Jingting Fan

Department of Economics
University of Maryland
College Park, MD 20742

Graduate Program:
301-405-3544

Undergraduate Program:
301-405-3266

Research

Talent, Geography, and Offshore R&D  (Job Market Paper) [PDF]


I model and quantify the impact of a new dimension of global integration: offshore R&D. In the model, firms match with heterogeneous researchers to develop new product blueprints, and then engage in offshore production and exporting. Cross-country differences in the distributions of firm managerial efficiency and researcher talent generate a “talent-acquisition” motive for offshore R&D, while the frictions impeding offshore production and trade lead to a “market-access” motive. I find empirical support for both motives using firm-level patenting data. I find additional evidence for these motives via counterfactuals using the calibrated model: international differences in endowment distributions and the market access motive collectively account for 90% of the average observed level of offshore R&D. Offshore R&D increases countries’ gains from global integration by a factor of 1.2 on average, with much larger increases for developing than for developed countries. Incorporating offshore R&D also has important implications for understanding the welfare impact of traditional forms of global integration, namely trade and offshore production.

Internal Geography, Labor Mobility, and the Distributional Impacts of Trade  [PDF] [Online Appendix]

R&R at American Economic Journal: Macroeconomics

This paper develops a spatial equilibrium model to quantify the aggregate and distributional impacts of international trade in an economy with intra-national trade and migration costs. I apply the framework to China and conduct counterfactual experiments. I find that international trade increases the skill premium within a region, as well as the between-region inequality for workers with similar skills. Both components are quantitatively important for the increase in aggregate inequality after trade liberalization. Reforms in domestic labor/goods markets can alleviate the effects of trade on inequality, but do so at the expense of smaller aggregate gains from trade.

Presented at: Urban Economic Association Annual Meeting (2015), Georgetown Center for Economic Research Biennial Conference (2015), Midwest International Trade Fall Meetings (2014)

The Alibaba Effect: Spatial Consumption Inequality and the Welfare Gains from e-Commerce [PDF]

with Lixin Tang, Weiming Zhu, Ben Zou

R&R at Journal of International Economics


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 city purchase more intensively online. We first test and confirm this prediction using unique data from China's leading e-Commerce platform. We then build a multi-region general-equilibrium model to quantify the welfare gains   from e-Commerce. We find the welfare gains from e-Commerce to be 1.6%. Furthermore, the arrival of 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%.

Presented at: GWU Annual Conference on US-China Economic Relations & China's Economic Developments (scheduled), Federal Communications Commission (2016), World Bank Annual Bank Conference in Development Economics (2016), NBER Summer Institute IT and Digitization (2016, coauthor presented), NBER Chinese Economy Group Spring Meeting (2016, coauthor presented)

Industrializing from Scratch: The Persistent Effects of China's `Third Front' Movement [PDF]

with Ben Zou [About the Third Front Movement (Wikipedia)]

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 inter-regional 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.

Presented at: Urban Economic Association Annual Meeting (2014),  The Econometric Society North America Winter Meeting (2016, coauthor presented)

The Emergence of Asia: Reforms, Corporate Savings, and Global Imbalances [PDF]

with Şebnem Kalemli-Özcan
IMF Economic Review
, 64(2), 239-267, 2016

One of the explanations for global imbalances is the self-financing behavior of credit-constrained firms in rapidly growing emerging markets. We use an extensive firm-level data set from several Asian countries during 2002–2011, and test the micro foundation of this theory by estimating the effect of an exogenous change in credit constraints, resulting from financial reforms, on firms’ saving behavior. As predicted, after financial reforms, firms who were credit-constrained previously decreased their savings more (or increased their savings less) relative to unconstrained firms. However, this firm-level effect did not lead to a decrease in aggregate corporate savings as conjectured by the theory. Our sector level regressions show that corporate savings increased after financial reforms, and more so for sectors more dependent on external finance. The current account surpluses also did not register a significant deterioration after financial reforms, consistent with our findings on sectoral and aggregate corporate savings.