Two-way Fixed-effects Research Articles

How Does Trade Liberalization in Imports Affect China's Export Growth Pattern?

Abstract Optimizing export growth patterns and improving the quality of export trade have become prominent issues that need to be addressed urgently in the context of increasing global economic uncertainty. This study utilizes matched data from the CEPII database (1995–2020) and WTO tariff database, adopts a product-level perspective based on the triple margins of exports, and uses an individual-time two-way fixed-effects model to investigate the impact of import trade liberalization on China's export growth pattern. The research findings are as follows: (1) Increasing levels of import trade liberalization are beneficial for enhancing the extensive margin, intensive margin, and quantity margin of products, while exerting a restraining effect on the price margin. This strengthens the price advantage of Chinese products, indicating that import trade liberalization helps optimize China's export growth pattern. (2) Compared with the intensive margin, import trade liberalization has a more significant promoting effect on the extensive margin. (3) The conclusions drawn from heterogeneity analysis suggest that trade liberalization has a more pronounced effect on the extensive margin, intensive margin, and quantity margin of products in medium-high technology industries, differentiated products, and intermediate goods. This study holds important theoretical and practical significance for evaluating the economic benefits of expanding imports, optimizing China's export growth pattern, and improving the quality of export trade.

Digital economy and fiscal decentralization: Drivers of green innovation in China

The impact of government behavior under a fiscal decentralization system on the interplay between the digital economy and both the quality and efficiency of green innovation poses an intriguing question. To address this, the present study employs two-way fixed-effects models, instrumental variables, and spatial econometric techniques, using data from 30 provinces and cities in China spanning 2004 to 2019. The findings reveal that the advancement of the digital economy significantly enhances the quality and efficiency of green innovation. In the context of China's fiscal decentralization, local governments frequently employ a “race to the top” strategy, amplifying the digital economy's beneficial impact on green innovation. This effect is particularly pronounced in economically prosperous regions that prioritize environmental assessments. Additionally, the study identifies a spatial demonstration effect, indicating that fiscal decentralization bolsters the digital economy's influence in adjacent regions. Consequently, policy recommendations include deepening the digital economy, advocating for increased fiscal autonomy for local governments, refining the performance appraisal systems for local officials, and establishing a well-calibrated environmental transfer mechanism. Further, leveraging the positive spatial correlations among local governments can foster a competitive yet collaborative landscape for green innovation.

Causal models for longitudinal and panel data: a survey

Summary In this survey we discuss the recent causal panel data literature. This recent literature has focused on credibly estimating causal effects of binary interventions in settings with longitudinal data, emphasising practical advice for empirical researchers. It pays particular attention to heterogeneity in the causal effects, often in situations where few units are treated and with particular structures on the assignment pattern. The literature has extended earlier work on difference-in-differences or two-way fixed effect estimators. It has more generally incorporated factor models or interactive fixed effects. It has also developed novel methods using synthetic control approaches.

The effects of Medicaid expansion on the racial/ethnic composition within nursing home residents

BackgroundThe Affordable Care Act (ACA), enacted in 2010, aimed to improve healthcare coverage for American citizens. This study investigates the impact of Medicaid expansion (ME) under the ACA on the racial and ethnic composition of nursing home admissions in the U.S., focusing on whether ME has led to increased representation of racial/ethnic minorities in nursing homes.MethodsA difference-in-differences estimation methodology was employed, using U.S. county-level aggregate data from 2000 to 2019. This approach accounted for multiple time periods and variations in treatment timing to analyze changes in the racial and ethnic composition of nursing home admissions post-ME. Additionally, two-way fixed effects (TWFE) regression was utilized to enhance robustness and validate the findings.ResultsThe analysis revealed that the racial and ethnic composition of nursing home admissions has become more homogeneous following Medicaid expansion. Specifically, there was a decline in Black residents and an increase in White residents in nursing homes. Additionally, significant differences were found when categorizing states by income inequality, and poverty rate levels. These findings remain statistically significant even after controlling for additional variables, indicating that ME influences the racial makeup of nursing home admissions.ConclusionsMedicaid expansion has not diversified nursing home demographics as hypothesized; instead, it has led to a more uniform racial composition, favoring White residents. This trend may be driven by nursing home preferences and financial incentives, which could favor residents with private insurance or higher personal funds. Mechanisms such as payment preferences and local cost variations likely contribute to these shifts, potentially disadvantaging Medicaid-reliant minority residents. These findings highlight the complex interplay between healthcare policy implementation and racial disparities in access to long-term care, suggesting a need for further research on the underlying mechanisms and implications for policy refinement.

