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Description
These essays attempt to explore how technological change, technology diffusion and economic distortions shape the aggregate economy. The first chapter empirically documents that wage inequality within the group of skilled workers in the U.S. has significantly widened since 2000 and that the changing trend of wage inequality was entirely driven by the non-routine analytic occupation. The model I build demonstrates that the task allocation induced by investment- specific technical change can widen the within-group wage inequality because of the “composition effect”. The quantitative results provide a well-matched timing and magnitude of the non-linear expansion path in wage inequality that is observed in the data. In chapter two I explore the role human capital plays in the convergence of Asian growth miracles. I incorporate the idea that education could facilitate technology diffusion into a growth framework by developing a model of human capital investment, adding a role for human capital in the convergence of productivities towards the technology frontier. I then calibrate my model to the South Korea between 1960 and 2019. My model can remarkably match the ‘S Shaped’ convergence trajectory in South Korea well. More importantly, the quantitative exercises demonstrate that a significant extent of the externality is required to match the transition path of output in South Korea. A series of quantitative experiments suggest that if the externality is removed from the model, then it cannot quantitatively match South Korea’s convergence pattern well. Chapter three documents a fact that that firms in developing economies face both financing constraints and face size-dependent distortions. The two distortions, however, affect firms in opposite ways. I build a model showing that the adverse effects associated with size-dependent distortions drastically reduce, and may even reverse, if firms also face financing constraints. This occurs because the misallocation effects of the two may offset each other. The quantitative analysis shows that size- dependent distortions estimated from data lead to up to 25 percent of output drop if they are implemented alone, but have virtually no effect on aggregate output in the presence of empirically relevant capital financing constraints.
ContributorsQian, Long (Author) / Ventura, Gustavo (Thesis advisor) / Brooks, Wyatt (Thesis advisor) / Vereshchagina, Galina (Committee member) / Arizona State University (Publisher)
Created2023
Description
These essays are my attempt to answer a big picture question in economics "why some countries are richer than others?". In the first chapter, I document that for a group of 38 countries ranging from low to high income, managers in richer countries are more skilled, and the relative income of managers to non-managers along with skill premium is lower in richer countries. I use a model of investment in skills and occupational choice in which countries differ in productivity level and size-dependent distortions. I find that exogenous productivity differences alone can produce the abovefacts qualitatively, but size-dependent distortions are needed to account for these facts quantitatively.
Chapter two accounts for the sources of world productivity growth, using data for more than 36 industries and 40 economies. Productivity growth in advanced economies slowed but emerging markets grew more quickly, which kept global productivity growth relatively constant until 2010. World productivity growth is highly volatile from year to year, which primarily reflects shifts in the reallocation of labor. Deviations from Purchasing Power Parity account for about a third of the shifts. Though markups are large and rise over time, they only modestly affect measured industry-level productivity growth.
In chapter three, I document that the mean and dispersion of pre-tax labor earnings grow faster over the life-cycle in the U.S. than in some European countries and individuals with at least a college degree are key for these facts. I use a life-cycle model of human capital accumulation and elastic labor supply which features non-linear taxation and a college choice and investments during college. The model economy is consistent with earnings distribution among college and non-college individuals in the U.S. Non-linear taxation suppresses pre-tax earnings, reduces college attendance
and investments during college. More generous subsidies for college exacerbate labor earning inequality. Differences in taxation and college subsidies account for 94% of the differences in mean earnings, and 80% of the differences in inequality over the life-cycle across the U.S. and European countries.
ContributorsEsfahani, Mehrdad (Author) / Ventura, Gustavo (Thesis advisor) / Hobijn, Bart (Thesis advisor) / Ferraro, Domenico (Committee member) / Arizona State University (Publisher)
Created2021