Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1996. / Includes bibliographical references (p. 116-118). / by Peter Sorensen. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2017. / Cataloged from PDF version of thesis. / Includes bibliographical references. / This thesis analyzes how national and local labor markets re equilibrate after shocks to labor market institutions (Chapter I), demand (II-III), and supply (IV). Chapter I analyzes Germany's 2005 Hartz IV reform, which lowered the generosity of longterm UI benefits available once short-term benefits run out. Using administrative records, I exploit cross-worker heterogeneity in the timing of when Hartz IV bites to estimate how long-term benefit cuts affect jobless durations, wages, and job characteristics. The job-finding hazard starts rising several months before cuts bind, culminating in a larger "spike at UI exhaustion" under Hartz IV. I find that UI reform reduced the probability of a one-year jobless spell by 12.4 percent, with employment gains driven by full-time jobs. Consistent with lower reservation utility, workers experiencing benefit cuts accept lower-paying jobs. Chapter II (joint with Daron Acemoglu, David Autor, David Dorn, and Gordon Hanson) argues that Chinese import competition, which surged after 2000, was a major force behind both recent reductions in US manufacturing employment and-through input-output linkages and other general equilibrium channels-weak overall job growth. Our central estimates suggest import induced job losses over 1999-2011 in the range of 2.0-2.4 million. Chapter III (joint as above) reassesses the conventional wisdom that IT is revolutionizing productivity while making workers redundant. Examining IT usage in US manufacturing, we find only mixed evidence of faster productivity growth in IT-intensive industries. Surprisingly, output in IT-intensive industries falls relative to other manufacturing industries. Productivity increases, when detectable, reflect even faster employment declines. Chapter IV exploits German high school reforms to estimate the labor market effects of sharp fluctuations in cohort size. These reforms, which eliminated grade 13 at upper-track high schools, led to an idiosyncratically timed "double cohort" in each reforming state, as students graduated under both old and new curricula. Consistent with the fact that a modest share of upper-track students enter firm-based apprenticeships after graduation, new training contracts jump by about 2 percent in double-cohort years. This increase is driven by upper-track graduates; I find no clear evidence that other graduates are crowded out, but the results are imprecise. / by Brendan Price. / I. The Duration and Wage Effects of Long-Term Unemployment Benefits: Evidence from Germany's Hartz IV Reform -- II. Import Competition and the Great US Employment Sag of the 2000s (joint with Daron Acemoglu, David Autor, David Dorn, and Gordon Hanson) -- III Return of the Solow Paradox? IT, Productivity, and Employment in US Manufacturing (joint with D. Acemoglu, D. Autor, D. Dorn, and G. Hanson) -- IV. Can Local Labor Markets Absorb Crowded Cohorts? Evidence from German High School Reforms. / Ph. D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2016. / Cataloged from PDF version of thesis. Chapter two co-authored with Emily Breza and Arun Chandrasekhar. / Includes bibliographical references. / This dissertation examines three current topics related to development economics. In the first chapter I investigate spatial variation in earnings and the cost of internal migration in Thailand. The second chapter explore the unintended consequences of low accountability that accompany large technological investments in the Indian dairy sector. In the third chapter I develop a model of mutual insurance where agents can only partially observe each other's earnings. In the first chapter I estimate the perceived cost of internal migration and associated labor supply elasticity in Thailand using the revealed-preference location decisions of workers. I develop a multiperiod model of the location decision where observed earnings are an imperfect proxy for the net present value of a migration. I use global commodity prices to construct instruments that identify permanent and transitory components of local earnings. Reduced-form evidence suggests that workers are sensitive to the share of the permanent component in an earnings innovation. Given this, I estimate a structural model of migration to recover cost parameters, exploiting variation in net present value induced by the instruments. Over a range of discount rates, I estimate the average cost of migration to an individual to lie between 0.3 and 1.1 times annual earnings. Fixed costs of moving (which include both financial and psychic costs) account for 60 percent of this, with the remaining 40 percent varying by distance. Furthermore, variation in idiosyncratic preferences is more than double the spatial variation in earnings. Using the parameter estimates of the model, I find that migration contributes 8.6 percentage points to local labor supply elasticity, split almost evenly between workers entering a province and fewer locals exiting. The model suggests that 20% of long-term earnings differentials over space can be attributed to perceived moving costs. In the second chapter (co-authored with Emily Breza and Arun Chandrasekhar) I investigate the effects of technology investment in the Indian dairy sector. In India, village dairy cooperatives collect milk from rural producers and sell it in bulk to the regional market. In the last decade the Karnataka Milk Federation, the largest organizer of cooperatives in the Indian state of Karnataka, has invested heavily in bulk milk chillers (BMCs) that drastically lower the time between production and refrigeration. These chillers, by lowering the perceived risk of penalty for spoilage, both raise the potential returns to high quality milk and increase the temptation to engage in unsavory practices such as milk dilution. Risk declines both because chillers better preserve milk and because monitoring at chilling stations is more lax. Therefore the new technology both raises the returns to quality and lowers the cost of cheating. We investigate the net effects of village access to a BMC on the production process through a difference-in-difference approach using village-level data from the district of Kolar. We find that production quantity increases with access to a chiller but average production quality decreases, as does the