Economics

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Open Access
A Study of Immigration Performance in Terms of Task Specialization in the Canadian Labor Market
(2020-11-13) Jiang, Shiyu; Salisbury, Laura
In this dissertation, I study the impact of immigration on the Canadian economy as well as the economic outcomes of immigrants to Canada. I focus on two key economic outcomes, which differ from most of the previous literature: task usage and labor market segmentation. My first chapter examines the effect of immigration on natives' task usage. My second chapter studies differences in the outcomes of immigrants who work in and out of ethnic enclaves. My third chapter explores differences in the outcomes of first, second and third-generation immigrants. In Chapter 1, I use Canadian confidential census data to undertake research on the effects of immigration on employees' performance in the Canadian labor market. This chapter concentrates on changes in task supplies in the labor market resulting from changes in immigration to Canada. I also find the increase in the foreign-born share will lead both the relative supply of communication versus manual tasks and the relative compensations to go up in the highly-educated workers' group. In Chapter 2, I study performance differences between immigrants working in the regular Canadian labor market and those in the ethnic enclave sector. I find that the returns to education are greater and being a visible minority carries less of a wage penalty for immigrants working in the regular sector. Moreover, I document different effects of education and race on both earnings and job segments for these two types of immigrants and propose an explanation. Finally, I have a view of the differences in performance between immigrants working in the regular and enclave sectors. In Chapter 3, I estimate differences in task supply and earnings between natives and two generations of immigrants in 1970 and 2015. Furthermore, using a three-fold Blinder-Oaxaca decomposition, I link the average weekly wage of workers to their task productivity and try to find the effects of the returns to tasks as well as different task supplies on the average wage gap between natives and immigrants. Finally, I demonstrate and measure the significant effects of immigrant status on an employee's labor market segment
Open Access
An Analysis of the Impact of Governments Policies on Economic Activities
(2023-12-08) Bi, Zifan; Stoyanov, Andrey
This PhD dissertation explores the intersection of international trade, empirical microeconomics, and public economics. In each chapter of the dissertation, I investigate the impact of free trade agreements (FTAs), preferential tariffs under the Generalized System of Preferences (GSP), and government regulations on local labor markets, respectively. In the first chapter, the study examines the effects of FTAs on members’ incentives to participate in multilateral trade liberalization. By addressing endogeneity issues and considering the parallel existence of multiple FTAs, the research provides robust evidence that FTA formation leads to a reduction in external tariffs towards nonmembers, shedding light on the role of FTAs in accelerating global free trade. The second chapter focuses on understanding the factors underlying countries’ choices of preferential tariffs towards developing countries under the GSP. A theoretical model is constructed to capture the donor countries’ consideration of the economic interests of recipient countries. The findings demonstrate that donors partially internalize the effect of GSP tariffs on profits of firms from developing countries, indicating their concern for the welfare of recipient countries. However, evidence for such considerations among the least developed countries is limited. In the third chapter, the study analyzes the impact of government regulations on local labor markets, with a specific focus on the United States. Using innovative quantification methods, the research confirms the cost of regulations and their adverse effects on local employment and income equality. Furthermore, the analysis highlights the influence of political party affiliation, showing that regulations under Republican governments tend to attenuate the negative impacts on employment and income equity compared to regulations under Democratic governments.
Open Access
Asymptotic Likelihood Inference for Sharpe Ratio
(2016-11-25) Qi, Ji; Wong, Augustine C.M.; Jasiak, Joann
The Sharpe ratio is one of the most widely used measures of the performance of an investment with respect to its return and risk. Since William Sharpe (1966) defined the ratio, as the funds excess return per unit of risk measured by standard deviation, investments have been often ranked and evaluated on the basis of Sharpe ratio by both private as well as institutional investors. Our study on Sharpe ratio estimator is focused on its finite sample statistical properties which have being given less attention in practice. Approximations aimed at improving the accuracy of likelihood method have been proposed over the past three decades. Among them, Lugannani and Rice (1980) and Barndorff-Nielsen (1986) introduced two widely used tail area approximations with third order of convergence. Furthermore, Fraser(1988; 1990), Fraser and Reid (1995), Fraser, Reid and Wu (1999) improved their methods and developed a general tail probability methodology, based on the tangent exponential model. The objective of this paper is to use the third order asymptotic likelihood-based statistical method to obtain highly accurate inference on Sharpe ratio. Since the methodology is demonstrated to work well generally for any parametric distribution, our study will assume the market log returns are independent identically distributed (IID) normal, or follow an autoregressive process of order one (AR(1)) with Gaussian white noise. While most literature address large sample properties of the Sharpe ratio statistic (Lo 2002, Mertens 2002, Christie 2005, Bailey and Lopez de Prado 2012); it is important to compare the performance of investments when only small sample observations are available, especially before and after markets change direction. Our research would address this issue. New tests are developed for testing hypothesis on the Sharpe ratio calculated from one sample and on the difference of two Sharpe ratios. Comparison between our method and the currently existing methods in the literature are conducted by simulations. The p-values and confidence intervals for Sharpe ratio are calculated and various applications are illustrated.