New Exploration of Industrial Structure Upgrading under the Wave of Digital Finance

Based on the panel data of cities in the Yangtze River Delta region from 2011 to 2021, Through the two-way fixed effect model, this paper explores the mechanisms, effects and heterogeneity of digital finance development in promoting the upgrading of industrial structure. The results show that digital finance can significantly promote the upgrading of industrial structure, among which innovation and entrepreneurship is an important transmission path, and technology and finance play a key role in the process. Heterogeneity analysis shows that in non-central cities and cities with high consumption level, the promotion effect of digital finance development on industrial structure upgrading is more obvious. Therefore, it is necessary to further strengthen the construction of digital financial infrastructure, build an innovation-driven entrepreneurial environment, promote, and optimize the consumption environment according to city conditions.

Food for Thought: Understanding the Impact of Food Insecurity on Fertility Dynamics in the U.S.

This paper examines the relationship between food insecurity rates and fertility rates in the United States using panel data at the county level spanning from 2010 to 2017. Drawing upon health literature that highlights the disproportionate burden of food insecurity on women and its adverse effects on maternal and child health, I investigate the hypothesis that counties with lower rates of food insecurity exhibit lower fertility rates by employing an instrumental variable regression approach with two-way fixed effects. The two most notable findings are, first, that there is weak but suggestive evidence of a positive relationship between food insecurity and fertility at the national level and second, regional disparities can cause this relationship to turn negative. These findings underscore the significance of socioeconomic factors in shaping reproductive behaviors. Further research using alternative econometric techniques is warranted to investigate causal mechanisms in the observed relationship.

Competitiveness of citrus export and its determinants: a two-way fixed effect panel data model approach.

Pakistan has a conducive condition for the development of a wide range of scrumptious fruits. As a result, the country grows a diverse assortment of tropical and subtropical fruits; the most prized and top-ranked fruit among all fruits grown in Pakistan is citrus. Citrus is the principal fruit that contributes significantly to Pakistan's export earnings and national income. In this study, the cross-border determinants influencing Pakistan's citrus exports to its topmost 22 trading partners are examined using a gravity model technique. This is the first large study from Pakistan by using gravity model to check the impact of various cross-border factors on citrus fruit export. The analysis is based on a panel dataset covering the years 2003 to 2021. To estimate the results, the study used fixed effect regression with time and country fixed effects. The results signify that per capita income, population, and some regional dummies are positively associated with citrus exports from Pakistan. Citrus price, distance, exchange rate, and other regional dummies are observed to have an adverse effect on citrus exports. Trade agreements between Pakistan and trade partners such as free trade agreements, preferential trade agreements, and SAFTA, have been observed as important determinants of citrus exports. Citrus exporters in Pakistan can also benefit from understanding the factors that influence export markets. By addressing the challenges identified in this study, Pakistan can enhance its citrus exports and boost its agricultural sector.

The impact of decentralization of health services at the municipal level on health outcomes: evidence from China.

Under the system of health decentralization, there are differences in the level of expenditure decentralization at different levels of government, and their impact on residents' health may also be different. This paper is one of the first to evaluate the effect of decentralization of health services at the municipal level from a multi-dimensional health perspective. This paper uses the data of expenditure decentralization of health services at the municipal level to match the panel data from the China Household Panel Survey (CFPS) from 2010 to 2018, and uses the logit model, ordered logit model and two-way fixed effects model to empirically analyze the impact of health decentralization at the municipal level on health outcomes. Based on the perspective of multi-dimensional health, from the three aspects of physical health, depression status and cognitive ability, the six sub-indicators of self-rated health, BMI standards, depression scores (summation method), depression scores (factor method), phrase test scores and mathematics test scores are discussed separately. The results show that the decentralization of health services at the municipal level has a significant promotion effect on the multi-dimensional health of residents. The decentralization of health services at the municipal level has important theoretical significance for promoting the reasonable division of medical and health powers and expenditure responsibilities between provincial and municipal governments, improving the efficiency of health expenditure funds, and establishing a fiscal system that matches financial resources.

