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This dissertation consists of three essays that broadly deal with the international economics and development. The first chapter provides empirical evidence of the prevalence and importance of intangible capital transfer within multinational corporations (MNCs). Using a unique data set of Korean multinational foreign affiliates, I find that most of the foreign affiliates have managers transferred from their parent, while almost half are isolated from the parent in terms of physical trade. Furthermore, the transferred managers are positively associated with labor productivity, while physical trade from the parent is less so. I consider two possibilities for this productivity effect: (1) the managers transferred from the parent are simply more efficient than native managers; and (2) they provide knowledge that increases the productivity of all inputs. I find that the latter is consistent with the data. My findings provide evidence that transferring managers from the parent is a main source of benefit from foreign direct investment (FDI) to foreign affiliates because the managers transfer firm-specific knowledge. The second chapter analyzes importance role of service or other sectors for economic growth of manufacturing. Productivity in agriculture or services has long been understood as playing an important role in the growth of manufacturing. In this paper we provide an endogenous growth model in which manufacturing growth is stimulated by the non-manufacturing sector that provides goods used for both research and final consumption. The model permits to evaluatation of two policy options for stimulating manufacturing growth: (1) a country imports more non-manufacturing goods from a foreign country with a higher productivity; or (2) the country increases productivity of domestic non-manufacturing. We find that both policies increase welfare of the economy, but depending on the policy the manufacturing sector responses differently. Specifically, employment and value added in manufacturing rise with policy (1), but contract with policy (2). Therefore, specialization through importing non-manufacturing goods explains how some Asian economies experience fast growth in the manufacturing sector without progress in the other sectors. The third chapter tests for the importance of composition effects in affecting levels and changes of education wage premiums. In this paper I revisit composition effects in the context of Korea. Korea's large and rapid expansion of education makes it an ideal place to look for composition effects. A large, policy-induced increase in attainment in the 1980s offers additional scope for identifying composition effects. I find strong evidence that the policy-induced expansion of education lowered education wage premiums for the affected cohorts, but only weak evidence that the trend expansion of education lowered education wage premiums.
ContributorsCho, Jaehan (Author) / Silverman, Daniel (Thesis advisor) / Prescott, Edward C. (Committee member) / Schoellman, Todd (Committee member) / Arizona State University (Publisher)
Created2014
Description
This dissertation consists of two essays. The first measures the degree to which schooling accounts for differences in industry value added per worker. Using a sample of 107 economies and seven industries, the paper considers the patterns in the education levels of various industries and their relative value added per worker. Agriculture has notably less schooling and is less productive than other sectors, while a group of services including financial services, education and health care has higher rates of schooling and higher value added per worker. The essay finds that in the case of these specific industries education is important in explaining sector differences, and the role of education all other industries are less defined. The second essay provides theory to investigate the relationship between agriculture and schooling. During structural transformation, workers shift from the agriculture sector with relatively low schooling to other sectors which have more schooling. This essay explores to what extent changes in the costs of acquiring schooling drive structural transformation using a multi-sector growth model which includes a schooling choice. The model is disciplined using cross country data on sector of employment and schooling constructed from the IPUM International census collection. Counterfactual exercises are used to determine how much structural transformation is accounted for by changes in the cost of acquiring schooling. These changes account for small shares of structural transformation in all economies with a median near zero.
ContributorsSchreck, Paul (Author) / Herrendorf, Berthold (Committee member) / Lagakos, David (Committee member) / Schoellman, Todd (Committee member) / Arizona State University (Publisher)
Created2011
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
The January 12, 2010 Haiti earthquake, which hit Port-au-Prince in the late afternoon, was the cause of over 220,000 deaths and $8 billion in damages \u2014 roughly 120% of national GDP at the time. A Mw 7.5 earthquake struck rural Guatemala in the early morning in 1976 and caused 23,000-25,000 deaths, three times as many injuries, and roughly $1.1 billion in damages, which accounted for approximately 30% of Guatemala's GDP. The earthquake which hit just outside of Christchurch, New Zealand early in the morning on September 4, 2010 had a magnitude of 7.1 and caused just two injuries, no deaths, and roughly 7.2 billion USD in damages (5% of GDP). These three earthquakes, all with magnitudes over 7 on the Richter scale, caused extremely varied amounts of economic damage for these three countries. This thesis aims to identify a possible explanation as to why this was the case and suggest ways in which to improve disaster risk management going forward.
ContributorsHeuermann, Jamie Lynne (Author) / Schoellman, Todd (Thesis director) / Mendez, Jose (Committee member) / Department of Supply Chain Management (Contributor) / Department of Economics (Contributor) / W. P. Carey School of Business (Contributor) / Barrett, The Honors College (Contributor)
Created2016-05
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
This paper investigates the effect of the mismatch between workers' skills and the job requirements on the aggregate output and the earnings distribution. It develops a labor market model in which workers of different skills are allocated across jobs with different skill requirements, and this allocation is distorted by various government regulations. The model is calibrated to match the features of the earnings distribution and the extent of the skill mismatch reported by The Organization for Economic Co-Operation and Development (OECD) for 2015. The model is then used to evaluate the economic outcomes of eliminating government regulations leading to skill mismatch. I find that such a change, despite an almost negligible effect on aggregate output, has quite a significant impact on the distribution of earnings. More formally, output increase by merely 0.045%, while wages allocated to routine workers increases by 1.77% and wages allocated to specialized workers reduced by 10.52%.
ContributorsHerring, Elizabeth Jan (Author) / Vereshchagina, Galina (Thesis director) / Douglas, Kacey (Committee member) / Department of Economics (Contributor) / W.P. Carey School of Business (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
Are there measurable differences between the human capital of the refugee children born inside and outside of the United States? If so, does the amount of time spent abroad before immigrating matter, and can we get an idea of what happens to this gap over time? Looking at the Children of Immigrants Longitudinal Study (CILS) 1991-2006, I examine standardized test scores and other indicators of performance of young Indochinese refugees and immigrants. This study finds evidence for a negative correlation between being born abroad and performance in selected metrics at the time of early adolescence. This is extended into a negative relationship between the lengths of time abroad before coming to the United States (age of arrival) and those same metrics. However, this study finds signs that this gap in human capital is at least partly bridged by the time of early adulthood. It remains unclear though, whether this possible catch up is reflected in other early adult outcomes such as household income.
ContributorsWatterson, Christen Brock (Author) / Schoellman, Todd (Thesis director) / Leiva Bertran, Fernando (Committee member) / Department of Economics (Contributor) / W. P. Carey School of Business (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