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- All Subjects: Economics
- Creators: Kuminoff, Nicolai
- Creators: Vereshchagina, Galina
Description
This dissertation studies two wide ranging phenomena and their socio-economic impacts: urban divergence in terms of geographical skill sorting and fast rising housing prices. The first essay explores the empirical pattern as well as the driving forces behind the American cities’ diverging path over the past forty years. Compared to the rest of the U.S. cities, the top 20 largest cities have been growing faster in several aspects, such as city-average wage, housing price, and measured innovation intensity (e.g., patents, venture capital). In addition, this geographical divergence has contributed substantially to the rising inequality in America. To explore the causes of this divergence, this paper constructs a spatial sorting model where entrepreneurs with different talents can freely move across cities. The key idea is that cities with advantages in innovation attract more productive entrepreneurs and more workers, thereby driving up wages and housing prices. Two things distinguish my models from others: 1. Large cities are having endogenous innovation advantage in equilibrium; 2. I can freely explore the driving forces behind the divergence, with an emphasis on how technology changes can reinforce the spatial sorting mechanism. Specifically, three types of technological changes have increased the benefits of skill clustering in innovative cities: general productivity increases; improvements in communications technologies; and declines in trade costs.
The second essay studies how heterogeneous households respond to the fast rising housing prices through their life-cycle behaviors. Chinese housing market has been undergoing a rapid booming period since 1998, causing the house prices increasing significantly. As a result, households endured severe financial burdens to buy homes at price-to-income ratios of around six. Along with the rising house prices, household savings rate has been increasing consistently since 1998. Can the rising house prices be an important factor to explain the increase in household saving rate? This paper develops a life cycle dynastic model with endogenous choice on housing, coresidence and intergenerational transfer, then quantitatively analyze the effect of housing price on household saving. It shows that housing is an important motive for saving, and it accounts for about 35% of the increase in household savings rate. The housing situation affects households’ saving behavior through three channels. First, households are financially constrained due to the down payment requirement and they choose to limit their consumption in order to buy houses. Second, young adults live in their parents’ houses for a long time and save more intensively, since they get to pay less for the housing expenses under coresidence. Thirdly, older parents make large sum of intergeneration transfer in aid of the children’s housing purchase, indicating the housing affordability issue also has influence on old parents’ saving decisions.
The second essay studies how heterogeneous households respond to the fast rising housing prices through their life-cycle behaviors. Chinese housing market has been undergoing a rapid booming period since 1998, causing the house prices increasing significantly. As a result, households endured severe financial burdens to buy homes at price-to-income ratios of around six. Along with the rising house prices, household savings rate has been increasing consistently since 1998. Can the rising house prices be an important factor to explain the increase in household saving rate? This paper develops a life cycle dynastic model with endogenous choice on housing, coresidence and intergenerational transfer, then quantitatively analyze the effect of housing price on household saving. It shows that housing is an important motive for saving, and it accounts for about 35% of the increase in household savings rate. The housing situation affects households’ saving behavior through three channels. First, households are financially constrained due to the down payment requirement and they choose to limit their consumption in order to buy houses. Second, young adults live in their parents’ houses for a long time and save more intensively, since they get to pay less for the housing expenses under coresidence. Thirdly, older parents make large sum of intergeneration transfer in aid of the children’s housing purchase, indicating the housing affordability issue also has influence on old parents’ saving decisions.
ContributorsSun, Minjuan (Author) / Schoellman, Todd (Thesis advisor) / Ventura, Gustavo (Committee member) / Vereshchagina, Galina (Committee member) / Arizona State University (Publisher)
Created2018
Description
This dissertation consists in two chapters. In the first chapter I collected and digitized historical tax records from the Spanish colonial regime in Ecuador to estimate the long-run effects of a forced labor institution called concertaje on today’s economic performance. This institution allowed landlords to retain indigenous workers due to unpaid debts, and forced them to work as peasants in rural estates known as haciendas. In order to identify the causal effects of concertaje, I exploit variation in its intensity caused by differences in labor requirements from the crops a region could grow. I first report that an increase in 10 percentage points in concertaje rates is associated with a 6 percentage points increase in contemporary poverty. I then explore several channels of persistence. Districts with higher concertaje rates have been historically associated with higher illiteracy rates, lower school enrollment, and populations with fewer years of education. I also report that concertaje is associated with a higher fraction of people working nowadays in the agricultural sector.
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.
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.
