An Analysis of the Impact of Governments Policies on Economic Activities

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.