We thank participants at the 2015 NBER China meeting for helpful comments. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the Board of Governors, its research staff, or the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w22178.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

We exploit a policy‐induced exogenous surge in China's college‐educated workforce that started in 2003 to identify the impact of human capital on productivity. Using a difference‐in‐differences estimation strategy, we find that industries using more human‐capital intensive technologies experienced a larger gain in total factor productivity after 2003 than they did in prior years. Exploring the pathways from human capital increases to TFP growth, we find that these industries also accelerated new technology adoption, as reflected in the importation of advanced capital goods, R&D expenditure and capital intensity, as well as employment of more highly skilled individuals. The productivity gains were weaker for domestic private firms than for foreign‐owned firms.

Purpose – The purpose of this paper is to examine the impacts of off-farm labor employments on household land rental behavior in rural China. Design/methodology/approach – IV-Probit and IV-Tobit model are used to identify the estimate of interest. Findings – The results indicate that households with more members participating in either migration or local off-farm work are more/less likely to rent out/in land. Moreover, the effect of migration on household land rental behavior is much larger than the effect of local off-farm work. Practical implications – These results suggest that ensuring benefits of migrants in urban cities can automatically promote household land rental behavior in rural China. Originality/value – The authors provide a rigorous and careful empirical analysis on the effect of off-farm employment on household land rental behavior and pay special attention to the endogeneity issue tackled using separable instruments.

Historical relations between countries bring important explanatory power for foreign direct investment (FDI) decisions, yet little is known whether a home-host country relation exhibits heterogeneous effects on FDI across the country's subnational regions. In this study, we examine the long-term impact of historical conflict on FDI location choices and performance from a subnational perspective. Using a sample of 8,646 Japanese FDI in China, we show that civilian casualties in subnational regions of China during the Second Sino-Japanese War exert deterring effects on Japanese FDI location choices. Furthermore, we demonstrate that civilian casualties negatively affect Japanese FDI performance and political capital accumulation strategies, in the forms of excessive tax payment and local employment, can reduce this negative effect. This study contributes to the understanding of how within-country differences of historical factors affect FDI location decisions and performance. The findings on firms' political capital accumulation strategies also provide important implications for FDI operation in an environment characterized by historical animosity.

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