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- All Subjects: development
- Creators: Herrendorf, Berthold
- Status: Published
The first chapter is motivated by the fact that a prominent feature of cities in developing countries is the existence of slums: locations with low housing-quality and informal property rights. This paper focuses on the allocation of land across slums and formal housing, and emphasizes the role of living in central urban areas for the formation of slums. I build a quantitative spatial general equilibrium model to study the aggregate effects of anti-slum policies and use microdata from India for the quantitative implementation. According to my findings, demolishing slums in central urban areas leads to a decrease in welfare, aggregate labor productivity, and urban population. In contrast, decreasing formal housing distortions in India to the U.S. level increases the urban population share by 20% and labor productivity by 2.4%, and reduces the share of the urban population living in slums by 19%.
The second chapter is motivated by the fact that labor productivity gaps between rich and poor countries are much larger for agriculture than for non-agriculture. Using detailed data from Mexican farms, this paper shows that value added per worker is frequently over two times larger in cash crops than in staple crops, yet most farmers choose to produce staples. These findings imply that the agricultural productivity gap is actually a staple productivity gap and understanding production decisions of farmers is crucial to explain why labor productivity is so low in poor countries. This paper develops a general equilibrium framework in which subsistence consumption and interregional trade costs determine the efficient selection of farmers into types of crops. The quantitative results of the model imply that decreasing trade costs in Mexico to the U.S. level reduces the ratio of employment in staple to cash crops by 17% and increases agricultural labor productivity by 14%.
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.
Mitigation banks are a tool created to mitigate and compensate for negative impacts on the environment resulting from man made activities, especially damage caused to endangered wildlife, plants, and wetland ecosystems. The main objective of creating the system of mitigation banks is to achieve environmental equilibrium, meaning “No Net Loss” to all environmental functions. This means damage to one area is compensated for in another area of like-kind through restoration. There is great controversy surrounding this claim. There is a system of debits and credits to ensure ecological loss from development is preceded by restoration of a similar ecology and function. Wetland mitigation banks are the focus for the purpose of research. Background and benefits will be given first, followed by threats, issues, solutions and a personal experience with mitigation banks.