Time: 10am-11:30am, Nov. 30th, 2018

Venue: Room 359S, Overseas Exchange Center, Peking University

Speaker: Zhe Fu (School of Finance, University of International Business and Economics)

Abstract:

Transition increases economic inequality. This paper establishes a theory to explain why. Workers in state-owned enterprises (SOEs) face on average significantly lower idiosyncratic income shocks than their counterparts in private-owned enterprises (POEs). Economic transition, resulting from a continuously reducing subsidy to SOEs, pushes workers to move from SOEs to POEs. The transition in labor market thus changes the composition of underlying income shock structure in the aggregate economy. This leads to

rising income inequality and co-moving consumption inequality. We calibrate the model to the Chinese economy in transition and show that the model is able to capture the majority of rising economic inequality in urban China.

Speaker:

Zhe Fu is an Assistant Professor of School of Finance at University of International Business and Economics (UIBE). Professor Fu’s research interest is macroeconomic research, particularly in economic growth and income inequality. He also studies the role of infrastructure investment and financial intermediation cost on growth and income distribution. Professor Fu received his Ph.D. in Economics degree from George Washington University in 2017.