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The same government policy that incentivizes individuals to make a certain choice can have different effects across groups due to the existence of social norms. In this paper, we study how Chinese ethnic policies that give material benefits to minorities affect ethnicity choices for children in ethnically mixed marriages. We document that, on average, such policies increase the propensity of choosing minority status for the children. Meanwhile, responses to the same policies differ widely across localities, suggesting that social norms may be important. We formalize the ethnic identity choice in a simple framework, which highlights the interaction of material benefits stemming from the ethnic policies, identity costs associated with breaking the norms of following the father's ethnicity, and social reputations altering the importance of identity costs. This framework predicts that ethnic policies should increase the propensity of breaking the norm (i.e., following the mother's ethnicity) in localities where more families follow the norm. We find support for this prediction in microdata from multiple census waves, and show that a number of alternative explanations can be ruled out. More broadly, our study serves as evidence about the interplay of individual and social motivates in shaping policy consequences, as well as evidence on the determinants of identity choice.
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A burgeoning literature has documented the importance of elite colleges. Yet, little is known about access to elite education and its labor market implications in China, a country that produces one in every five college graduates in the world. College admission in China is governed by a single exam--the national college entrance exam, and the government sets admission cutoff scores for elite colleges. We examine the impacts of scoring above the elite-tier cutoff on a student's access to elite colleges and wage outcomes after graduation, using the discontinuity around the cutoff score. By employing hand-collected survey data, we find that scoring above the cutoff not only increases the chance of entering an elite college but also raises a young person's first-job wages after graduation. We also find that those just above the cutoff have peers with higher scores and better social networks than those below the cutoff, but it is less clear whether the two groups use their time differently in college.
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We argue that China, with its long history, a relatively stable political system, and multiple regime changes, provides us an opportunity to investigate the political economy of administrative hierarchy. Using prefecture-level panel data and exploiting regime changes during AD1000-2000, we find that gaining and losing importance in the political hierarchy led to the rise and decline of different prefectures (measured by population density and urbanization). Moreover, political hierarchy shapes regional development via both political and market channels (reflected by public employment and transportation networks). More broadly, our study serves as new evidence on how politics shapes economic geography and offers a context to understand changes in economic activity location in the long run.
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