Chaoran Chen

Assistant Professor
Office: Vari Hall, 1034
Phone: 4167362100 Ext: 30106
Email: chenecon@yorku.ca
Primary website: https://sites.google.com/site/chaoransite/
I am currently an Assistant Professor at York University. Before joining York, I received my Ph.D. degree in economics from the University of Toronto in 2017 and then taught for two years at the National University of Singapore.
My research interests are in macroeconomics and economic development. My work focuses on understanding the observed cross-country productivity differences through the lens of resource misallocation, structural transformation, and technology adoption, using both general equilibrium models and micro data. I am also interested in incomplete market models and inequality.
Degrees
Ph.D. Economics, University of TorontoM.A. Economics, University of Toronto
B. Economics, Fudan University
Research Interests
Land Misallocation and Productivity
American Economic Journal: Macroeconomics, 15(2): 441-65.
Abstract: Using detailed household-level data from Malawi on physical quantities of outputs and inputs in agricultural production, we measure total factor productivity (TFP) for farms controlling for land quality, rain, and other transitory shocks. We find that operated land size and capital are essentially unrelated to farm TFP implying substantial factor misallocation. The agricultural output gain from a reallocation of factors to their efficient use among existing farmers is a factor of 2.8-fold nationwide and 1.8-fold within enumeration areas, the narrowest geographical category in our data. Constructing a panel to estimate household-farm productivity that controls for transitory variation such as potential measurement error, the agricultural output gain is still quite substantial, between 1.7 to 2.0-fold, while the pattern of misallocation of near zero correlation of inputs and productivity remains essentially the same. We also provide suggestive evidence of the connection between misallocation and land markets and illustrate how an efficient allocation can substantially reduce agricultural income inequality and poverty.
Finance, Managerial Inputs, and Misallocation
American Economic Review: Insights, forthcoming.
Abstract: In standard macro-finance models, financial constraints mainly affect small or young firms but not large or old ones due to the self-financing mechanism, and the dispersion of marginal revenue product of capital (MRPK) of a firm cohort is less persistent than in the data. We extend a standard model by allowing firms to hire managers and large firms hire disproportionately more managers, consistent with data. In our model, financial constraints and the dispersion of MRPK persist, and even large firms are likely to be constrained. The productivity loss from financial frictions is also substantially amplified.
The Effects of Land Markets on Resource Allocation and Agricultural Productivity
Review of Economic Dynamics, 45: 41-54.
Abstract: We assess the effects of land markets on misallocation and productivity both empirically and quantitatively. Exploiting variation from a land certification reform across time and space in Ethiopia, we find that certification facilitates rentals and improves agricultural productivity. We calibrate a quantitative macroeconomic model with heterogeneous household farms facing institutional costs to land markets using the micro panel data. The effect of a counterfactual reallocation from no rentals to efficient rentals increases zone-level agricultural productivity by 43 percent on average. While our estimated institutional costs are strongly associated with land certification across zones, there are nontrivial residual frictions to rental market activity, implying that land certification only partially captures the overall effects of rentals. A full certification reform accounts for about one-fourth of the overall productivity gains from land rentals. This result highlights the importance of comprehensive reforms alleviating frictions to land transactions beyond the granting of certificates.
Capital-Skill Complementarity, Sectoral Labor Productivity, and Structural Transformation
Journal of Economic Dynamics and Control, 116: 103902.
Abstract: In the postwar U.S. economy, labor productivity has been growing faster in the goods sector versus the service sector. This paper argues that this sectoral labor productivity growth gap can largely be explained by the fact that capital intensity also increases faster in the goods sector. I build a two-sector neoclassical growth model in which capital substitutes low-skilled labor but complements high-skilled labor, and the goods sector is more intensive in low-skilled labor relative to the service sector, as observed in the data. As capital becomes more abundant relative to labor along economic growth, low-skilled labor is substituted by capital, leading to faster growth of capital intensity and hence labor productivity in the goods sector. Using a calibrated model, I find that two thirds of the sectoral labor productivity growth gap can be explained by capital accumulation and its interaction with capital-skill complementarity.