Open Access
Canadian Gender Wage Gap
(2023-12-08) Zhu, Shengyi; Sand, Benjamin M.
This dissertation provides a comprehensive analysis of the Canadian gender wage gap over the past two decades, employing modern methodologies and tools. In the first chapter, selection bias and its impact on the entire earning distribution are examined. A selection-corrected quantile regression is utilized to provide a more accurate depiction of the gender wage gap distribution. The simulation of potential government child care benefits as an instrument helps address the selection bias issue. Findings reveal the persistent but inconsistent effects of selection bias across wage quantiles and time. The presence of negative selection for women entering the workforce is identified, and the absence of this bias would result in an even higher unexplained portion of the gender wage gap. Moving to the second chapter, a thorough investigation of the heterogeneity of the gender wage gap is conducted. High-dimensional models are employed to explore the diverse factors contributing to the wage gap. Advanced machine learning algorithms are utilized as robustness checks to address possible multicollinearity problems. The analysis reveals significant reductions in the gender wage gap attributed to age and several occupations, while penalties related to family structure persist. Finally, the third chapter explores the under-researched area of job-education mismatch and its impact on the gender wage gap. The study focuses on the differences in vertical and horizontal matching between women and men. Self-reported measurements of both vertical and horizontal mismatch, as well as an objective index of horizontal mismatch, are utilized. Results indicate that, unlike other countries, vertical mismatch does not contribute significantly to the gender wage gap. Furthermore, the role of horizontal mismatch is economically insignificant in relation to the overall gap. This dissertation enhances our understanding of the Canadian gender wage gap by addressing important aspects such as selection bias, heterogeneity, and job-education mismatch. The findings contribute to the existing literature on gender inequality, offering valuable insights for policy interventions and future research in this field.
Open Access
Climate Change, Structural Change and Innovation
(2022-12-14) Kim, HyungJu; Adamopoulos, Anastasios T.
In this dissertation, I study the sources of economic growth and structural transformation by combining a quantitative framework with micro data. As the main theme of the dissertation, I focus on the impact of climate change on the agricultural sector of developing countries and spatially analyze its impact on the agricultural productivity and long-run distribution of farming activity. Then, I move onto the non-agricultural sector of a developed country by analyzing the source of economic growth through product innovation. In chapter 1, I study the impact of climate change on farm size and agricultural productivity in developing countries. I combine pixel-level climate data from the Global Agro-Ecological Zones (GAEZ) project with rich household-level data on agricultural production from the World Bank’s LSMS for Uganda. I assess the implications of anticipated climate change on aggregate productivity through the lens of a two-sector model with endogenous farm size and crop choice, featuring heterogeneity in both land quality and farmer ability. In chapter 2, I study the interaction of climate change with transport frictions to determine the long-run distribution of farming activity in Ethiopia. I assess the implications of anticipated climate change through the lens of a spatial model featuring locational heterogeneity in land quality, transportation costs, and agricultural production, by incorporating a quantitative spatial framework to rich micro-data combined from different sources. I calibrate the model to the benchmark economy with baseline (1961-1990) geographical conditions, then change geographical conditions alone to the future level (year 2050). Where does the product innovation come from? From entering plants or incumbents? From existing products or brand new products? In chapter 3, I answer these questions by quantifying the sources of innovation in South Korea over the years 2001-2011. To account for the sources of innovation, I combine unique Korean data on the universe of non-farm private sector establishments and the growth framework of Garcia-Macia, Hsieh, and Klenow, which infers the sources of innovation from job creation and job reallocation flows among incumbent and entrant firms.