ContributorsRivadeneira Acosta, Alex Pierre (Author) / Ventura, Gustavo (Thesis advisor) / Vereshchagina, Galina (Committee member) / Schoellman, Todd (Committee member) / Arizona State University (Publisher)
Created2019
Description
This dissertation consists of two parts. The first part is about understanding the mechanism behind female labor supply movement over economic development. Female labor force participation follows a U-shape pattern over per capita GDP cross nationally as well as within some countries. This paper questions if this pattern can be explained through sectoral, uneven technological movements both at market and at home. For that I develop a general equilibrium model with married couples and home production. I defined multiple sectors both at home and in the market. And by feeding the model with uneven technological growth, I observe how participation rate moves over development. My results indicate that a decrease in labor supply is mainly due to structural transformation. Meaning, a higher technology in a large sector causes prices to go up in that sector relative to other. Hence, labor allocated to this sector will decrease. Assuming this sector has a big market share, it will decrease the labor supply. Also, I found that the increase in female labor supply is mostly because of movement from home to market as a result of a higher technological growth in the market. The second part is about developing a methodology to verify and compute the existence of recursive equilibrium in dynamic economies with capital accumulation and elastic labor supply. The method I develop stems from the multi-step monotone mapping methodology which is based on monotone operators and solving a fixed point problem at each step. The methodology is not only useful for verifying and computing the recursive competitive equilibrium, but also useful for obtaining intra- and inter-temporal comparative dynamics. I provide robust intra-temporal comparative statics about how consumption and leisure decisions change in response to changes in capital stock and inverse marginal utility of consumption. I also provide inter-temporal equilibrium comparative dynamics about how recursive equilibrium consumption and investment respond to changes in discount factor and production externality. Different from intra-temporal comparative statics, these are not robust as they only apply to a subclass of equilibrium where investment level is monotone.
ContributorsDalkiran, Dilsat Tugba (Author) / Reffett, Kevin (Thesis advisor) / Datta, Manjira (Committee member) / Vereshchagina, Galina (Committee member) / Arizona State University (Publisher)
Created2018
Description
This dissertation focuses on consequences of public policy on consumption responses.
Chapter 1 evaluates the effect of Thailand's car tax rebate scheme in 2012 on household consumption by examining aggregate and administrative data. Car sales doubled during the policy and dramatically declined afterwards while domestic household spending was sluggish following the policy, suggesting a substantial dampening effect of the policy on future household consumption.
Chapter 2 develops a formal model to evaluate Thai household consumption responses. A life-cycle model of consumption and saving is developed with features including uninsured income risks, liquidity constraints, durable goods with embedded adjustment costs and non-homothetic preference in durable goods. Adjustment costs and liquidity constraints are important frictions in the evaluation of the shorter-term responses to changes in relative prices, while non-homotheticity captures the income effect given that cars are luxury goods in the Thai economy context. Key parameters and the partial equilibrium responses, which are key inputs to inform the aggregate outcome of the policy, are estimated. The results show that the car-tax rebates had a sizable impact on slowing Thai household consumption following the policy due to high level of elasticity of intertemporal substitution among Thai households.
Chapter 3 examines the effect of public smoking bans in the EU countries. Using individual-level data, this chapter investigates whether nationwide smoke-free laws in Europe lead to higher smoking reduction and cessation rates among mature smokers. Exploiting the different timing in imposing smoking ban laws and using a difference-in-differences approach, I find that light smokers and heavy smokers were more likely to quit smoking after comprehensive bans were in place while there was no significant effect on average smokers. The results confirm that smoking bans, particularly when enforced more strictly and comprehensively, lead to higher smoking cessation rates even among mature smokers with well-established addiction.
Chapter 1 evaluates the effect of Thailand's car tax rebate scheme in 2012 on household consumption by examining aggregate and administrative data. Car sales doubled during the policy and dramatically declined afterwards while domestic household spending was sluggish following the policy, suggesting a substantial dampening effect of the policy on future household consumption.
Chapter 2 develops a formal model to evaluate Thai household consumption responses. A life-cycle model of consumption and saving is developed with features including uninsured income risks, liquidity constraints, durable goods with embedded adjustment costs and non-homothetic preference in durable goods. Adjustment costs and liquidity constraints are important frictions in the evaluation of the shorter-term responses to changes in relative prices, while non-homotheticity captures the income effect given that cars are luxury goods in the Thai economy context. Key parameters and the partial equilibrium responses, which are key inputs to inform the aggregate outcome of the policy, are estimated. The results show that the car-tax rebates had a sizable impact on slowing Thai household consumption following the policy due to high level of elasticity of intertemporal substitution among Thai households.
