Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics and Social Science, 1959. / Includes bibliographical references (leaves 374-378). / by Herbert D. Mohring. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2007. / "June 2007." / Includes bibliographical references. / This thesis is a collection of essays on coordination and learning in dynamic cooperation games. Chapter One begins by establishing results which are required in order to extend the global games approach to settings where the game structure is endogenous. In particular it shows that the selection argument of Carlsson and van Damme (1993) holds uniformly over appropriately controlled families of games. It also discusses selection results when the game lacks dominance regions. Chapter Two uses these results to investigate the impact of miscoordination fear in a class of dynamic cooperation games with exit. More specifically, it explores the effect of small amounts of private information on a class of dynamic cooperation games with exit. It is shown that lack of common knowledge creates a fear of miscoordination which pushes players away from the full-information Pareto frontier. Unlike in one-shot two-by-two games, the global games information structure does not yield equilibrium uniqueness, however, by making it harder to coordinate, it does reduce the range of equilibria and gives bite to the notion of local dominance solvability. / (cont.) Finally, Chapter Two provides a simple criterion for the robustness of cooperation to miscoordination fear, and shows it can yield predictions that are qualitatively different from those obtained by focusing on Pareto efficient equilibria under full information. Finally Chapter Three studies how economic agents learn to cooperate when the details of what cooperation means are ambiguous. It considers a dynamic game in which one player's cost for the cooperative action is private information. From the perspective of the other player, this cost is an unknown but stationary function of observable states of the world. Initially, because of information asymmetries, full cooperation can be sustained only at the cost of inefficient punishment. As players gain common experience, however, the uninformed player may learn how to predict her partner's cost, thereby resolving informational asymmetries. Once learning has occurred, players can sustain cooperation more efficiently and reduce the partnership's sensitivity to adverse economic conditions. Nevertheless, because inducing information revelation has an efficiency cost, it may sometimes be optimal for the uninformed player to remain uninformed even though that limits the amount of cooperation that can be sustained in equilibrium. / by Sylvain Guillaume Chassang. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2010. / "September 2010." Cataloged from PDF version of thesis. / Includes bibliographical references. / It is often argued that borrowing constraints are crucial to the understanding of entrepreneurial activity in the United States. However, portfolio data and calibration exercises raise doubts about the importance of borrowing constraints. This thesis provides three chapters on the subject of entrepreneurship, two study the role of borrowing constraints and another shows that introducing uncertainty about ability in an occupational choice model without financial frictions can generate many patterns that resemble capital market imperfections. In the first chapter, I model agents who are imperfectly informed about their entrepreneurial ability and whose income provides a signal about their ability. In each period, they observe their income and choose their occupation (worker or entrepreneur) for the next period on the basis of their belief about their ability. I find that such a model produces patterns of wealth, savings, entry into entrepreneurship, and correlations between cash flow and investment that are consistent with the data. While previous work has used these patterns to argue that entrepreneurs face binding borrowing constraints, this paper shows that the same patterns may emerge simply because entrepreneurs are uncertain about their ability and learn slowly about it. In the second chapter, I use cross-sectional and panel data from the Survey of Consumer Finances across occupations and occupational transition groups. I argue that the evidence on mortgage rates and holdings of stocks and bonds of entrepreneurs are at odds with theories that propose borrowing constraints as the key ingredient in understanding occupational choice and entrepreneurial activity in the United States. Finally, the last chapter uses a standard general equilibrium model of occupational choice to study the role of financial constraints, finding that borrowing constraints are tighter in the model than in the data. Next, I recalibrate the model to match measures of firm size and slack in the financial constraint given by the real estate equity available for borrowing on the entrepreneur's primary home. Finally, two policy experiments are analyzed for both calibrations, highlighting the equilibrium effects of the differing degrees of tightness in the borrowing constraints. / by Carmen Aída Taveras. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics and Social Science, 1944. / Vita. / Includes bibliographical references (leaves 196-203). / by Lawrence R. Klein. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2007. / Includes bibliographical references. / This dissertation is a collection of three independent papers in empirical development economics. The first chapter studies the effect of a family planning program in Bangladesh, which successfully reduced fertility, on households' asset accumulation. In developing countries parents expect their children to take care of them when they are old. Children also help parents to smooth consumption over their life cycle. They send remittances when parents are old and have relatively low income. The chapter presents a model where asset accumulation and children are substitutes, and finds that households exposed to a family planning program have lower fertility and more assets than those who were not exposed to the program. Chapter 2 examines effect of the same program on female autonomy. Policy makers and planners often view family planning programs (FPP) as being conducive to female autonomy. They argue that when women have fewer children they can earn more income and enjoy more property rights, higher mobility and greater decision making power inside and outside the household. But this may not be true in all situations. / (cont.) Using household data from 142 villages in Bangladesh this paper shows that although a family planning program reduces women's fertility and thereby allows them to enjoy higher levels of private consumption through expanding their outside opportunities, it significantly reduces their decision making power within the household. A simple analytical model is presented to reconcile this empirical evidence. Finally chapter 3 explores the macroeconomic usage of aid using panel data for a broad sample of aid-recipients. An increase in aid must go toward a reduction in the current account balance (in which case there is a real transfer of resources from donor to recipient and aid is said to be absorbed), an increase in capital outflows, or into international reserves. We find that short-run absorption is typically very low. While absorption increases in the long-run, it is still significantly less than complete and only a tiny fraction of the absorbed aid dollars go towards investment. It is likely that the remaining aid is lost through the capital account. Moreover, aid spending, defined in terms of the increase in government fiscal expenditures as a result of aid, is significantly greater than aid absorption, implying that aid systematically leads to an injection of domestic liquidity in recipient economies, with possible adverse consequences for macroeconomic management. / (cont.) The evidence marshaled here may help illuminate the rather weak link between aid and growth found in the literature. / by Ummul Hasanath Ruthbah. / Ph.D.

Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2000. / Includes bibliographical references (p. 76-80). / This thesis consists of two separate essays. The first, entitled 'The Long Boom', considers the causes of the recent record breaking growth in the United States. The second, entitled 'Markups and Inflation', looks at the relationship between markups and inflation in the US and OECD. The first essay starts from the observation that economic growth in the 80s and 90s has been characterized by expansions significantly longer than the preceding post-war experience. An examination of the most recent cycles shows that they have been much less volatile than previous cycles. Investigation of the causes of this suggests that the shocks hitting the economy have been smaller rather than the structure being more stable. A structural decomposition finds that the volatility decline is concentrated in demand shocks and consumption volatility. The decline in consumption volatility is traced to a decline in the volatility of shocks with a permanent effect on consumption and a reduction in the reaction of consumption to temporary shocks. Examination of output volatility in other countries finds that the reduction in output volatility is a worldwide phenomenon. This suggests that the cause for the reduction in volatility is not confined to an individual country. Regardless, the conclusion. is that the prospects for future of economic growth in the US are good. The second essay calculates markups for 450 US manufacturing industries as well as 25 broader sectors in 14 OECD countries. These markups are compared with GDP deflater inflation. A significant and robust finding is that there is a negative correlation between inflation and markups. Furthermore, the strength of the correlation varies with industry concentration. Specifically, the markup in concentrated industries is more sensitive to inflation fluctuations than in unconcentrated industries. A model emphasizing the interaction of inflation with collusive behavior is then presented. The critical channel in this model is that the variance of cost shocks increases with inflation. Higher inflation and the concomitant increase in the variance of cost shocks makes the maintenance of collusive arrangements harder and, thereby, leads to a lower average markup. / by John A. Simon. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2003. / Includes bibliographical references (p. 165-169). / This thesis examines the incentives to exercise market power that generators would face and the different strategies that they would follow if all electricity supplies in Chile were traded in an hourly-unregulated spot market. The industry is modeled as a Cournot duopoly with a competitive fringe; particular care is given to the hydro scheduling decision. Quantitative simulations of the strategic behavior of generators indicate that the largest generator (" Endesa") would have the incentive and ability to exercise market power unilaterally. It would schedule its hydro resources, which are shown to be the real source of its market power, in order to take advantage of differences in price elasticity: too little supply to high demand periods and too much to low demand periods. In the second Chapter the following mitigation measures are analyzed: (a) requiring Endesa to divest some of its generating capacity to create more competitors and (b) requiring the dominant generators to enter into fixed price forward contracts for power covering a large share of their generating capacity. Splitting the largest producer in two or more smaller firms turns the market equilibrium closer to the competitive equilibrium as divested plants are more intensely used. Contracting practices proved to be an effective tool to prevent large producers from exercising market power in the spot market. / (cont.) In addition, a more efficient hydro scheduling resulted. Conditions for the development of a voluntary contract market are analyzed, as it is not practical to rely permanently on vesting contracts imposed for the transition period. In the final Chapter, a model that explicitly allows producers to engage in strategic behavior to congest the system's main transmission line in order to exercise market power is estimated. Results indicate that there is no pure strategy equilibrium in which one generator plays an aggressive strategy and congests the line towards the other region while the other generator passively accepts imports. Indeed, generators would follow opposite strategies. The second largest producer's position in the industry is not strong enough to exercise market power most of the time but is strong enough to restrain Endesa's attempts to congest the line. / by Maria Soledad Arellano. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2008. / Includes bibliographical references (p. 137-142). / This dissertation consists of three chapters on the youth and low-skilled labor markets. In Chapter 1, I show that teen employment is significantly more responsive than adult employment to immigration, and that growth in low-skilled immigration appears to be a partial explanation for recent declines in teen employment rates. Using variation in immigrant shares across metropolitan areas between 1980 and 2000, I demonstrate that the impact of immigration on youth employment is at least twice as large as the impact on adults, and that immigration affects school enrollment decisions and the type of jobs held by native youth. These effects are strongest for black youth and youth from poorer and less educated families. The estimates suggest that a 10 percentage point increase in the immigrant share of a city's low-skilled population reduces the teen employment rate by 5 percentage points, implying