Research on the Impact of Digital Trade on Urban Carbon Emissions in China under the "Dual Carbon" Target

After the "dual carbon" goal was put forward, low-carbon development has gradually become the focus of attention from all walks of life, and digital technology plays an important role in the process of helping carbon emission reduction. Digital trade, as an active field in international economy and trade, is of great significance to the economic growth of all countries and to deal with the problem of carbon emission reduction. This paper analyzes the transmission path of digital trade on urban carbon emission reduction in China from the theory of scale effect, structure effect and technological progress effect, and based on the panel data of 280 cities in China from 2011 to 2019, uses two-way fixed effect model to conduct regression analysis on the carbon emission reduction effect of digital trade. The study finds that China's digital trade development reduces urban carbon emission intensity, and the conclusion is still valid after the robustness test. Heterogeneity analyses show that the carbon emission reduction effect of digital trade varies in different regions in the East, West and Centre, as well as in regions with different degrees of carbon emissions. In terms of the transmission path, digital trade reduces regional carbon emission intensity by promoting scale effects, technological progress and industrial structure upgrading. Therefore, on the road of actively realizing the goal of "dual carbon", China should vigorously promote the development of international trade mode mainly represented by digital trade. At the same time, we fully recognize the heterogeneity of the impact of digital trade on carbon emissions, and adopt differentiated policies according to the different utility levels of digital trade on carbon emissions in different regions. This will narrow the "digital divide" between cities and help achieve China's "dual carbon" goal.

Threshold effects of Government digital development and land resource disparity on Urban carbon efficiency in China

Government digital development has become deeply intertwined with modern governance frameworks in the rapidly advancing digital landscape. It has emerged as a crucial force driving the implementation of public policies and improving administrative efficiency. Understanding how government digital development impacts carbon efficiency and analyzing its underlying mechanisms has become a subject of great interest. This study employs two-way fixed-effects and threshold models to investigate how government digital development influences carbon efficiency using Chinese prefecture-level cities from 2011 to 2022. The findings reveal that government digital development significantly enhances carbon efficiency. It highlights the significant role of land resource mismatches in limiting the positive impact of government digital development on carbon efficiency.Regarding regional differences, the study finds that the positive effect of government digital development on city carbon efficiency is more pronounced in eastern and central regions and non-resource cities. The results of threshold regression analysis indicate that government digital development negatively correlates with carbon efficiency when it falls below a certain threshold. However, this negative effect becomes insignificant when government digital development surpasses the threshold value.

Corporate social responsibility disclosure and cash holdings

Purpose: the demand for firms to disclose their corporate social responsibility (CSR) activities has risen steeply over the last two decades, pushing many jurisdic-tions to implement mandatory non-financial reporting. We exploit the European non-financial reporting directive (NFRD) to study how companies change their cash management policies in response to additional mandatory CSR disclosure requirements. Methodology: we adopted a difference-in-differences (DID) approach, which is designed to estimate causality between the mandatory adoption of the NFRD and firms' cash holdings. We implemented a two-way fixed effect model in the context of mandatory disclosure and staggered adoption of regulation, in order to study how firms changed their cash holdings following the introduction of the NFRD. Findings: we find that firms increased cash holdings following enactment of the NFRD, which is in line with the theory that cash is held for precautionary reasons. The growth in cash holdings is not equally distributed, as it is less pronounced in firms that are in a high-investment phase. Our findings reveal that mandatory non-financial disclosure can have real effects. Originality/value: This research shows that, in the short-term, mandatory CSR disclosure can have real effects on cash holding. Long-term effects should be con-sidered further by future research. Practical implications (optional): Policymakers should consider that additional CSR requirements are costly to firms, and thus find mechanisms that induce firms to adopt these requirements despite their costs

Can financial incentives improve access to care? Evidence from a French experiment on specialist physicians

In France, addressing balance billing is essential for equitable healthcare access and reducing physician income disparities. The National Health Insurance (NHI) introduced financial incentive programs, namely the “Contract for Access to Care” (CAS) in 2014 and the “Option for Controlled Pricing” (OPTAM) in 2017, to encourage physicians to reduce extra fees and adhere to regulated prices. This study analyzed the impact of these programs on self-employed physicians using a comprehensive administrative dataset covering specialist physicians from 2005 to 2017. The dataset comprised 9891 surgical specialists (30,972 observations) and 6926 medical specialists (21,650 observations) between 2005 and 2017.Applying a difference-in-differences design with a two-way fixed effect model and matching through the "Coarsened Exact Matching" method, the study examined CAS and/or OPTAM membership effects on physicians' activity and fees. The results indicate that both the CAS and OPTAM successfully enhance access to care. Physicians treat more patients, particularly those with lower incomes who might have previously avoided care because of the extra fees. However, an increased patient load translates to a higher workload for physicians. Despite a fee increase, it was observed to be smaller than the surge in activity.Furthermore, if all physicians are appropriately rewarded for their efforts, this improvement in access comes at a cost to NHI. This study's findings provide crucial insights into the nuanced effects of these financial incentive programs on physicians' behavior, highlighting the tradeoff between improved access and increased NHI costs. Ultimately, these findings underscore the complexity of balancing financial incentives, physician workload, and healthcare accessibility in pursuit of a more equitable healthcare system.