Chapter 3 examines the effect of public smoking bans in the EU countries. Using individual-level data, this chapter investigates whether nationwide smoke-free laws in Europe lead to higher smoking reduction and cessation rates among mature smokers. Exploiting the different timing in imposing smoking ban laws and using a difference-in-differences approach, I find that light smokers and heavy smokers were more likely to quit smoking after comprehensive bans were in place while there was no significant effect on average smokers. The results confirm that smoking bans, particularly when enforced more strictly and comprehensively, lead to higher smoking cessation rates even among mature smokers with well-established addiction.
ContributorsTawichsri, Tanisa (Author) / Silverman, Daniel (Thesis advisor) / Kuminoff, Nicolai (Committee member) / Ventura, Gustavo (Committee member) / Arizona State University (Publisher)
Created2018
Description
A hybrid PV/T module was built, consisting of a thermal liquid heating system and a photovoltaic module system that combine in a hybrid format. This report will discuss the work on the project from Fall 2012 to Spring 2013 and the extended section on the economics for the Honors Thesis. Three stages of experiments were completed. Stage 1 showed our project was functional as we were able to verify our panel produced electricity and increased the temperature of water flowing in the system by 0.65°C. Stage 2 testing included “gluing” the flow system to the back of the panel resulting in an average increase of 4.76°C in the temperature of the water in the system. Stage 3 testing included adding insulating foam to the module which resulted in increasing the average temperature of the water in our flow system by 6.95°C. The economic calculations show the expected energy cost savings for Arizona residents.
ContributorsHaines, Brent Robert (Author) / Roedel, Ronald (Thesis director) / Aberle, James (Committee member) / Rauch, Dawson (Committee member) / Barrett, The Honors College (Contributor) / Electrical Engineering Program (Contributor)
Created2013-05
Description
A high voltage plasma arc can be created and sustained in air by subjecting the gases to an electric field with high voltage potential, causing ionization. The internal energy of the ionized gases can be transferred to corresponding pressure waves when the matter involved switches between the gaseous and plasma states. By pulse-width modulating a transformer driving signal, the transfer of internal electrical energy to resonating pressure waves may be controlled. Audio wave input to the driver signal can then be modulated into the carrier wave and be used to determine the width of each pulse in the plasma, thus reconstructing the audio signal as pressure, or sound waves, as the plasma arc switches on and off. The result will be the audio waveform resonating out of the plasma arc as audible sound, and thus creating a plasma loudspeaker. Theory of operation was tested through construction of a plasma arc speaker, and resultant audio playback was analyzed. This analysis confirmed accurate reproduction of audio signal in audible sound.
ContributorsBoehringer, Brian Thomas (Author) / Roedel, Ronald (Thesis director) / Huffman, James (Committee member) / Barrett, The Honors College (Contributor) / Electrical Engineering Program (Contributor)
Created2014-05
Description
Agent Based modeling has been used in computer science to simulate complex phenomena. The introduction of Agent Based Models into the field of economics (Agent Based Computational Economics ACE) is not new, however work on making model environments simpler to design for individuals without a background in computer science or computer engineering is a constantly evolving topic. The issue is a trade off of how much is handled by the framework and how much control the modeler has, as well as what tools exist to allow the user to develop insights from the behavior of the model. The solutions looked at in this thesis are the construction of a simplified grammar for model construction, the design of an economic based library to assist in ACE modeling, and examples of how to construct interactive models.