Open Access
Corporate Hedging, Executive Compensation and Commodity Price Prediction
(2021-07-06) Tong, Michelle Jacqueline; Tian, YiSong; Jasiak, Joann
This thesis examines the agency problem surrounding the corporate hedging decision. It gives insight on how managerial incentives impact corporate hedging decisions and on how executive compensation can be used to minimize the agency problem and factors determining the optimal compensation. The model predictions are then tested against empirical data. One of the factors aecting optimal executive compensation is volatility of commodity prices. To explore this, the last chapter develops an empirical model to forecast commodity prices. Past theoretical and empirical studies found that risk-averse managers tend to overhedge, without analyzing how to align shareholders and managers hedging strategies. In this dissertation I develop a model aligning hedging strategies using executive compensation, incorporating a risk-averse managers utility into the hedging decision. Consistent with standard theories, the model show managers hedge more of the expected production than shareholders. The model shows there is a decrease in corporate hedging with the presence of managerial equity-based incentive pay. It also shows managerial incentives can be used to impact corporate hedging to minimize agency problem. To align and optimize managerial hedging decisions, the optimal managerial incentive should comprise more of the equity-based portion when there is a low risk tolerance, or low price volatility, or a low variable cost. In contrast, when there is high coecient of absolute risk aversion, or low price volatility, or high variable cost, it is best to compensate the manager with a lower equity-based portion in order to optimally align hedging decisions. In other words, by determining and examining the primary factors aecting compensation scheme includes risk aversion, price volatility, and prot margin we can determine the optimal compensation scheme. When there is a low (high) coecient of absolute risk aversion, low (high) price volatility, or low (high) variable cost, then optimal compensation should comprise more (less) equity-based incentives. Next, using empirical data I test the model predictions from the theoretical framework; (i) when incentive pay increases, the optimal hedge ratio decreases, (ii) when price volatility increases, the optimal hedge ratio decreases, while price volatility have a negative relation with equity-based incentive, (iii) when risk aversion increases, the optimal hedge ratio decreases, while risk aversion have a negative relation with equity-based incentive, and (iv) when variable cost increases, the optimal hedge ratio decreases, while variable cost have a negative relation with equity-based incentive. The predictions are tested against data obtained from oil and gas rms using a standard regression approach. I nd that the model predictions are further supported by empirical evidence from the oil and gas industry showing (i) a negative relationship between incentive pay and hedge ratio, (ii) a negative relationship between price volatility and hedge ratio/incentive pay, (iii) a negative relationship between risk aversion and hedge ratio/incentive pay, and (iv) a negative relationship between price volatility and hedge ratio/incentive pay. Overall, the rst two chapters claries the optimal compensation scheme under varying economic environments in order to mitigate the agency problem associated with hedging decisions. Last, a new model for the series of West Texas Intermediate (WTI) crude oil prices process is introduced, which accommodates spikes and local trends in its trajectory, as well as the multimodality of its sample distribution. The model relies on the convolution of two stationary processes, causal and noncausal processes, which allows for the estimation of the monthly WTI crude oil prices series. As an alternative specication, the mixed causal-noncausal autoregressive (MAR) models are estimated and used for oil price prediction. Two forecasting methods developed in the literature on MAR processes are applied to the data and compared. In addition, this chapter examines the long-term relationships between the WTI crude oil price, the Ontario Energy Price Index (OEP) and the Ontario Consumer Price Index (OCPI). These relationships are established using the cointegration analysis. The vector error correction (VEC) model allows us to predict the Ontario price indexes and the WTI crude oil prices. This chapter shows an alternative simple method of forecasting Ontario price indexes from stationary combinations of WTI crude oil price forecasts obtained from the mixed causal-noncausal autoregressive (MAR) models. This chapter shows that both method of prediction yields forecasts that are close approximation of the out of sample value.
Open Access
Culture and Redistribution
(2015-08-28) Quattrociocchi, Jeff; Esteve-Volart, Berta
My dissertation empirically examines whether characteristics of one's social groups influence an individual's preferences for redistribution. I begin by focusing on the socioeconomic status of the ethnic and religious groups one belongs to. First, I develop a theoretical framework where an individual's identity is strengthened by the status of their group. Then, utilizing data from the US General Social Survey, I find evidence that the average incomes of one's ethnic and religious groups are negatively correlated with one's preferences for redistribution. Controlling for household income, and a number of other individual-level characteristics and additional controls, I find that a standard deviation increase in the average income of one's social groups correlates to a weakening of an individual's preferences for redistribution by seven to eight percentage points. This result is robust to the inclusion of rich controls and alternate measures of group status, as well as a number of robustness checks, such as sample restrictions and the use of additional data. I then examine the relative importance a culture places on individualism vs. collectivism. Utilizing data from the European Social Survey, I find evidence that immigrants who were born in countries with a more individualistic culture tend to have weaker preferences for redistribution in their residence country. A standard deviation increase in the individualism of one's home country culture correlates to a weakening of an individual's preferences for redistribution by twelve percentage points. This relationship appears to be as strong as that between household income and preferences for redistribution (eleven percentage points). This result is robust to the inclusion of rich controls and the use of sample restrictions. The relationship appears to be stronger among immigrants who vote, belong to an ethnic minority and live in a country with a relatively high number of ethnic minorities. I also find that the relationship between preferences for redistribution and i) household income and ii) education is stronger among immigrants born in a country with an individualistic culture. Moreover, my analysis suggests that this trait is transmitted across generations, and bears some influence on the preferences for redistribution of second-generation immigrants as well.
