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Population Policy, Demographic Change, and Firm Returns: Evidence from China

Author

Listed:
  • An Zhiyong

    (Division of Enterprise Risk Management, Fannie Mae, Washington, DC 20016, USA)

  • Hou Yilin

    (Center for Policy Research, The Maxwell School of Citizenship and Public Affairs, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020, USA)

Abstract

We take advantage of China’s relaxation in January 2014 of its “one-child” family planning policy to study the causal relationship between expected future demographic changes and firms’ stock returns. We use an event study method as our identification strategy and employ data from Chinese stock markets to implement the analysis. We find consistent evidence suggesting that expected demographic changes exert statistically and economically significant effects on firms’ stock returns. We address four potential threats about the validity of our empirical design and argue that our conclusion is not China-specific, but a generic lesson portable to developed countries.

Suggested Citation

  • An Zhiyong & Hou Yilin, 2019. "Population Policy, Demographic Change, and Firm Returns: Evidence from China," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(1), pages 1-11, January.
    • Handle: RePEc:bpj:bejeap:v:19:y:2019:i:1:p:11:n:9
    DOI: 10.1515/bejeap-2018-0128
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    References listed on IDEAS

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    More about this item

    Keywords

    demographics; family planning policy; stock return; China;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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