Matching Items (4)
Filtering by
- All Subjects: Labor Economics
- All Subjects: Business enterprises, Foreign--Developing countries.
- Creators: Schoellman, Todd
- Status: Published
Description
A growing number of jobs in the US require a college degree or technical education, and the wage difference between jobs requiring a high school diploma and a college education has increased to over $17,000 per year. Enrollment levels in postsecondary education have been rising for at least the past decade, and this paper attempts to tease out how much of the increasing enrollment is due to changes in the demand by companies for workers. A Bartik Instrument, which is a measure of local area labor demand, for each county in the US was constructed from 2007 to 2014, and using multivariate linear regression the effect of changing labor demand on local postsecondary education enrollment rates was examined. A small positive effect was found, but the effect size in relation to the total change in enrollment levels was diminutive. From the start to the end of the recession (2007 to 2010), Bartik Instrument calculated unemployment increased from 5.3% nationally to 8.2%. This level of labor demand contraction would lead to a 0.42% increase in enrollment between 2008 and 2011. The true enrollment increase over this period was 7.6%, so the model calculated 5.5% of the enrollment increase was based on the changes in labor demand.
ContributorsHerder, Daniel Steven (Author) / Dillon, Eleanor (Thesis director) / Schoellman, Todd (Committee member) / Economics Program in CLAS (Contributor) / Department of Psychology (Contributor) / Sandra Day O'Connor College of Law (Contributor) / School of Politics and Global Studies (Contributor) / Barrett, The Honors College (Contributor)
Created2016-05
Description
I began this thesis because I was confused about economics. I wondered why there were so many different models. I didn't understand how they fit together. I was also confused by the assumptions being made. For instance, the assumption that humans are rational utility-maximizers did not seem to agree with my own experiences. With my director Dr. Edward Schlee's help, my thesis has become an inquiry into the state of economic methodology, both in theory and in practice. The questions that drive this paper are: How do economists choose between theories? What is the purpose of economic theory? What is the role of empirical data in assessing models? What role do assumptions play in theory evaluation, and should assumptions make sense? Part I: Methodology is the theoretical portion of the paper. I summarize the essential arguments of the two main schools of thought in economic methodology, and argue for an updated methodology. In Part II: A case study: The expected utility hypothesis, I examine methodology in practice by assessing a handful of studies that seek to test the expected utility hypothesis. Interestingly, I find that there is a different between what economists say they are doing, and what they actually seem to be doing. Throughout this paper, I restrict my analysis to microeconomic theory, simply because this is the area with which I am more familiar. I intend this paper to be a guide for my fellow students and rising economists, as well as for already practicing economists. I hope it helps the reader better understand methodology and improve her own practice.
ContributorsKang, Dominique (Author) / Schlee, Edward (Thesis director) / Schoellman, Todd (Committee member) / Boerner, Rochus (Committee member) / Barrett, The Honors College (Contributor)
Created2013-05
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 three chapters. The first two explore the impact of government policies on human capital accumulation.
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.
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.
ContributorsBlandin, Adam (Author) / Ventura, Gustavo (Thesis advisor) / Schoellman, Todd (Committee member) / Wiswall, Matthew (Committee member) / Bick, Alexander (Committee member) / Arizona State University (Publisher)
Created2016