결혼 전 주택소유, 미혼 청장년의 결혼확률과 결혼시기에 영향을 미치는가?

Single individuals consider housing problems as the primary determinant in their decision to marry in South Korea. If they own a house, are they less likely to avoid marriage and more inclined to marry sooner? To identify this, we investigate the impact of pre-marital homeownership on the transition to marriage and its timing. To do so, we exploit a linear probability model with two-way fixed effects. We find no significant evidence of pre-marital homeownership on the transition to marriage, consistent across individual characteristics. Similarly, we also find that there is no evidence of the effects of pre-marital homeownership on marriage timing. However, the evidence of gender heterogeneity reveals that the pre-marital homeownership has marriage-delaying effects for women. These findings suggest the necessity of government intervention to discourage owning a house before marriage.

Research on the Impact of Digital Finance on the High-Quality Development of Regional Economy: An Empirical Analysis Based on Provincial Panel Data

As a product of the combination of digital technology and traditional finance, the vigorous development of digital finance in the context of the digital economy era will certainly have a great impact on the high-quality development of the economy. Based on the panel data of 31 provinces from 2011 to 2020, this paper adopts the entropy value method to determine the economic development index of the region, and applies the two-way fixed effect model to explore the impact of the development of digital finance on the regional economic development. It is found that the rapid development of digital finance has a positive role in promoting the economic development of the region and changes with the level of openness to the outside world as well as the level of human capital, and that the innovation effect update of the region plays an intermediary role as an intermediary variable in the impact of digital finance on the economic development of the region. There is significant heterogeneity in the economic development of digital finance on different regions, with the highest in the east and the lowest in the center. Reasonable suggestions are made for the better development of the economy of each region, thus promoting the high-quality development of the economy of each region.

No change in substance use disorders or overdose after implementation of state Earned Income Tax Credit (EITC)

BackgroundInadequate income is associated with higher likelihood of experiencing a substance use disorder (SUD). This study tests whether the earned income tax credit (EITC), which issues supplemental income for workers with children in the U.S., is associated with lower rates of SUD and fatal overdose. MethodsWe examined the effects of state-level refundable EITC presence and generosity (i.e., state EITC rate as a % of federal rate) on SUD-related outcomes (SUD prevalence and intentional and unintentional fatal overdose) using a difference-in-difference methodology, with both two-way fixed-effects models and event study plots. Several sensitivity analyses were conducted to assess the robustness of findings. Five data sources were used to create a combined state-level longitudinal dataset. ResultsWe did not find significant effects of refundable EITC presence or generosity on unintentional or intentional fatal overdose or SUD prevalence in two-way models. Event study models detected a very slight upward shift in SUD prevalence following refundable EITC implementation (not seen in sensitivity analyses) and no significant effects of EITC implementation on any of the fatal overdose outcomes. ConclusionsEvidence regarding income support programs is being highly sought by policy makers as income support programs have become increasingly popular policy levers since the start of the COVID-19 pandemic. Our study indicates EITC policies likely have no impact on SUD or overdose, however, other income support programs without family restrictions are important to investigate further.

Does climate change exposure impact on corporate finance and energy performance? Unraveling the moderating role of CEOs’ green experience

This study examines how firm-level exposure to climate change shapes sustainable financial and energy performance. We utilize a robust two-way fixed-effects approach to examine 2905 Chinese listed enterprises spanning 2010 to 2022. Our primary objective is to unravel the direct effects of climate change exposure (CCE) on corporate financial performance (CFP) and corporate energy performance (CEP), and to explore how CEOs' green experience moderates these effects. The findings delineate significant adverse effects on CFP and CEP stemming from CCE. Notably, augmenting CEOs’ green experience can help to mitigate these effects. We also emphasize the pivotal roles of green technology innovation (GTI) and the augmentation of environmental, social, and governance (ESG) performance as primary conduits through which CCE influences CFP and CEP. Our study illuminates nuanced variations in these influences that are based on climate risk type, geographical regions, firm scale, and industry. These insights offer fresh theoretical perspectives and robust evidence that are crucial for tackling climate-related challenges, especially in the context of emerging economies such as China. They also provide important implications for government actions, suggesting ways to refine environmental policy at the firm level.