Open Access
Essays in determinants of comparative advantage and welfare implications of trade wars
(2022-03-03) Gu, Ke; Stoyanov, Andrey
My main research areas are international trade and empirical microeconomics. In the first and second chapter of my PhD dissertation, I use similar empirical methodology clearly identify and analyzing comparative advantage among aging and female labor supply unbalanced countries. The third chapter focus on the effect of US China trade war on the country welfare with intermediate and non-tradable goods. In the first chapter, we investigate a particular mechanism through which differences in demographic composition across countries affect international trade flows. Some cognitive functions are known to vary across the adult life span, and in particular the ability to update skills and adapt to changes in working conditions. As a country's population is getting older, it becomes increasingly difficult for firms to find workers with up-to-date skills. As a result, countries with aging populations will start losing comparative advantage in industries that rely heavily on workers' ability to adapt to frequent changes in working conditions. We test this hypothesis and find robust empirical evidence for a significant negative effect of population aging on comparative advantage of a country in industries which are intensive in skill adaptability of the labor force, in both the cross-sectional and the dynamic panel data sets. In the second chapter, we study the effect of female labor supply change on China's international trade. In 1979, the one-child policy (OCP) was introduced in China, many more boys than girls have been born, changing the relative female labor supply. Differences in sex ratios across cities, caused by differences in OCP enforcement, affect availability of gender-dependent skills. These regional differences interact with sector-specific differences in intensities in gender-dependent skills. Other things equal, cities with higher female population share specialize in industries which use female labor intensively. We empirically confirm this insight for the sample of 283 Chinese prefecture cities, using spatial variation in OCP stringency as an exogenous female labor supply shifter. We interpret our results as highlighting the importance of labor force gender composition for industry's productivity. Our results imply that the effect of gender imbalances in labor supply on labor market outcomes, observed in many parts of the world, can be mitigated through international trade by utilizing relatively abundant type of labor in export-oriented industries. In the third chapter, we use a quantitative general equilibrium trade model to analyze the effect of the US China trade war on welfare of the main countries affected by it. In 2018, the US introduced a 25% import tariff on certain imports from China in an attempt to reduce US China trade deficits and to nudge the Chinese government to abandon its unfair trade practices. Quantitative results suggest that after three rounds of import tariff increase both China and US suffered welfare reductions, by 0.3 and 0.0075 percentage points respectively. At the same time, some other economies benefited from the trade war, especially the ones that are close trade partners to either US or China. We use this model to simulate the effect of the same additional import tariff imposed on randomly selected industries, and find similar reduction in welfare.
Open Access
Essays in Immigration and Migration
(2019-03-05) Monteiro, Stein; Bucovetsky, Sam
This research explores the socio-structural features of the migration and assimilation decision. The socio-structural features explored are the impact of extended family members on the migration decision of individuals within a household, and productivity differences on the assimilation rate of new immigrants. Extended families are a common feature of developing country households. I generalize the Mincer (1978) model of husband-wife migration by including decision makers from the extended family. The model with extended families predicts that migration decisions may become freer than in the husband-wife model because spouses are not more likely to be tied to their partners than members of the extended family. That is, marital status is a smaller deterrent to migration in extended family settings relative to nuclear families. I provide justification for the implications of the model using data from Nepal. Immigrants from poorer source countries have lower assimilation rates compared to immigrants from richer countries. Theory suggests that new immigrants from poor countries are exposed to co-ethnics more often than comparable immigrants from richer countries, which lead to lower assimilation rates. However, many new immigrants come with pre-immigration experience with the local culture which decreases learning costs. I insert investment into the matching model of Konya (2007). All immigrants face a cost to assimilating by investing in a process of cultural assimilation, but some new immigrants with large pre-immigration experience have significantly lower costs to investing. I provide evidence from the Longitudinal Survey of Immigrants in Canada: Waves 1-3. Source country richness has a significant positive effect on assimilation rates. But conditional on pre-immigration experience with the local culture, the exposure channel through which source country richness affects assimilation rates becomes insignificant. However, exposure to co-ethnics is not random, new immigrants face location choices among neighbourhoods in the host country. These location choices determine the level of exposure to other immigrants and the costs of learning the local native-born culture. I expand the model to include neighbourhood choice. Among neighbourhoods with fewer co-ethnics, immigrants from richer source country groups will sort into assimilating neighbourhoods. And neighbourhoods with a relatively large number of co-ethnics will receive some non-assimilating types. Using data from the Longitudinal Survey of Immigrants in Canada: Waves 1-3, I show that sorting is an important component of the exposure channel through which productivity differences affect assimilation rates. However, controlling for sorting, source country richness still has a significant positive effect on assimilation rates. There appears to be an alternate channel through which productivity differences affect assimilation rates.