likelihood of being punished for low quality. The results are consistent with a model in which villagers increase their use of dishonest practices such as dilution after being connected to a BMC because they face less risk of being punished. The effect size is strongest in villages that had the highest quality ex ante, suggesting an equilibrium shift brought on by the change in punishment probability. In addition, we find the strongest evidence of adulteration in villages with fewer outside agricultural options. In the third chapter I generalize a model of infinite-horizon risk sharing in which agents have private information about their stochastic income realizations. I extend the model so that agents also receive a noisy signal of each agent's earnings. Crucially, agents cannot change their action based on the signal, but contracts between the two agents may be conditioned on signal realizations. An efficient contract in this setting is one that maximizes total surplus subject to satisfying an aggregate resource constraint and ensuring that both agents truthfully reveal their private information. I first verify that an efficient contract exists and then characterize how the efficient contract incorporates information from the signal. Information increases surplus in the contracting relationship in two ways: first, it makes incentive compatibility easier to satisfy by allowing contracts to more precisely target individual types. Second, it allows contracts to better allocate resources to agents with low income by providing independent information on unobserved types. I show that under certain conditions, these two channels are mutually reinforcing and generate the unambiguous prediction that optimal contracts deliver greater payments to agents with signals associated with lower income realizations. Finally, I prove that under these conditions, as the signal gets more precise risk sharing improves monotonically and utility under an optimal contract approaches the first best. / by Ashish Shenoy. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1996. / Includes bibliographical references (leaves 185-194). / by Stefanie R. Schmidt. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1996. / Includes bibliographical references (leaves 106-109). / by Madeline Zavodny. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2012. / Cataloged from PDF version of thesis. / Includes bibliographical references. / This thesis consists of three independent essays on Financial Economics. In chapter one I investigate the possible mispricing of European-style options in the Mexican Stock Exchange. The source of this problem is that when the Mexican Stock Exchange introduced options over its main index (the IPC) in 2004, it chose Heston's (1993) "square root" stochastic volatility model to price them on days when there was no trading. I investigate whether Heston's model is a good specification for the IPC and whether more elaborate models produce significantly different option prices. To do so, I use an MCMC technique to estimate four different models within the stochastic volatility family. I then present both classical and Bayesian diagnostics for the different models. Finally, I use the transform analysis proposed by Duffie, Pan and Singleton (2000) to price the options and show that the prices implied by the models with jumps are significantly different from those implied by the model currently used by the exchange. Next, I turn to a problem in behavioral portfolio choice: It has been shown that the portfolio choice problem faced by a behavioral agent that maximizes Choquet expected utility is equivalent to solving a quantile linear regression. However, if the agent faces a vast set of assets or when transaction fees are considerable, it becomes optimal for the agent to take non-zero positions on only a subset of the available assets. Thus, in chapter 2, I present a portfolio construction procedure for this context using Li penalized quantile regression methods and explore the performance of these portfolios relative to their unrestricted counterparts. In chapter three, co-authored with Victor Chernozhukov, we present the Extended Pareto Law as an alternative for modeling operational losses. Through graphical examination and formal goodness of fit tests we show that it outperforms the main parsimonious alternative, Extreme Value Theory, in terms of statistical fit. Finally, we show that using the Extended Pareto Law as a modeling technique also leads to reasonable capital requirements. / by Alberto Vargas Mendoza. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1997. / Includes bibliographical references (p. 107-109). / by Brian Sack. / Ph.D.

Thesis: S.M., Massachusetts Institute of Technology, Department of Economics, 2014. / "February 2014." Abstract page contains the following information: "This paper is based in part on the second chapter of Fernández-Val (2005)'s MIT PhD dissertation." -- Authors: "Iván Fernández-Val and Joonhwan Lee." Cataloged from PDF version of thesis. / Includes bibliographical references (pages 25-27 (first group)). / This paper considers fixed effects estimation and inference in linear and nonlinear panel data models with random coefficients and endogenous regressors. The quantities of interest - means, variances, and other moments of the random coefficients - are estimated by cross sectional sample moments of GMM estimators applied separately to the time series of each individual. To deal with the incidental parameter problem introduced by the noise of the within-individual estimators in short panels, we develop bias corrections. These corrections are based on higher-order asymptotic expansions of the GMM estimators and produce improved point and interval estimates in moderately long panels. Under asymptotic sequences where the cross sectional and time series dimensions of the panel pass to infinity at the same rate, the uncorrected estimator has an asymptotic bias of the same order as the asymptotic variance. The bias corrections remove the bias without increasing variance. An empirical example on cigarette demand based on Becker, Grossman and Murphy (1994) shows significant heterogeneity in the price effect across U.S. states. / by Joonhwan Lee. / S.M.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1994. / Includes bibliographical references. / by Matthew J. Slaughter. / Ph.D.

Thesis (M.S.)--Massachusetts Institute of Technology, Dept. of Economics, 1991. / Includes bibliographical references (leaves 42-43). / by Ernesto Jorge Contreras. / M.S.