Jingcheng Jiang

Can anti-corruption enforcement improve allocative efficiency when political connections distort industrial policy? Exploiting China's 2013 anti-corruption inspections as a plausibly exogenous shock, I show that enforcement reduced subsidies to hometown-connected firms, with effects concentrated entirely on opaquely described allocations while transparent subsidies remained unaffected. This pattern reveals politicians curtailing corrupt rather than legitimate transfers when monitoring intensifies. Reductions operate primarily through behavioral change among continuing leaders as hometown favoritism transforms from career asset to career liability, disrupting clientelistic equilibria. Despite lower subsidies, regional productivity increases as resources reallocate from politically connected to more productive firms, with gains concentrated among smaller enterprises previously crowded out by larger incumbents in politicians' hometowns. These findings demonstrate a pattern consistent with politicians optimizing under enforcement constraints: when detection costs rise, corrupt transfers decline, career incentives reverse, and efficiency improves as misallocated resources flow toward productive firms, illuminating both how political connections generate substantial misallocation and the institutional mechanisms that restore competitive dynamics.

Competition among subnational governments generates internal non-tariff trade barriers, fragmenting markets within nominally integrated economies. In China's decentralized system, where provincial authorities evaluate city leaders on relative economic performance, politicians face incentives to maximize locally appropriable gains while minimizing spillovers to rivals. This yardstick competition creates systematic distortions in the allocation of public resources. Exploiting exogenous variation in promotion incentives driven by the age of city party secretaries (1996–2018), I show that intensified within-province competition significantly reduces inter-city trade flows, dampens international exports, and restricts firm access to intermediate inputs. Under competitive pressure, politicians reallocate resources toward non-tradable sectors, particularly real estate, while underinvesting in connective infrastructure near jurisdictional borders. Individually rational responses to career incentives thus generate collectively suboptimal market fragmentation, showing that internal trade costs are endogenous to political institutions and that yardstick competition carries dynamic costs.

We study whether transient policy-induced labor supply shocks can permanently redirect technological change. China's zero-COVID mobility restrictions provide a natural experiment: between 2020 and 2022, hundreds of millions of migrants were blocked from urban manufacturing centers, generating a nearly 60% collapse in migrant labor supply. Exploiting cross-county variation in pre-pandemic migrant dependence, we find that more exposed counties experienced sharp post-COVID growth in robotics patenting, with no corresponding change in total patenting activity. We also construct a Bartik IV and find consistent results: uncertainty in origin regions disrupted labor flows to destinations, and counties losing more migrants saw larger increases in automation patents. The response is concentrated in tight local labor markets where native workers could not substitute for absent migrants, consistent with binding and recurrent quantity constraints rather than wage-driven substitution. Displaced migrants bear persistent earnings and employment losses. The results show that temporary restrictions on labor mobility can have lasting effects on the direction of innovation.

We document a new failure mode of trade-led development. Standard theory predicts that expansions in skill-intensive sectors raise returns to skill and induce human capital investment. Using a Bartik shift-share design that interacts predetermined regional cropping patterns with international commodity price deviations, we test this prediction in rural China after agricultural trade liberalization and find it fails. Cash crop booms, though concentrated in skill-intensive production, generate no rise in the skill premium and no schooling response. The operating mechanism is propagation failure: specialized skills and bundled inputs required for cash crop production block entry, so trade rents are captured entirely by incumbents and never spill into broader labor markets. Staple crop shocks, by contrast, raise returns across a wide range of households and depress schooling through a standard opportunity cost channel. When trade rents bypass rural labor markets, agricultural liberalization widens the human capital gap — not from unusual frictions, but from a structural feature of skill-intensive sectors.

Correcting capital misallocation requires local politicians with both the capacity and the incentive to act. Using more than one million manufacturing firm-years matched to mayoral records, I find that misallocation falls as a mayor's tenure lengthens, but only in cities that rely on their own revenues; where local budgets depend on transfers, tenure brings little improvement. I develop a spatial model with interprovincial trade and costly migration in which tenure builds a mayor's capacity to alter capital allocation, while fiscal incentives determine the distortion the mayor seeks to implement. Changing fiscal incentives raises manufacturing TFP by up to 0.46 percent; trade spreads the gains to every province, and deeper market integration raises the cost of the distortion, making fiscal reform and integration complements. Short tenure is costly only when politicians have the incentive to use accumulated control.

Standard gravity models predict that proximity fosters trade, yet international relations theory suggests proximity breeds conflict. This paper formalizes the security externality of international trade to resolve this tension. Using data on trade flows, alliances, and disputes, I document a near-rivalry paradox: proximity lowers transport costs but sharply increases conflict probability, creating a tradeoff between efficiency and security. I show that ideological alignment is the critical mechanism unlocking regional integration. Exploiting exogenous leader turnovers that generate sharp shifts in bilateral ideological distance, I find these shocks disproportionately affect trade between proximate pairs. A network formation model rationalizes these findings: proximity amplifies the security risk of trade, generating a commitment problem, while ideological affinity signals peaceful intent, unlocking high returns from low gravity costs. Calibration reveals ideological distance acts as an 8% tariff between rivals, and counterfactuals show ideological fragmentation would sever the most efficient short-distance trade links.