Open Access
Essays in Incomplete Information and Trade Policy
(2020-08-11) Ning, Haokai; Lo, Kin Chung
Strategic trade policy has been one of the most intensively researched areas in theory of industrial organization and international trade over the last three decades. The fundamental motivation is that governments adopt trade polices to confer strategic advantage to their respective domestic firms when firms are imperfectly competing with each other. However, most of existing literature focuses on markets with certainty and complete information among firms. This dissertation introduces incomplete information at industrial level into uncertainty markets in various trade models, and it also integrates the concept of option value from financial economics into equilibrium analysis. In Chapter 1, incomplete information at industrial level is introduced into an importing country model in which the domestic market demand is uncertain, and the policy is chosen before the uncertainty is resolved. Unlike the classical findings on the issue of equivalence of tariffs and quotas under certainty and complete information, it is shown that a tariff is superior to a quota regardless of the degree of uncertainty. Moreover, a prohibitive quota that results in autarky is always preferred to a quota at the free-trade level as long as quota is concerned. Chapter 2 studies the design of trade policies in an uncertain third market with incomplete information. It is shown that the country with firm having information disadvantage tends to choose the direct quantity control, while the country with well-informed firm would use export subsidy (export quota) when the degree of uncertainty is sufficiently high (low). Finally, Chapter 3 extends the conventional literature on strategic trade policy in reciprocal dumping model to the context that involves market demand uncertainty and incomplete information. Incomplete information at industrial level redistributes the option value associated with better information to the country with well-informed firm. As a result, both governments tend to choose tariffs over export subsidies in the Nash equilibrium of the simultaneous strategic trade policy games under complete and incomplete information. This yields a second best outcome. Moreover, Nash equilibrium outcome is shown to be inferior to free-trade outcome.
Open Access
Essays in International Economics and Political Economy of Trade Policy
(2015-08-28) Mai, Joseph Jiacong; Stoyanov, Andrey
My primary areas of research interest are international economics, political economy of trade policy, and protection of intellectual property rights (IPR). I focus the first chapter of my PhD dissertation on cross-boarder IPR protection. I use a mixture of theory and empirical analysis to study the economic incentive that drives dual standards in IPR protections in a country's legal system. The second and third chapters of my dissertation focuses on trade policies of regional trade agreements (RTA), and particularly on identifying political and economic incentives for tariff cooperation between governments in free trade areas and its implications for the world trade system.
Open Access
Essays of the Pollution Effects on Sustainable Economic Development
(2017-08-08) Wang, Liang; Kong, Ying
Since the arouse of Environmental Kuznets Curve (EKC) hypothesis rst established by Simon Kuznets in 1950s, the analysis of the relationship between economic growth and environmental degradation have become popular among different economic researchers. Some studies tested this relationship by making similar theoretical models (Baldwin(1995), Lieb (2004), Palivos and Varvarigo (2010),etc), while others tested this relationship empirically (Grossman and Krueger (1991), Panayotou (1993), Shak and Bandyopadhyay (1992),etc). The motivation of my study is to analyze the long-run economic relationship between economic growth and pollution pressures with both theoretical and empirical methods. Pollution is a key indicator of economic growth, but on the other hand it hurts our environment quality as well as the people's health condition. Therefore, Both developed and developing countries need to deliberately deal with this conflict relationship between economic growth and pollution pressures. The results and findings will help us to understand about this relationship better and help the policy makers to make their decisions about solving this conflict situation in a cost efficient way. In addition, not only does this thesis provide a suitable way for policy makers to choose an optimal choice between choosing pollution and economic growth, but also it teaches people how to choose their pollution abatement in order to for them to live longer under pollution.