that between one-third and one-half of the fall in teen employment between 1990 and 2005 can be explained by increased immigration. In Chapter 2, co-authored with David H. Autor and Alan Manning, we offer a fresh analysis of the effect of state and federal minimum wages on earnings inequality over 1979 to 2007, exploiting substantially longer state-level wage panels than were available to earlier analyses as well as a proliferation of recent state minimum wage laws. We obtain identification using cross-state and over-time variation in the 'bite' of federal and applicable state minimum wages, as per influential studies by Lee (1999) and Teulings (2000, 2003). / (cont.) Distinct from this work, we use statutory minimum wages as instrumental variables for the bite of the minimum wage, thereby purging simultaneity bias stemming from errors-in-variables, which we hypothesize causes upward bias in prior OLS estimates. While we uphold the finding that the minimum wage reduces inequality in the lower tail of the wage distribution, we estimate that earlier OLS models overestimate this impact greatly-by 150 to 450 percent. Models purged of simultaneity bias indicate that the minimum wage explains at most one-third of the rapid rise in inequality during the 1980s, and a comparable share of the more modest subsequent rise. These impacts are still larger than would be implied by a simple mechanical application of the minimum to the distribution, suggesting spillovers. We identify these spillovers by structurally estimating the latent wage distribution, calculating the mechanical effect of the minimum wage through truncation, and inferring spillovers by comparison of the mechanical and observed distributions. Spillovers account for one-third to one-half of the minimum's modest impact on percentiles in the lower tail of the wage distribution. Their magnitude has declined in parallel with the direct effects of the minimum, though their share of the total effect has risen. / (cont.) In Chapter 3, I explore the extent to which polarization in the adult labor market-i.e. a gradual increase in the share of adults working in the highest and lowest paying occupations, caused by technology-induced (computers) changes in labor demand-has impacted youth employment. I show that, since 1980, teen employment rates fell more in states and commuting zones for which the share of adults in low-paying occupations increased the most. I also find that this measure of polarization is strongly associated with lower teen and low-skilled adult wages, and more weakly associated with lower employment rates for low-skilled adults. These results can be rationalized in a model of local labor markets for which a reduction in the price of computing capital reduces labor demand for middle -income, routine-task intensive (manufacturing) jobs, pushing these workers into lower-paying service jobs. This chapter therefore provides evidence that a portion of the recent decline in youth employment is attributable to a reduction in labor demand for youth, due to an increase in the supply of substitutable labor (i.e. the gradual movement of less-educated adults from middle-paying to lower-paying occupations). / by Christopher Lane Smith. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1997. / Includes bibliographical references (p. 113-117). / by Charles Rupert Morcom. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006. / Includes bibliographical references. / My dissertation is a collection of three essays that consider various aspects of income inequality and the demand for skill. The first chapter uses the advent of the US Interstate Highway System to examine the effect of reducing trade barriers on the relative demand for skilled labor. The Interstate Highway System was designed to connect major cities, to serve national defense, and to connect the US to Canada and Mexico. As an unintended consequence, many rural counties were connected to the highway system. I find that these counties experienced an increase in trade-related activities, such as trucking and retail sales. By increasing trade, the highways raised the relative demand for skilled manufacturing workers in skill-abundant counties and reduced it elsewhere, consistent with the predictions of the Heckscher-Ohlin model. The second chapter examines the effect of the division of labor on the demand for information processing. I find that manufacturing industries with a more complex division of labor employ relatively more clerks, who process information that is used to coordinate production. An early information technology (IT) revolution that took place around 1900 raised the relative demand for clerks in manufacturing, and significantly more so in industries with a complex division of labor. / (cont.) The increased demand for clerks likely contributed to the subsequent onset of the High School Movement. Interestingly, recent changes in IT have enabled firms to substitute computers for clerks, and I find evidence that this substitution occurred at a faster rate in more complex industries. The third chapter, coauthored with Liz Ananat, examines the effect of marital breakup on the economic outcomes of women with children. We find that having a female firstborn child increases the probability that a woman's first marriage ends in divorce. Using this exogenous variation we find that divorce has little effect on a woman's average household income, but it does increase the probability that her household ends up in the lowest income quartile. While women partially offset the loss of spousal earnings by receiving more child support and welfare, combining households, and increasing their labor supply, divorce still increases the odds of household poverty. / by Guy Michaels. / Ph.D.