small open economy. A currency basket for the home economy is defined as a chosen weighted average of a subset of foreign currencies, and an optimal currency basket is taken to be one that minimizes a given weighted...

• Sources of Business Cycles in a Low Income Country

  We examine the role of global and domestic shocks in driving macroeconomic fluctuations for Ghana. We are able to study the impact of exogenous shocks, including productivity, credit supply and commodity price shocks. We identify the shocks using a combination of sign and recursive restrictions...

• Comparison of Important Laws Governing the Macroeconomies of Taiwan and China

  This is a comparative study of the important laws governing the macroeconomies of Taiwan and China. The laws are concerned with consumption, investment and fiscal and monetary policies of the government. Following similar studies on China, the present paper focuses on the case of Taiwan. Using...

• Credit Market Imperfections and Macroeconomic Instability

  Credit market imperfections typically characterize a low quality financial market, where the quality of information about borrowers is low and/or enforcement rules or institutions are not well developed. We consider an economy with credit market imperfections and analyse how changes in the degree...

• Environmental Impacts of Tariff and Tax Reforms Under Origin and Destination Principles

  The impacts of a point‐by‐point tariff/tax reform on the environment under the origin‐based or destination‐based tax principle are examined. The policy reform under the origin‐based principle can raise the optimal pollution tax and, hence, improve the environment when the consumption demand and...

• How changes in global liquidity affect dynamics of banks’ leverage: A case in Hong Kong

  This paper examines how abundant global liquidity could influence the adjustment of banks’ leverage. Using banks in Hong Kong as an example, we find that the global liquidity effect is significant, and that mean reversion of banks’ leverage may under certain circumstances be more than offset by...

• Dynamic Moral Hazard and Executive Stock Options

  This paper shows that the optimal executive compensation scheme in a dynamic moral hazard environment is convex in the firm value. This implies that the optimal contract should include stock options. This is because the private benefit of shirking is increasing in firm value and the manager's...

• North–South asymmetry, unilateral environmental policy and carbon tariffs

  This paper focuses on the potential impact of a carbon tariff on carbon emissions, North–South trade and welfare. We use a North–South trade model, where North implements a unilateral environmental policy on domestic carbon‐intensive industries followed by a carbon tariff on imports from South....

• China's efficient urban bias

  This paper develops a dynamic general equilibrium model with endogenous rural–urban migration to analyse the provision of rural and urban government services in China, with special emphasis on the role of the household registration (hukou) system in shaping its urbanization process. It argues that...