Open Access
Essays on Human Capital Development, International Trade and Robotization
(2022-12-14) Chowdhury, Mahin Farjana; Stoyanov, Andrey
This dissertation consists of three related essays on trade, industrial robots and human capital. In Chapter 1, we investigate the importance of a country’s exports and imports for human capital development. In order to analyze this relationship, measures of the educational intensity of exports and imports are developed for a sample of 137 countries from 1962 to 2010. We find that the educational intensity of exports has a positive and statistically significant impact on human capital development while the educational intensity of imports has a negative and statistically significant impact on educational attainment. In Chapter 2, we investigate the importance of regional exports and imports of the U.S. for human capital development. In order to analyze this relationship, measures of the educational intensity of exports and imports are developed for a sample of commuting zones (CZs) from a single country (U.S.) for a study period from 1980 to 2010. We find that the educational intensity of exports has a positive and statistically significant impact on human capital development. On the other hand, the educational intensity of imports, as a whole, has a positive but insignificant effect on educational attainment but educationally-intensive imported intermediate inputs, when separated out, have a positive and significant effect on human capital development. In Chapter 3, we study the effect of robot adoption exposure in the labor market to identify the effect of technological-induced changes on educational attainment in the U.S. from 1993 to 2007. A closer look is taken by looking at educational attainment for the overall sample (ages 15 to 65), age group, educational share, and gender. We document exposure to robots having a positive impact on the educational attainment of middle-age groups across U.S. commuting zones, providing indication that the opportunity cost of schooling is less for middle-aged groups. We find a significant and positive relationship between robot adoption and an increase in educational level of those with a high school education but not a college degree. We did not find any significant relationship for the overall sample (ages 15 to 65) and gender with robot adoption.
Open Access
Essays on Inequality and Productivity Growth Decomposition
(2017-07-27) Akbar, Rushde Elahi; Stoyanov, Andrey
In this dissertation I analyze the effect of globalization on income inequality and aggregate productivity growth. In the first two chapters I develop a theoretical model to study the effect of international trade and foreign direct investments (FDI) on income inequality. In the model firms with heterogeneous productivity levels hire homogenous workers. The central feature of the model is the rent-sharing mechanism, by which firms share part of their profits with employees. As a result, income varies across workers because more productive firms pay more to their workers. In the first chapter, I focus on the case when all countries are symmetric in their aggregate productivity levels. I find that increased openness to trade increases welfare and at the same time reduces income inequality. At the same time, policies that facilitate FDI, although increase welfare, also lead to greater inequality. I also find that technological progress can result in higher inequality. In the second chapter I extend the model to asymmetric countries, in which one country (North) has greater aggregate productivity than the other country (South). As the two countries liberalize trade, both countries would observe a reduction in inequality, although the reduction is greater in the North and the income inequality differential between the two countries decreases. A unilateral tariff reduction by the South has a similar effect, but North is better off setting lower tariff as it observes lowest inequality compare to other cases. The third chapter analyzes aggregate productivity growth in Chilean manufacturing industry during 1979-96. I first decompose the aggregate growth into three major components: the inter-industry effect, whereby aggregate productivity increases due to expansion of the most productive industries; the intra-industry effect, whereby aggregate productivity increase due to expansion of the most productive firms within an industry; the technological effect, which reflects a symmetric increase in aggregate productivity across all firms and industries. I then estimate the contribution of each of these channels to Chilean aggregate productivity growth and find that technological progress was the major factor of the rapid aggregate productivity growth in Chile, while the contribution of inter-industry and intra-industry effects was minimal.
Open Access
Essays On International Capitol Mobility
(2016-09-20) Vafa, Shervan; Jasiak, Joann
Unequal quality of fundamental institutions induces different patterns of international capital flows in terms of both direction and magnitude. This dissertation examines, theoretically and empirically, the link between the financial intermediation sector and capital flows by highlighting the role of institutions and the technological level that financial intermediaries have access to. The theoretical section employs a model with endogenous labour input in monitoring loans by the financial intermediary. Numerical exercises reveal that this modification improves the traditional exogenous model by replicating the stylized facts, in particular, the model is able to replicate and explain the non-monotonic relationship between institutional quality and international net bank flows. Furthermore, contrary to the exogenous model, the model with endogenous labour input is able to reproduce a loan interest rate profile which decreases as institutional quality improves. The empirical section uses a panel of 56 rich and middle-income countries and cross-border bank flows and reveals that, firstly, institutional quality matters slightly more for the mid-income countries in explaining the net bank flows, while for high-income countries it is the market fundamentals which are significant explanatory forces. Secondly, while for both income groups the rule of law and voice & accountability indices are significant, for mid-income countries government effectiveness is also of significance.
