This thesis is a collection of three essays with contributions to the intergenerational and intra-generational mobility literature. The essay on full risk insurance and measurement error examines the likelihood that measurement error may reconcile observed departures from perfect rank immobility in insurable consumption with the mobility predictions of full risk insurance, by generating spurious rank-breaking transitions. The essay shows that under certain assumptions full risk insurance predicts perfect rank immobility and that there exists ranges of error covariance matrices for which the mobility predictions of full risk insurance plus measurement error can not be rejected in the Peruvian data. A novel approach to test these mobility predictions is presented. The essay on discrete time-states Markov chain models applied to welfare dynamics shows that models with higher order may fit data better than the popular first-order, stationary model, and that the order of the chain, in turn, affects the estimation of equilibrium distributions. A best-practice methodology to conduct homogeneity tests between two samples with different optimal order is proposed, and an index by Shorrocks, based on the trace of the transition matrix, is extended to discrete Markov chain models with higher order. The essay on cohort heterogeneity in intergenerational mobility of education shows how cohort heterogeneity affects the analysis of cross-group homogeneity and long-term prospects of a welfare variable, based on transition matrix analysis. The essay compares the transition matrices of Peruvian groups divided by gender and ethnicity and finds genuine reductions in heterogeneity of the mobility regimes between male and female and between indigenous and non-indigenous groups among the youngest cohorts. The essay proposes a methodology to conduct first-order stochastic dominance analysis with equilibrium distributions and shows that among the youngest cohorts past stochastic dominance of male over females and non-indigenous over indigenous disappear in the long term.

Accounting for output per worker differences across countries has been an ongoing topic of research in economics. This thesis expands upon standard approaches by allowing for technological heterogeneity and exploiting firm and worker level data to determine the microeconomic sources of variation in both productivity and earnings. An intercontinental comparison using production functions for the Ghanaian and South Korean manufacturing sectors in Chapter 2 finds, in contrast to the conclusions of much of the macroeconomic literature, that there is no difference in total factor productivity (TFP). The microeconomic sources of the difference in value added per worker lie within the technology of firms, which is defined as the way in which inputs are used. Two important dimensions of this difference are the larger role of material inputs and the much lower rate of return to schooling in Ghana. In Chapter 3 a more general specification investigates intra-African variation in production, which is much smaller than the intercontinental difference. The pattern of cross-country heterogeneity is that, as GDP per capita rises, the relative input of materials falls, those of capital and labour rise and the returns to education increase. Differences in TFP are limited. Possible sources of the low returns to schooling in Ghana are investigated in Chapter 4 using earnings and production functions. Conditional upon selection into occupations, the only group of workers for whom education appreciably increases earnings are those employed in skilled jobs with more than ten years of education. The evidence is consistent with a lack of technological sophistication being the source of these low returns. Investment in new production processes by firms will increase the return to education and raise incomes and output. Reducing the share of intermediate inputs in production is key to the transition from low to high productivity activities. Technology is the critical element that can explain the performance of manufacturing firms across countries.

