Chengying Luo


Department of Economics

Research Interest

Urban Economics, Public Economics, International Economics

Job-market Paper

Initial Public Offerings and Local Economic Activity: Jobs, Housing Market Markets, and Demographics

Going public allows firms to raise capital, and gives employees and early investors an opportunity to cash out. This paper examines the impact of large initial public offerings (IPOs) in U.S. stock markets on local economic activity. Using business pattern data, housing transaction data, and zip-code demographic data, the paper shows that going public leads to an increased number of businesses in the IPO firms’ industries and higher employment, wages,
and housing prices in the vicinity of the firms’ headquarters. Information aggregated in the IPO process plays an important role in explaining housing price dynamics at different stages of IPOs. Neighborhoods close to firm headquarters experience modest growth in income, a smaller share of low-income residents, and an increase in the number of nearby restaurants. These effects do not appear to reflect the wealth effect from people cashing out, but rather suggest that post-IPO firm investments give rise to an local agglomeration economies.

Other Works

International Competition in the Race to Clean Technology with Douglas Hanley

We build a two-country, two-sector (clean, dirty) trade model in which clean and dirty technologies compete in production. Research and carbon tariffs encourage production and innovations in clean technology, though carbon taxes may encourage dirty innovation abroad and generally cannot avoid the carbon leakage. We estimate the parameters of the model using US and China micro-data on firm-level output, R&D, and patents. We then characterize the optimal bilateral/unilateral policy path that using carbon taxes, research subsidies and tariffs. Finally, we quantify each country's decision allowing for game-theoretic interactions on policies. 

Environmental Regulation and Enterprises' Green Innovation: Evidence from a Quasi-natural Experiment in China with  Douglas Hanley and Mingqing Wu

This paper examines whether stringent environmental regulations can motivate enterprises to generate more innovations. Chinese government implemented a Two Control Zone (TCZ) policy in 1998, and tougher environmental regulations are imposed in TCZ regions, while other regions are not. We link the universe of China patents from 1985 to 2016 to China economic censuses and classify them as sulfur dioxide (SO2) emission reduction or non-reduction patents based on patent texts. Using a difference-in-difference-in-differences framework, we find that environmental regulation caused a significant increase in patents that can reduce SO2 emissions in more polluted industries in TCZ regions. Meanwhile, we find that non-state-owned enterprises are more sensitivein patents related with SO2 than state-owned enterprises. Our findings contribute to the effectiveness of the Porter Hypothesis in developing countries.

Are Consumer Reviews Affecting Labor Decisions? Evidence from

How do consumer reviews affect employment decision? Internet review platforms increasingly inform consumers about product quality and shift consumer demand. Meanwhile, these reviews are also frequently read by business owners and may be used to monitor their employees. I investigate this question by combining reviews from and information on the employment and wages of local businesses in Pittsburgh. Using a regression discontinuity framework that exploits Yelp's rounding thresholds, I find that an extra star rating leads to about 3.5 in crease in the quarterly number of employees and $2,800 increase in the quarterly total wage bill, while it does not affect average wage per worker. This effect also holds true for other service industries. By analyzing consumer review content on services with text-mining approach, my results show that consumer reviews on customer services do not seem to change employment decisions significantly.

Job Market Paper Link