Open Access
Essays on Migration, Remittance and Households Consumption, Production and Investment Decision: Evidence from Bangladesh
(2017-07-27) Kabir, Mir Ahasan; Anam, Mahmudul
This dissertation consists of three related essays on the motivation of migration, remittance, and the effect of remittance on households. For the empirical analysis, we use Household Income Expenditure Survey (HIES-2010) data sets from Bangladesh, managed and developed by Bangladesh Bureau of Statistics (BBS). Chapter one gives an introduction to the essays. In chapter two, we employ multinomial conditional logit estimation to study the risk diversification motive of migration using household level data from Bangladesh. The household as a whole takes migration decisions to maximize expected utility. Risk-averse household allocates its members to rural agricultural, urban formal or urban informal sectors to maximize the expected utility of the household. The rural agricultural and the urban informal sector incomes are assumed to be stochastic and potentially correlated. Families send members to the urban informal sector to reduce the volatility of aggregate income as in the portfolio choice model in finance. Empirical results support the predictions of the model. Rural households are more likely to send a member to an urban destination with a higher average monthly income and lower income volatility. Households are also more likely to send a member to a destination that has a low-income correlation with the location of origin. The multinomial conditional logit model also admits the use of both alternative specific and household specific variables that are of interest in migration analysis. In chapter three, we examine the motivation for sending remittance by migrant members. International and internal remittances contribute a significant amount to the disposable income for many households in developing countries like Bangladesh. We discuss a simple theory of remittance where insurance is a particular case of the altruistic model. Our results show that the number of migrants and total household income per-capita are inversely related to the amount of remittance sent by a migrant, thus supporting the altruistic motive for remittances. We find that the Heckman selection estimation is asymptotically consistent for the sample and insurance model is nested in the altruistic model of remittance. In chapter four, we use the Heckman selection, multinomial logit, and three-stage least square estimations to analyze the effects of internal and international remittances on the recipient households consumption structure, human capital investment, choice of school and crop production in Bangladesh. First, for both internal and international remittances have a positive and significant impact on all expenditure categories. Second, controlling both endogeneity and selection issues, results show that both domestic and international remittance increases households investments in human capital. Third, foreign remittance has a positive effect on children regarding their choice of private schools with and without government grant and other schools. Internal remittance has a positive effect on attendance in institutions other than public and private schools. Finally, domestic and international remittances increase households crop production. These findings support the growing view that remittances improve households living standards through a variety of channels.
Open Access
Essays on Preferential Trade Agreements Under Uncertainty
(2016-09-20) Ali, Shafkat; Anam, Mahmudul
This dissertation studies the formation of preferential trade agreements using a coalition formation approach in both certain and uncertain frameworks. It is at the intersection of international trade and cooperative game theory. In chapter 2 we consider a three-country model of oligopoly and trade under demand uncertainty. We endogenize the coalition structure that forms in a three stage game. We find that for small volatilities countries prefer global free trade. The more positively correlated two countries are the more likely they are to form a customs union. We also find that countries may wish to stand alone under certain variance-covariance configurations. In chapter 3 we add exogenous trade costs under both certainty and uncertainty. We find that trade costs critically affect choice of output by firms and choice of tariffs and coalitions by governments. With symmetric trade costs as trade costs vary we find different coalitions forming in equilibrium. The introduction of demand uncertainty affects coalition choices by changing the cutoff trade costs at which a country may be indifferent between two different coalitions. Further, coalitions that may form under certainty or low uncertainty may not form with high uncertainty. On the other hand under different configuration of trade costs coalitions that may not be feasible under certainty may be shown to be possible under uncertainty. In both cases, as long as trade costs are not prohibitive, as volatility in every market increases without bound, we get global free trade with probability one. As a special case we show that under certain conditions two geographically distant countries may choose to form a coalition excluding a nearby country if the market volatility and correlation between partner countries is high enough. .
Open Access
Essays on Private Contributions for Public Goods
(2018-11-21) Zhang, Yi; Bucovetsky, Sam
In many circumstances, public goods are funded by both government revenue and private contributions. Private contributions to public goods could achieve the same social goals as the government-funded public goods. Certain financial aid from the voluntary sectors reduces the heavy fiscal burdens of the public sector by sharing the responsibilities of providing public goods and services. As an alternative to the public provision of public goods, social planners encourage private contributions by providing fiscal subsidies as part of the income tax policy. My dissertation addresses the questions of whether the private provision of public goods is welfare improving in various aspects of theory and how effective it is applied to the Canadian tax schedule in an empirical model. In the second chapter of this dissertation, I focus on a particular case of the consumer's utility to investigate the effect of a government transfer to the private donation of a public good. Unlike the classic conclusion, the influence of income redistribution is not always neutral when I take consideration of the substitute relationship between the private contributed public good and the public provision of a public good. Then in chapter 3, I build on the traditional income tax model in Part I and improve it to a two-stage non-cooperative game in which it encompasses both governments funded public goods and private contributions in the optimal income tax problem in Part II. Finally, in chapter 4, I apply my theoretical model in an empirical setting using Canadian family expenditure data. I exploit this rich data on charitable contribution in Canada to assess the effectiveness of Canadian tax incentive towards charitable giving from the private sector. The empirical analysis illustrates that individuals in Canada are quite responsive to the change of tax incentive for charitable donation since price elasticity, in general, exceeds 1 in absolute value.
