Parallel Trends Research Articles

Can broadband infrastructure construction promote equality of opportunity? Evidence from a quasi-natural experiment in China

This study considers the impact of broadband infrastructure construction on household inequality of opportunity. Based on the "circumstance-effort" framework, we estimate the inequality of opportunity index, and we utilize China's household survey data. To identify this effect, we consider the construction of "Broadband China" demonstration cities, and we apply the difference-in-differences method; thus, we observe that broadband infrastructure can promote the equality of opportunity, and with respect to a series of robustness tests (e.g., parallel trend tests and instrumental variable estimation), the conclusion is robust. Furthermore, we observed that by increasing the intergenerational mobility of education for individuals with lower parental education background and by narrowing the gender wage gap, the deployment of broadband infrastructure reduces the opportunity inequality that is occasioned by parental education background and gender.

Green Bond Issuance and Corporate Investment and Financing Level: Evidence from Chinese Listed Companies

After the formation of the Chinese green bond market in 2016, it rapidly developed. However, there have been relatively few studies in academia on the financial performance of enterprises after issuing green bonds. In order to promote the development of the green bond market and guide enterprises to improve their investment and financing decisions, this paper uses panel data of A-share listed companies and green bond issuing companies from 2012 to 2022 as samples to study the impact and mechanism of green bond issuance on the investment and financing behavior and maturity mismatch of enterprises. The conclusion drawn is that green bond issuance significantly promotes the improvement of enterprises' investment and financing capabilities, and it also reduces the degree of maturity mismatch for enterprises. This conclusion passes the parallel trends test and remains robust after controlling for the effects of corporate financial asset allocation, industry time trends, and excluding competitive hypotheses. Through mechanism research, it is found that green bonds can improve the level of enterprise investment and financing and the degree of maturity mismatch by reducing the degree of financing constraints on enterprises. They can also enhance enterprise investment and financing capabilities by changing market sentiment and alleviate the maturity mismatch of investment and financing.

Impact of budget performance management reform on local fiscal relief

Budget performance management is crucial for strengthening fiscal revenue and expenditure management, enhancing the efficiency of fiscal fund utilization, and deepening the fiscal and tax system reform. Based on the quasi-natural experiment of budget performance management reform and utilizing data from 30 provinces spanning the years 2001–2021, this study employs a multi-temporal difference-in-differences model to investigate the mechanism and effects of budget performance management reform on local government fiscal pressure from both theoretical and empirical perspectives. The results reveal that budget performance management reform has a significant effect on relieving local fiscal pressure. Parallel trends and series of robustness tests support the results. Budget performance management reform impacts fiscal pressure through fiscal expenditure efficiency, government expenditure scale, and fiscal transparency. The heterogeneity analysis results indicate that the impact advancing budget performance management reform on fiscal pressure is affected by regional environment, fiscal decentralization areas, and municipal debt areas. The research results provide direct evidence of the effect of budget performance management on fiscal pressure, providing policy insights for local governments to alleviate the contradiction between fiscal revenue and expenditure.

Can new urbanization pilot policies promote green technology innovation in cities: Empirical evidence from China.

The development of urbanization has brought new challenges to the ecological environment, and the promotion of green technology innovation and development is widely recognized as an essential method to achieve cities' economic benefits and environmental protection. This paper examines whether the new urbanization pilot policies (NUP) increase green technology innovation (GTI) from both theoretical and empirical perspectives. This paper examines the impact of new urbanization on GTI by analyzing data from 285 cities in China between 2010 and 2021, using the multi-period DID model with the implementation of NUP as an exogenous policy shock. The study results indicate that NUP significantly affects GTI, and the conclusion still holds after the parallel trend test, placebo test, and other robustness tests. Heterogeneity analysis shows that the NUP significantly enhances GTI in low environmental pollution, non-resource-based, Medium-sized, and Central Region cities. The test of moderating effect shows that NUP has a "linkage effect" with the government's environmental attention, financial investment in innovation, and regional talent pooling. The findings of this paper provide empirical evidence and decision-making reference for promoting NUP and sustainable development of cities.