Technology Adoption, Capital Deepening, and International Productivity Differences
Journal of Development Economics, 143: 102388
Abstract: I document that cross-country differences in capital intensity are much larger in the agricultural sector than in the nonagricultural sector. To explain this fact, I build a model featuring technology adoption with fixed costs among heterogeneous farmers. More productive farmers operating larger farms pay the fixed cost and adopt a modern capital-intensive technology, while less productive ones choose a traditional labor-intensive technology. The model is calibrated using historical data on farmer adoption of mechanized technology in postwar America. This calibrated model is then employed to perform cross-country comparisons. Incorporating a technology adoption channel not only allows the model to predict substantial differences in agricultural capital intensity between rich and poor countries that an otherwise identical model would fall short in generating, but also improve explanatory power for cross-country agricultural productivity differences by 1.5-fold.
Untitled Land, Occupational Choice, and Agricultural Productivity
American Economic Journal: Macroeconomics, 9(4): 91-121
Abstract: The prevalence of untitled land in poor countries helps explain the international agricultural productivity differences. Since untitled land cannot be traded across farmers, it creates land misallocation and distorts individuals' occupational choice between farming and working outside agriculture. I build a two-sector general equilibrium model to quantify the impact of untitled land. I find that economies with higher percentages of untitled land would have lower agricultural productivity; land titling can increase agricultural productivity by up to 82.5 percent. About 42 percent of this gain is due to eliminating land misallocation, and the remaining is due to eliminating distortions in individuals' occupational choice.
Upcoming Courses
Term | Course Number | Section | Title | Type |
---|---|---|---|---|
Fall 2023 | AP/ECON2450 3.0 | A | Intermediate Macroeconomic Theory II | LECT |
Winter 2024 | AP/ECON2400 3.0 | M | Intermediate Macroeconomic Theory I | LECT |
Winter 2024 | AP/ECON2450 3.0 | M | Intermediate Macroeconomic Theory II | LECT |
Fall 2023 | GS/ECON5110 3.0 | A | Topics In Macroeconomic Theory | LECT |
I am currently an Assistant Professor at York University. Before joining York, I received my Ph.D. degree in economics from the University of Toronto in 2017 and then taught for two years at the National University of Singapore.
My research interests are in macroeconomics and economic development. My work focuses on understanding the observed cross-country productivity differences through the lens of resource misallocation, structural transformation, and technology adoption, using both general equilibrium models and micro data. I am also interested in incomplete market models and inequality.
Degrees
Ph.D. Economics, University of TorontoM.A. Economics, University of Toronto
B. Economics, Fudan University
Research Interests
All Publications
Land Misallocation and Productivity
American Economic Journal: Macroeconomics, 15(2): 441-65.
Abstract: Using detailed household-level data from Malawi on physical quantities of outputs and inputs in agricultural production, we measure total factor productivity (TFP) for farms controlling for land quality, rain, and other transitory shocks. We find that operated land size and capital are essentially unrelated to farm TFP implying substantial factor misallocation. The agricultural output gain from a reallocation of factors to their efficient use among existing farmers is a factor of 2.8-fold nationwide and 1.8-fold within enumeration areas, the narrowest geographical category in our data. Constructing a panel to estimate household-farm productivity that controls for transitory variation such as potential measurement error, the agricultural output gain is still quite substantial, between 1.7 to 2.0-fold, while the pattern of misallocation of near zero correlation of inputs and productivity remains essentially the same. We also provide suggestive evidence of the connection between misallocation and land markets and illustrate how an efficient allocation can substantially reduce agricultural income inequality and poverty.
Finance, Managerial Inputs, and Misallocation
American Economic Review: Insights, forthcoming.
Abstract: In standard macro-finance models, financial constraints mainly affect small or young firms but not large or old ones due to the self-financing mechanism, and the dispersion of marginal revenue product of capital (MRPK) of a firm cohort is less persistent than in the data. We extend a standard model by allowing firms to hire managers and large firms hire disproportionately more managers, consistent with data. In our model, financial constraints and the dispersion of MRPK persist, and even large firms are likely to be constrained. The productivity loss from financial frictions is also substantially amplified.
