ASU Electronic Theses and Dissertations
This collection includes most of the ASU Theses and Dissertations from 2011 to present. ASU Theses and Dissertations are available in downloadable PDF format; however, a small percentage of items are under embargo. Information about the dissertations/theses includes degree information, committee members, an abstract, supporting data or media.
In addition to the electronic theses found in the ASU Digital Repository, ASU Theses and Dissertations can be found in the ASU Library Catalog.
Dissertations and Theses granted by Arizona State University are archived and made available through a joint effort of the ASU Graduate College and the ASU Libraries. For more information or questions about this collection contact or visit the Digital Repository ETD Library Guide or contact the ASU Graduate College at gradformat@asu.edu.
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In the second chapter I use administrative data on the ownership, management, and taxes for the universe of all firms in Ecuador to study the role of family management in firm dynamics and its implications for aggregate productivity. A novel finding I document is that family-managed firms grow half as quickly as externally-managed firms. This growth differential implies that family-managed firms account for half of employment, despite comprising 80% of firms. I construct a general equilibrium model of firm dynamics that is consistent with these facts. Entrepreneurs choose whether to utilize family members as managers or hire external managers. External managers allow firms to scale up production, but their efficiency is a affected due to contractual frictions. Changes in the contractual environment that lead to a drop in the presence of family-managed firms by half could increase output on the order of 6%, as firms that abandon family management enjoy rapid growth.
Abstract The first chapter discusses the policies that may have an impact on the long-run innovation capacity of developing economies. The existing literature emphasizes that the backward linkage of foreign-owned firms is a key to determining whether FDI is beneficial or detrimental to a domestic economy. However, little empirical evidence has shown which aspects of FDI policies lead to a strong backward linkage between foreign-owned and domestic firms. This paper focuses on the foreign ownership structure of these foreign-owned firms. I show that joint ventures (i.e, firms with 1%-99% foreign share) have stronger backward linkages than MNC affiliates (i.e, firms with 100% foreign share) with domestic firms. I also find that the differences in backward linkages are strong enough to translate into a positive correlation between domestic innovation and the density of joint ventures and a negative correlation between domestic innovation and the density of MNC affiliates. Finally, I find that the channel through which foreign ownership structure affects domestic innovation raises innovation TFP in domestic firms. My results suggest that policies that affect the foreign ownership structure of foreign-owned firms could have a persistent effect on domestic innovation because they shift the comparative advantage of an developing economy towards the innovation sector in the long run.
Abstract The second chapter provides a unified theory to study what causes the divergence in economic growth of developing economies and how the innovation sector emerges in the developing countries. I show that open developing economies become trapped at the middle-income level because they tend not to specialize in sectors that generate spillover or factor accumulation (the innovation sector). Using a dynamic Heckscher-Ohlin (H-O) model, I show that the fast growth of developing economies tends to end before they can fully catch up with the developed world, and the innovation sector will not operate in the developing countries. However, the successful growth stories of Korea and Taiwan challenge this view. In order to explore the economic miracle that happened in Korea and Taiwan, I generalize a dynamic Heckscher-Ohlin (H-O) model by introducing technology adoption and explore how it generates spillovers to domestic innovation. I show that countries with policies that encourage technology adoption will benefit most from FDI: in addition to the fact that foreign technology raises productivity in the host country, the demand for skilled labor to adopt these technologies raises the education level in equilibrium, which benefits domestic innovation and leads to catch-up in the long run.
Chapter one makes two novel contributions related to the two workhorse models in the human capital literature: Learning by Doing (LBD) and Ben-Porath (BP).
First, I show that BP is much more consistent with empirical life-cycle patterns related to individual earnings growth rates relative to LBD.
Second, I show that the same model features that generate different life-cycle predictions between models also generate different policy implications. In particular, increasing the top marginal labor tax rate, relative to the current US level, generates much larger reductions in lifetime human capital accumulation in the BP model versus the LBD model.
Chapter two examines reforms to the Social Security taxable earnings cap in the context of a human capital model. Old age Social Security benefits in the US are funded by a 10.6% payroll tax up to a cap of $118,500. There has been little work examining the likely outcomes of such a policy change. I use a life-cycle BP human capital model with heterogeneous individuals to investigate the aggregate and distributional steady state impacts of several policy changes the earnings cap. I find that when I eliminate the cap: (1) aggregate output and consumption fall substantially; (2) the role of endogenous human capital is first order; (3) total federal tax revenues are lower or roughly unchanged; (4) about 1/3 of workers are made worse off.
The final chapter studies the existence and optimality of equilibria in the presence of asymmetric information. I develop an equilibrium concept which corresponds to the presence of mutual insurance organizations for a class of adverse selection economies which includes the Spence (1973) signaling and Rothschild-Stiglitz (1976) insurance environments. The defining features of a mutual insurance organization are that policy holders are also the owners of the organization, and that the organization can write policies for which the terms depend on the experience of the mutual members. In general the equilibrium exists and is weakly Pareto optimal. Further, all equilibria have the same individual type utility vector.
The first chapter studies the aggregate consequences of misallocation in a firm dynamics model with multi-establishment firms. I calibrate my model to the US firm size distribution with respect to both the number of employees and the number of establishments, and use it to study distortions that are correlated with establishment size, or so-called size-dependent distortions to establishments, which are modeled as implicit output taxes. In contrast to previous studies, I find that size-dependent distortions are not more damaging to aggregate productivity and output than size-independent distortions, while the implicit tax revenue approximately summarizes the effects on aggregate output. I also use the model to compare the effects of size-dependent distortions to establishments and to firms, and find that they have different effects on firm size distribution, but have similar effects on aggregate output.
The second chapter studies the effects of product market frictions on firm size distribution and their implications for industrial pollution in China. Using a unique micro-level manufacturing census, I find that larger firms generate and emit less pollutants per unit of production. I also provide evidence suggesting the existence of size-dependent product market frictions that disproportionately affect larger firms. Using a model with firms heterogeneous in productivity and an endogenous choice of pollution treatment technology, I show that these frictions result in lower adoption rate of clean technology, higher pollution and lower aggregate output. I use the model to evaluate policies that eliminate size-dependent frictions, and those that increase environmental regulation. Quantitative results show that eliminating size-dependent frictions increases output by 30%. Meanwhile, the fraction of firms using clean technology increases by 27% and aggregate pollution decreases by 20%. In contrast, a regulatory policy which increases the clean technology adoption rate by the same 27%, has no effect on aggregate output and leads to only 10% reduction in aggregate pollution.