The effect of privatization on corporate innovation: New evidence from China’s ownership-transfer-privatization

This paper investigates the effect of privatization on corporate innovation utilizing the SOEs’ ownership-transfer-privatization (OTP) in China. Adopting a multiple period difference-in-difference method, we find that privatization significantly reduces the quantity of privatized SOEs’ innovation while increases the quality of privatized SOEs’ innovation. Several robustness checks, which include alternative measures, parallel trends and placebo tests, and the dynamic effect of privatization, are performed to validate our findings. Moreover, we demonstrate that two mechanisms – outside government intervention and inside political connections – drive the identified effect of privatization. Our findings shed new light on the debate surrounding the effects of privatization on corporate innovation.

Digital economy and urban innovation level: A quasi-natural experiment from the strategy of “Digital China”

The digital economy is an essential engine of the innovation-driven development strategy and plays a valuable role in promoting the high-quality development of the regional economy. Based on the panel data of 286 cities in mainland China with the help of the digital economy strategic plans issued by local governments as a quasi-natural experiment, we use the multi-temporal double-difference (DID) method to examine the impact of the digital economy on the urban innovation level. Findings show that the digital economy can significantly improve the urban innovation level. After a series of robustness tests, such as parallel trend test, updating sample and period, and repeated placebo test, the innovation-driving effect generated by the development of the digital economy remains significant. Results of the mechanism analysis indicate that the digital economy enhances the level of innovation through upgrading industrial structures. In addition, we find through the heterogeneity test that the digital economy has a stronger effect on improving the quality of innovation. Meanwhile, the innovation output in the Middle Eastern region is more significantly affected by the “Digital China” strategy than the Western region. Therefore, we should accelerate the implementation of the local digital economy development strategy to realize the high-quality development of the regional economy.

Green finance and food production: Evidence from cities in China

In the domain of global socio-economic dynamics, the pivotal role of food production (FP) cannot be overstated. It constitutes the bedrock of fundamental human necessities while being inexorably linked with critical aspects such as economic expansion, societal equilibrium, and geopolitical interplays. The multifaceted nature of FP appears through its direct impact on macroeconomic indicators and its latent influence on international relations and policy-making. This critical nexus underscores the imperative for a comprehensive understanding and strategic management of food production processes to sustain and enhance global socio-economic stability and growth. Investigating the nexus between green finance (GF) and FP is pivotal for ensuring national security and promoting sustainable economic development. This research thus paper examines GF's impact on FP in China as outlined in the 2017 green finance policies. It employs the difference-in-differences (DID) method and analyzes a balanced panel dataset comprising 282 cities in China from 2009 to 2020. The results show that GF has an inhibitory effect on FP, and this remains valid after a range of reliability checks, including parallel trend assessments and placebo tests. Further findings of transmission mechanism analysis indicate that non-agricultural factors and financial exclusion are critical for GF's inhibitory effect on FP. Heterogeneity analyses show that GF's inhibitory effect on FP is more pronounced in the main food-producing areas, the main food-marketing areas, and cities with better infrastructure. The empirical results of this paper comprehensively illustrate GF's impact on FP and how it contributes to the achievement of food security objectives.

Did the nationwide implementation of electronic fund management in the Indian employment guarantee scheme result in reduced expenditures? A re‐examination of the evidence

AbstractDigital tools are increasingly being used in welfare programmes to reduce corruption and increase transparency. Banerjee et al. (2020, E‐governance, accountability, and leakage in public programmes: experimental evidence from a financial management reform in India. American Economic Journal: Applied Economics. https://doi.org/10.1257/app.20180302) evaluate the effectiveness of one such intervention. In a later section of their paper, they use a Two‐Way Fixed Effects (TWFE) specification to examine the consequences of the nationwide scale of an electronic funds management system in India's workfare programme, and report that it reduced expenditures by 19%. The present paper extends its analysis by (a) exploiting the recent literature that disaggregates the TWFE coefficient in the presence of staggered treatment timing to pinpoint sources of identifying variation and (b) attempting to uncover heterogeneity in treatment effects. We find that certain problematic comparisons have a large weight in the TWFE coefficient. Further, an event study analysis of the six constituent and valid comparisons shows that there is no support for parallel trends, so lag coefficients cannot be vested with causal interpretation. Our results imply that large‐scale evaluations, because of the very diversity they encompass, need to explicitly account for the factors that are responsible for programme effectiveness.