Open Access
Essays On Productivity and Resource Reallocation
(2015-01-26) Sadeghzadeh Biglari, Javad; Adamopoulos, Anastasios T.
My thesis consists of four chapters that examine how productivity is affected by government policies and market regulations. In particular, I study the impact of policy reforms on productivity through their effect on: (a) the allocation of resources across heterogeneous establishments, and (b) productivity at the establishment-level via technology adoption. In chapter one, I develop a theoretical model to analyze the effect of environmental policies on industry productivity and market competition. In my model, environmental regulations affect not only the allocation of resources across incumbent firms but also the incentive of firms to invest in pollution-abatement technologies. My findings imply that environmental regulations raise both environmental quality (by incentivizing the adoption of “cleaner” technologies), and industry productivity (by reallocating resources to more productive firms). In chapters two and three, using micro-level data from Indian manufacturing plants, I study total factor productivity (TFP) growth, and the contribution of firm-level subsidies to overall TFP growth. My analysis recognizes that while size-dependent subsidies may induce technology adoption for recipient firms, they also generate misallocation of resources across firms. I focus on the India subsidy program initiated in 2005 in Iron and Steel Industry. In chapter two, my growth accounting provides evidence of an acceleration of TFP growth after 2005 but primarily among plants that adopted more productive technologies. In chapter three, using a general equilibrium model with heterogeneous firms and a technology choice at the firm-level, I examine the impact of size-dependent subsidies on industry productivity. I show that while the induced misallocation tends to reduce productivity, technology adoption raises it. In the context of this model, the policy contributed about 20% to the observed productivity growth. In chapter four, I assess the effect of labor market reforms on measures of productivity across Indian states. Using a state-level labor reform index, and plant-level data, I show that large plants, in labor intensive industries, operating in the states with flexible labor market are more likely to gain from labor market reforms through an improvement in TFP and labor productivity.
Open Access
Essays on the Economics of Ethnolinguistic Differences
(2018-03-01) Dickens, Andrew Colin; Lagerlof, Nils-Petter
In this dissertation, I study the origins and economic consequences of ethnolinguistic differences. To quantify these differences, I construct a lexicostatistical measure of linguistic distance. I use this measure to study two different outcomes: ethnic politics and cross-country idea flows. I then take the economic importance of ethnolinguistic differences as given, and explore the geographic foundation of these differences. In chapter 1, I document evidence of ethnic favoritism in 35 sub-Saharan countries. I use lexicostatistical distance to quantify the similarity between an ethnic group and the national leader's ethnic identity. I find that a one standard deviation increase in similarity yields a 2 percent increase in group-level GDP per capita. I then use the continuity of lexicostatistical similarity to show that favoritism exists among groups that are not coethnic to the leader, where the mean effect of non-coethnic similarity is one quarter the size of the coethnic effect. I relate these results to the literature on coalition building, and provide evidence that ethnicity is a guiding principle behind high-level government appointments. In chapter 2, I use book translations data to capture cross-country idea flows. It has been conjectured that income gaps are smaller between ancestrally related countries because they communicate more ideas. I provide empirical support for this link and a deeper understanding of the hypothesized mechanism: population differences do exhibit a negative relationship with the diffusion of ideas, with the caveat that this negative relationship operates across linguistic lines. After accounting for the linguistic distance between two countries, I find that dissimilar populations communicate more ideas. In chapter 3, I study the geographic origins of ethnolinguistic differences. I construct a novel dataset to examine the border regions of neighbouring ethnolinguistic groups, together with variation in the set of potentially cultivatable crops at the onset of the Columbian Exchange, to estimate how agricultural diversity impacts linguistic differences between neighbouring groups. I find that ethnic groups separated across agriculturally diverse regions are more similar in language than groups separated across homogeneous agricultural regions. I propose that historical trade in agriculturally diverse regions is the mechanism by which group similarities are preserved.