ContributorsAnderson, Brandon David (Author) / Bazzi, Rida (Thesis director) / Kuminoff, Nicolai (Committee member) / Roberts, Nancy (Committee member) / Computer Science and Engineering Program (Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2016-05
Description
The returns to education in Haiti are high. Nevertheless, few individuals receive/enjoy them because education is privately provided, costly, and the poor cannot afford it. The poor receive too little education and would benefit from investing more into their education however, they cannot do so because they are unable to borrow, which can be attributed to the poorly functioning credit markets. Therefore, there is a need for government policy intervention aimed at providing more education to the poor. The purpose of this study is to propose and evaluate economic policies that might help the poor obtain more education. In particular, I analyze a taxation policy that redistributes income from the rich to the poor by implementing a tax transfer program. I also analyze a tax policy that taxes only the rich and used the tax revenue generated to fund public education for all children age 5-14. In the first policy, a tax rate of 3.17% on the rich and transfer to the poor increases the income of the poor parents by $81.74 USD a year and the income of the poor child by $61.78 USD while decreasing the income of the rich child by $61.78 USD. The second policy varies the amount parents and the government spend on a children's education and analyzes the effects on a children's income. I find that a fairly modest tax on the rich does a good job at generating more education for the poor, increasing the income of the poor children, and therefore alleviating the poverty of the poor. For example, a 5.21% tax on the top 20% of the rich raises enough money to provide six years of free public education for all children. As a result, the child's income in the poorest 20% of families raises from $539.30 to $887.14. These findings suggest that public education is likely an important channel through which the extent of poverty in Haiti can be reduced.
ContributorsWard, Alisha Elizabeth (Author) / Vereshchagina, Galina (Thesis director) / McDaniel, Cara (Committee member) / Department of Finance (Contributor) / Department of Economics (Contributor) / Barrett, The Honors College (Contributor)
Created2017-12
Description
This dissertation consists of two essays that deal with the development of open developing economies. These economies have experienced drastic divergence in terms of economic growth from the 1970s through the 2010s. One important feature of those countries that have lagged behind is their failure to build up their domestic innovation capacity.
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.
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.
ContributorsGe, Zhizhuang (Author) / Vereshchagina, Galina (Thesis advisor) / Schoellman, Todd (Committee member) / Ventura, Gustavo (Committee member) / Arizona State University (Publisher)
Created2015
Description
This dissertation consists of two chapters. Chapter one studies distortionary effects of tax exemption of employer-sponsored health insurance (ESHI) premiums. First, I argue that, in the competitive labor market, tax deductibility of ESHI premiums generates an implicit labor cost subsidy to the employers sponsoring health insurance (HI) which distorts the allocation of labor across employers. Second, I quantify the extent of this misallocation measured as output loss in a general equilibrium model of firm dynamics extended to incorporate tax exemption of ESHI premiums and endogenous provision of HI by the employers. The calibrated model shows that elimination of tax exemption increases aggregate output by 1.73%. About two-thirds of this effect comes from removing the misallocation of labor across existing establishments, and the remaining one-third comes from the increase in the number of operating establishments. Third, I use the model to analyze how tax exemption interacts with the employer mandate of the Affordable Care Act imposing a tax on large employers not sponsoring HI. Quantitative results show that implementing the employer mandate when the tax exemption is present reduces output by 0.13%.
Chapter two studies macroeconomic implications of a higher cost of health services faced by the unemployed which arise because 1) workers lose access to ESHI when they leave their jobs and 2) the uninsured face inflated health care prices. First, I provide evidence suggesting that the cost of health services for the privately insured is about 50% lower than for the uninsured. Second, I quantify the effects of higher cost of health services for the unemployed in the Lucas and Prescott (1974) island model extended to allow the workers to pay an extra cost of health services contingent on their employment status. Calibration procedure uses the differences between costs of health services for the privately insured and uninsured inferred from the data as a gap between costs of health services for the employed and unemployed. Quantitative results show that equalizing these costs across workers increases labor productivity by 1.2% and unemployment rate by 1.5 percentage points. The increased unemployment dominates quantitatively leading to a decrease in aggregate output by 0.26%.
Chapter two studies macroeconomic implications of a higher cost of health services faced by the unemployed which arise because 1) workers lose access to ESHI when they leave their jobs and 2) the uninsured face inflated health care prices. First, I provide evidence suggesting that the cost of health services for the privately insured is about 50% lower than for the uninsured. Second, I quantify the effects of higher cost of health services for the unemployed in the Lucas and Prescott (1974) island model extended to allow the workers to pay an extra cost of health services contingent on their employment status. Calibration procedure uses the differences between costs of health services for the privately insured and uninsured inferred from the data as a gap between costs of health services for the employed and unemployed. Quantitative results show that equalizing these costs across workers increases labor productivity by 1.2% and unemployment rate by 1.5 percentage points. The increased unemployment dominates quantitatively leading to a decrease in aggregate output by 0.26%.
ContributorsKrukava, Nastassia (Author) / Vereshchagina, Galina (Thesis advisor) / Herrendorf, Berthold (Committee member) / Ventura, Gustavo (Committee member) / Arizona State University (Publisher)
Created2017