(Empirical) Bayes Approaches to Parallel Trends

We consider Bayes and Empirical Bayes (EB) approaches for dealing with violations of parallel trends. In the Bayes approach, the researcher specifies a prior over both the pretreatment violations of parallel trends delta-pre and the posttreatment violations delta-post. The researcher then updates their posterior about the posttreatment bias delta-post given an estimate of the pre-trends delta-pre. This allows them to form posterior means and credible sets for the treatment effect of interest, Delta-post. In the EB approach, the prior on the violations of parallel trends is learned from the pretreatment observations. We illustrate these approaches in two empirical applications.

Optimisation of analytical methods for tuberculosis drug detection in wastewater: A multinational study

Wastewater-based epidemiology (WBE) is a robust tool for disease surveillance and monitoring of pharmaceutical consumption. However, monitoring tuberculosis (TB) drug consumption faces challenges due to limited data availability. This study aimed to optimise methods for detecting TB drugs in treated and untreated wastewater from four African countries: South Africa, Nigeria, Kenya, and Cameroon. The limit of detection (LOD) for these drugs ranged from a minimum of 2.20 (±1.02) for rifampicin to a maximum of 2.95 (±0.79) for pyrazinamide. A parallel trend was observed concerning the limit of quantification (LOQ), with rifampicin reporting the lowest average LOQ of 7.33 (±3.44) and pyrazinamide showing the highest average LOQ of 9.81 (±2.64). The variance in LOD and LOQ values could be attributed to factors such as drug polarity. Erythromycin and rifampicin exhibited moderately polar LogP values (2.6 and 2.95), indicating higher lipid affinity and lower water affinity.Conversely, ethambutol, pyrazinamide, and isoniazid displayed polar LogP values (−0.059, −0.6, and −0.7), suggesting lower lipid affinity and greater water affinity. The study revealed that storing wastewater samples for up to 5 days did not result in significant drug concentration loss, with concentration reduction remaining below 1 log throughout the storage period. Application of the optimised method for drug detection and quantification in both treated and untreated wastewater unveiled varied results. Detection frequencies varied among drugs, with ethambutol consistently most detected, while pyrazinamide and isoniazid were least detected in wastewater from only two countries. Most untreated wastewater samples had undetectable drug concentrations, ranging from 1.21 ng/mL for erythromycin to 54.61 ng/mL for isoniazid. This variability may suggest differences in drug consumption within connected communities. In treated wastewater samples, detectable drug concentrations ranged from 1.27 ng/mL for isoniazid to 10.20 ng/mL for ethambutol. Wastewater treatment plants exhibited variable removal efficiencies for different drugs, emphasising the need for further optimisation. Detecting these drugs in treated wastewater suggests potential surface water contamination and subsequent risks of human exposure, underscoring continued research's importance.

Do studies evaluating early-life policy interventions fully adhere to the critical conditions of difference-in-differences? A systematic review

ObjectivesTo assess the reporting and methodological quality of early-life policy intervention papers that applied difference-in-differences (DiD) analysis.Study designSystematic review.Data sourcesPapers applying DiD of early-life policy interventions in high-income countries as...

Investigating the Relevance of Cyclic Adenosine Monophosphate Response Element-Binding Protein to the Wound Healing Process: An In Vivo Study Using Photobiomodulation Treatment.