The Effects of Land Markets on Resource Allocation and Agricultural Productivity
Review of Economic Dynamics, 45: 41-54.
Abstract: We assess the effects of land markets on misallocation and productivity both empirically and quantitatively. Exploiting variation from a land certification reform across time and space in Ethiopia, we find that certification facilitates rentals and improves agricultural productivity. We calibrate a quantitative macroeconomic model with heterogeneous household farms facing institutional costs to land markets using the micro panel data. The effect of a counterfactual reallocation from no rentals to efficient rentals increases zone-level agricultural productivity by 43 percent on average. While our estimated institutional costs are strongly associated with land certification across zones, there are nontrivial residual frictions to rental market activity, implying that land certification only partially captures the overall effects of rentals. A full certification reform accounts for about one-fourth of the overall productivity gains from land rentals. This result highlights the importance of comprehensive reforms alleviating frictions to land transactions beyond the granting of certificates.
Capital-Skill Complementarity, Sectoral Labor Productivity, and Structural Transformation
Journal of Economic Dynamics and Control, 116: 103902.
Abstract: In the postwar U.S. economy, labor productivity has been growing faster in the goods sector versus the service sector. This paper argues that this sectoral labor productivity growth gap can largely be explained by the fact that capital intensity also increases faster in the goods sector. I build a two-sector neoclassical growth model in which capital substitutes low-skilled labor but complements high-skilled labor, and the goods sector is more intensive in low-skilled labor relative to the service sector, as observed in the data. As capital becomes more abundant relative to labor along economic growth, low-skilled labor is substituted by capital, leading to faster growth of capital intensity and hence labor productivity in the goods sector. Using a calibrated model, I find that two thirds of the sectoral labor productivity growth gap can be explained by capital accumulation and its interaction with capital-skill complementarity.
Technology Adoption, Capital Deepening, and International Productivity Differences
Journal of Development Economics, 143: 102388
Abstract: I document that cross-country differences in capital intensity are much larger in the agricultural sector than in the nonagricultural sector. To explain this fact, I build a model featuring technology adoption with fixed costs among heterogeneous farmers. More productive farmers operating larger farms pay the fixed cost and adopt a modern capital-intensive technology, while less productive ones choose a traditional labor-intensive technology. The model is calibrated using historical data on farmer adoption of mechanized technology in postwar America. This calibrated model is then employed to perform cross-country comparisons. Incorporating a technology adoption channel not only allows the model to predict substantial differences in agricultural capital intensity between rich and poor countries that an otherwise identical model would fall short in generating, but also improve explanatory power for cross-country agricultural productivity differences by 1.5-fold.
Untitled Land, Occupational Choice, and Agricultural Productivity
American Economic Journal: Macroeconomics, 9(4): 91-121
Abstract: The prevalence of untitled land in poor countries helps explain the international agricultural productivity differences. Since untitled land cannot be traded across farmers, it creates land misallocation and distorts individuals' occupational choice between farming and working outside agriculture. I build a two-sector general equilibrium model to quantify the impact of untitled land. I find that economies with higher percentages of untitled land would have lower agricultural productivity; land titling can increase agricultural productivity by up to 82.5 percent. About 42 percent of this gain is due to eliminating land misallocation, and the remaining is due to eliminating distortions in individuals' occupational choice.
Upcoming Courses
Term | Course Number | Section | Title | Type |
---|---|---|---|---|
Fall 2023 | AP/ECON2450 3.0 | A | Intermediate Macroeconomic Theory II | LECT |
Winter 2024 | AP/ECON2400 3.0 | M | Intermediate Macroeconomic Theory I | LECT |
Winter 2024 | AP/ECON2450 3.0 | M | Intermediate Macroeconomic Theory II | LECT |
Fall 2023 | GS/ECON5110 3.0 | A | Topics In Macroeconomic Theory | LECT |