Green Finance, Green Technology Innovation and the Upgrading of China’s Industrial Structure: A Study from the Perspective of Heterogeneous Environmental Regulation

In the era of green economic development, green finance serves as a crucial catalyst for green technological innovation, and both may significantly drive the upgrading of industrial structures. This study combines green finance, green technological innovation, and industrial structure into a research framework, analyzing data from 29 Chinese provinces (2003–2020) to empirically assess their impacts on China’s industrial structure using a two-way fixed-effects model. The results show the following: first, green finance and green technological innovation can significantly promote the upgrading of China’s industrial structure directly and synergistically, a finding corroborated by various robustness tests. Secondly, heterogeneity analysis reveals that there is a “path-dependency effect” in the development of green finance and technology innovation: in areas with higher population density, more developed technological markets, and lower fiscal pressure, the synergistic promotion of the upgrading of industrial structure is stronger. Thirdly, further research indicates that green finance and technology innovation impact the upgrading of industrial structure variably under command-and-control, market-incentive, and voluntary environmental-regulation tools. The most effective policy is the voluntary regulation tool, which involves higher levels of public participation. This study offers valuable insights for fostering green technology innovation, refining environmental policies, and enhancing the optimization and upgrading of industrial structure.

From Kyoto to Paris and beyond: A deep dive into the green shift

This study investigates the impact of the Kyoto Protocol and its associated regime, the Paris Agreement, on environmental outcomes and the green transition. We employ a difference-in-differences (DD) specification for country-level panel data from 1995 to 2018. The DD estimates suggest that the Kyoto Protocol of 2005 significantly reduced CO2 emissions and natural resources rents by around 20 percent and decreased the quantity of non-renewable electricity generated by about 36 percent, relative to the pre-Kyoto period. The protocol also led to increases in renewable energy consumption and generation of 18 percent and 60 percent, respectively. Robustness checks using system GMM estimates confirm that the effects of the Kyoto Protocol are likely not biased because of dynamic endogeneity from simultaneity problems or confounding trends. For the Paris Agreement, given documented issues in interpreting the average treatment effects using standard two-way fixed effects (TWFE), we leverage a DD specification with multiple treatment timings. We find no statistically significant effect of the Paris Agreement 2016 on the green transition except that it contributes to reducing CO2 emissions. The absence of a significant impact from the ad hoc Paris Agreement on most outcomes points to the need for greater effort in implementing environmental treaties.

Does unstable off-farm employment cause stagnant farmland rent-out in rural China?

PurposeThis paper aims to examine the impacts of unstable off-farm employment on the probability and stability of farmland rent-out and explore its mechanisms.Design/methodology/approachThe paper adopts Ordinary Least Squares (OLS), Probit, Tobit, Order probit models with two-way fixed effects to conduct empirical analysis based on the balanced panel data collected in 2016 and 2023 with a national representativeness sample of 1,206 rural households in 100 villages across 5 provinces in China.FindingsThe empirical results showed that unstable off-farm employment had negative effects on the probability of farmland rent-out, but it had no effects on the stability of farmland rent-out. The mechanism analysis showed that unstable off-farm employment affected the probability of farmland rent-out by decreasing the probability of purchasing houses in city and endowment insurance with high pension. Heterogeneity analysis indicated that the negative effect of unstable off-farm employment was much larger for the households with higher share of labor engaging in off-farm employment outside home county, elder members in the households and those located in the villages of mountain areas.Originality/valueThis paper is the first to define the unstable off-farm employment from the perspective of incontiguous off-farm employment for several years, which could capture the normality rather than particular case in a certain year of off-farm employment among rural labors. Using these new measurements of unstable off-farmland, this paper examined the impacts and mechanisms of share of unstable off-farm employment on the probability and stability of farmland rent-out.

Promotion incentives, economic growth targets and industrial land supply: evidence from China

ABSTRACT This study examines the impact of officials’ promotion incentives on the industrial land supply and explores the mediating role of economic growth targets, which are greatly influenced by local leaders. Using the panel data of 257 prefecture-level cities across China from 2007 to 2019, we identify the influence of officials’ promotion incentives on industrial land supply using a two-way fixed-effects model and then examine the mediating role played by the setting of economic growth targets using a mediating-effects model. The estimated results indicate that the promotion incentives of local leaders and the supply of industrial land by local governments follow a significant inverted U-shaped relationship, and that the economic growth targets play a partial mediating role. Heterogeneity analysis shows that the impact of promotion incentives for local leaders on industrial land supply is significantly heterogeneous due to differences in the age of local leaders and the economic development across different regions. The findings are important for improving China’s assessment system of officials, formulating economic growth targets, and optimizing the allocation of urban industrial land.