Monitoring inflammatory cytokines is crucial for assessing healing process and photobiomodulation (PBM) enhances wound healing. Meanwhile, cAMP response element-binding protein (CREB) is a regulator of cellular metabolism and proliferation. This study explored potential links between inflammatory cytokines and the activity of CREB in PBM-treated wounds. A total of 48 seven-week-old male SD rats were divided into four groups (wound location, skin or oral; treatment method, natural healing or PBM treatment). Wounds with a 6 mm diameter round shape were treated five times with an 808 nm laser every other day (total 60 J). The wound area was measured with a caliper and calculated using the elliptical formula. Histological analysis assessed the epidermal regeneration and collagen expression of skin and oral tissue with H&E and Masson's trichrome staining. Pro-inflammatory (TNF-α) and anti-inflammatory (TGF-β) cytokines were quantified by RT-PCR. The ratio of phosphorylated CREB (p-CREB) to unphosphorylated CREB was identified through Western blot. PBM treatment significantly reduced the size of the wounds on day 3 and day 7, particularly in the skin wound group (p < 0.05 on day 3, p < 0.001 on day 7). The density of collagen expression was significantly higher in the PBM treatment group (in skin wound, p < 0.05 on day 3, p < 0.001 on day 7, and p < 0.05 on day 14; in oral wound, p < 0.01 on day 7). The TGF-β/TNF-α ratio and the p-CREB/CREB ratio showed a parallel trend during wound healing. Our findings suggested that the CREB has potential as a meaningful marker to track the wound healing process.

The Effect of Technology Transfer Efficiency of Policies for Coordinated Development in the Beijing Tianjin Hebei Region: Evaluate by Using a Difference-in-differences Model

This paper uses the DID model to explore the impact of the implementation of the Beijing-Tianjin-Hebei coordinated development in 2014 on the efficiency of technology transfer in China. A comparative study was selected for the 6 years before and 5 years after the implementation of the policy. The technology transfer efficiency is calculated by the CCR and SBM of the DEA model. The scale of urban development and the financial capacity of the government are the control variables, which proves that the policy can improve the efficiency of regional technology transfer. The model passed parallel trend test and placebo test.

Digitalization in prefabricated constructions and reducing carbon emission: empirical evidence from China.

Taking the implementation of digitalization in prefabricated constructions (DPC) as an exogenous shock, this study utilizes provincial panel data of China from 1997 to 2019, and uses the difference-in-differences model to identify the causal effect of DPC on carbon emissions in the construction industry (CECI). This study shows that DPC effectively reduces CECI with the results withstanding rigorous testing, including parallel trend tests, placebo tests, and a heterogeneous time-varying treatment test based on Bacon decomposition and the DIDm approach. The mechanism test confirms that DPC reduces CECI through two channels, which are improving existing building technologies and promoting better management capabilities. At the same time, further analyses show that the carbon emissions reduction effect of DPC is more pronounced in regions with a higher degree of marketization, financial development, human capital and environmental regulation. This study contributes to understanding the underlying mechanisms between DPC and CECI, providing new insights for the deeper integration of digital technologies and the construction industry. It offers new avenues for revitalizing the construction sector and facilitating achieving global carbon emissions reduction goals.

Aesthetic principles of expressionism in modern architecture

The purpose of the article is to study the aesthetic principles of expressionism that influenced the development of modern architecture. An analysis of the concepts and means of artistic expression of the direction under study is proposed. The conditions for the emergence and formation of expressionism, its artistic methods of expression from conventionally realistic to abstract, as well as the manifestation of this direction of art in architectural design are considered. A brief analysis of the connection between expressionism and other parallel trends or movements of art of the twentieth century is given. Variations of expressionism from the standpoint of abstract art are identified, where the search for interactivity between the artist and the viewer in the process of visual perception of the painting is indicated. It is concluded that imagination is one of the main ways of artistic thinking in the process of author’s artistic design. The manifestation of the aesthetic principles of expressionism in the architecture of individual countries is considered. It has been revealed that expressionism in architecture is characterized by a departure from traditional forms in order to achieve the maximum emotional impact on the recipient. The study of the stated topic allows us to draw a conclusion about the relevance of expressionism at the beginning of the 21st century, which, with its traditions, continues the achievements of expressionism of the 20th century. and at the same time gives a new impetus to artistic expressions of the personal views of artists and architects on the ongoing processes in society. Parallels of the beginning of the 20th – beginning of the 21st centuries. revealed similarities in the aesthetic principles of the formation of the subject-spatial architectural environment. Expressionist techniques, means and methods of working on a painting or object are most accurately able to express the feelings of artists and architects, their psychological stress, the conviction that the viewer must go through a new experience while looking at an architectural or artistic work.

Trade and Water Pollution: Evidence from China

China’s economy has achieved significant success by integrating itself into the globalized production system over an extended period. However, it is crucial to address the environmental consequences that accompany rapid economic progress. The correlation between trade and environmental pollution is still controversial in the existing literature, with a lack of research specifically investigating this relationship using detailed data at the firm level. Based on the quasi-natural experiment of China’s accession to the WTO, this study uses the DID method to evaluate the causal relationship between trade and the environment experimentally. It is found that trade liberalization significantly increases firms’ industrial wastewater emissions, and the empirical results remain robust after parallel trend tests, placebo tests, and replacement variables. The mechanism of action suggests that trade expansion enhances corporate pollution emissions through two channels: attracting foreign investment into the country and intensifying energy consumption. A heterogeneity analysis reveals that the pollution-enhancing effect of trade expansion on enterprises is mainly concentrated in export-oriented enterprises, labor-intensive industries, and coastal regions. Additionally, further analysis shows that trade liberalization not only has local impacts but also spatial spillover effects on enterprise pollution. It is found that enhancing environmental governance and reducing corruption can effectively mitigate the adverse environmental consequences caused by trade liberalization.

To tell or not to tell? Examining voluntary disclosure of customers’ identities under capital market pressure

Using China’s short-sell reform as a quasi-natural experiment, we find that firms respond to short-sell pressure by reducing the disclosure of their customers’ identities after controlling for the influence of proprietary costs. The result remains robust after conducting a parallel trends test and a placebo test, and using a propensity score matching approach. Furthermore, non-disclosure becomes more prevalent among firms with highly perceived customer risks and significant discretionary revenues. These findings imply that negative information transmission between economically linked firms and potential agency issues inherent to supplier firms prompt them to withhold customer identity. Finally, a non-disclosing strategy benefits firms by lowering the probability of fraud detection and reducing operating uncertainty. We suggest regulators implement policies to incentivize firms to improve information transparency in the supply chain.

Does the Water Rights Trading Policy Improve Water-Use Efficiency? An Environmental Policy Evaluation from China

As a crucial basic natural resource, water resources are the cornerstone for sustainable national economic development. This paper takes the 2014 pilot water rights trading policy (WRT) as an entry point and uses a difference-in-differences (DID) model to test the policy effect of WRT on water-use efficiency (WUE) based on panel data for 30 Chinese provinces from 2005 to 2021. The study shows that WRT can significantly improve the regional WUE, and these results remain valid after a series of robustness tests, such as the parallel trend test, placebo test, and PSM-DID. Mechanistic analysis revealed that WRT can produce the Porter effect, which affects the WUE through technological innovation. The results of the heterogeneity analysis based on the synthetic control method (SCM) showed that WRT effectively improved WUE in Jiangxi, Henan, Ningxia, Hubei, and Guangdong, but did not achieve the expected effect in Inner Mongolia or Gansu. This paper provides solid empirical support for assessing the effectiveness of WRT and accelerating the process of establishing a unified national WRT market in China by 2025.

Analysis of the Influence of Investor Sentiment on IPO Underpricing under Full Registration System: Empirical Analysis Based on PSM-DID

In February 2023, China promulgated the full implementation of the registration system in the entire stock market, replacing the original verification system. Taking the main board and GEM companies listed from January 2019 to January 2023 as research samples, this paper uses PSM-DID Model to investigate the impact of the registration system on the IPO underpricing rate. Meanwhile, OLS model is used to analyze the impact of investor sentiment and the interaction of the registration system on the IPO underpricing rate. The implementation of the registration system significantly improves the IPO underpricing rate on the basis of 1%. Parallel trend test and placebo test further verify the robustness of the conclusion. the interaction between investors' speculation and the registration system also improves the IPO underpricing rate.

Environmental protection tax law and corporate ESG performance

We analyze the bond between environmental protection tax law (EPTL) and corporate environmental, social, and governance (ESG) performance and explore the mediating role of corporate green technological innovation between the two. The study reveals a significant positive correlation between implementing EPTL and corporate ESG performance, with corporate green technological innovation acting as an intermediary. Furthermore, we find heterogeneity in the influence of EPTL on corporate ESG performance, which is primarily concentrated in non-state-owned enterprises. This study's conclusions remain valid after robustness and parallel trend tests.