Agent based computational economics (ACE), as a research field, has been using co-evolutionary algorithms for modelling the socio-economic learning and adaptation process of players within games that model socio-economic interactions. In addition, it has also been using these algorithms for optimising towards the game equilibria via socio-economic learning. However, the field has been diverging from evolutionary computation, specifically co-evolutionary algorithm design research. It is common practice in ACE to explain the process and outcomes of such co-evolutionary simulations in socio-economic terms. However, co-evolutionary algorithms are known to have unexpected dynamics that lead to unexpected outcomes. This has often lead to mis-interpretations of the process and outcomes in socio-economic terms, a case in point being the lack of a methodical use of the term bounded rationality. This mis-interpretation can be attributed to the lack of a proper consideration of the solution concept being implemented by the coevolutionary algorithm used for the simulation. We propose a holistic methodical framework for analysing and designing co-evolutionary simulations, such that mis-interpretations of socio-economic phenomena be methodically avoided, disabling the algorithm from being mis-interpreted in socio-economic terms, aimed at benefiting ACE as a research field. More specifically, we consider the methodical treatment of co-evolutionary algorithms, as enabled by the framework, such that mis-interpretations of bounded rationality be avoided when these algorithms are used to optimise towards equilibrium solutions in bargaining games. The framework can be broken down into two parts: • Analysing and refining co-evolution for ACE, using the notion behind co-evolutionary solution concepts from co-evolutionary algorithm design research: Challenging the value of the implicit assumption of bounded rationality within co-evolutionary simulations, which leads to it being mis-interpreted, we show that convergence to the equilibrium solutions can be achieved with boundedly rational agents by working on the elements of the implemented co-evolutionary solution concept, as opposed to previous studies where bounded rationality was seen as the cause for deviations from equilibrium. Analysis and refinements guided by the presence of top-down equilibrium solutions, allow for a top-down avoidance of misinterpretations of bounded rationality within simulations. • Analysing and refining co-evolution for ACE, using the notion behind reconciliation variables proposed in the thesis: Reasonably associating mis-interpreted socio-economic phenomena of interest with the elements of the implemented co-evolutionary solution concept, parametrising and quantifying the elements, we obtain our reconciliation variables. Systematically analysing the simulation for its relationship with the reconciliation variables or for its closeness to desired behaviour, using this parametrisation, is the suggested idea. Bounded rationality is taken as a reconciliation variable, reasonably associated with agent strategies, parametrised and quantified, and analysis of simulations with respect to this variable carried out. Analysis and refinements based on such an explicit expression of bounded rationality, as opposed to the erstwhile implicit assumption, allow for a bottom-up avoidance of mis-interpretations of bounded rationality within simulations. We thus remove the causes that lead to bounded rationality being mis-interpreted altogether using this framework. We see this framework as one next step in ACE socio-economic learning simulation research, which must not be overlooked.

Using the BHPS data, we have carried out three empirical studies to investigate household risky asset choice in the UK. In the first study we follow appropriate econometric procedures to identify household specific factors that can be observed to influence a household’s asset choice through parameters of their objective function, such as risk aversion and habit. In the second and third study, we use techniques to explain the specific influence of various factors rather than finding what lies behind the interactions observed. Specifically, the second study is about examining the effect of retirement on household risky asset choice and investigating whether this effect would be different when house ownership is taken into account. In fact, we do find that retirement has a positive effect on risky asset shares for house owners while it has no effect on non-house owners. In the third study, we carry out an empirical study on the impact of taxation on household risky asset choice, and we find in the short run paying income tax has negative impact on individual’s risky asset shares and in the long run paying capital gain tax has positive effect on individual’s risky asset shares. Hence a possible policy implication is to increase the income tax allowance in order to provide incentives for people on low incomes to save, and to save in a balanced portfolio of low and high risk assets.

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This thesis explores the relationships between immigration and labour mar- kets. The work consists of three empirical papers that examine particular aspects of this relationship. The first paper investigates the hypothesis that immigrants are attracted by a particular labour market institution, the minimum wage. The empirical analysis is implemented by assessing the impact that an exogenous increase in the federal USA minimum wage has on the immigration ows of low-skilled individuals. The main findings are that low-wage workers move to States where the growth of the minimum wage is larger, while high-wage individuals are insensitive to the policy. The second paper analyses the effects of immigration in the host labour market, in particular on the mobility of previous residents. The main objective is to investigate if inflows of recent immigrants determine an out-migration of natives and earlier immigrants. This is achieved by analysing patterns of internal mi- gration using information on the local authority of origin and destination and on the skill level of individuals. The analysis demonstrates that, while UK-born individuals and recent immigrants move to similar locations, earlier immigrants are instead displaced, suggesting closer substitutability with the newcomers. The impact of ethnic networks on employment outcomes is the final topic of the thesis. The important feature of this study is to examine this effect separately for immigrants and natives. This is achieved by analysing detailed data on ethnic enclaves from two Censuses of England and Wales, which are used to construct an index that captures local interactions. The results show that, for the majority of immigrant groups, a larger informal network is associated with higher employ- ment probabilities. For the group of natives, there is no evidence that living in an enclave is detrimental to employment, and the eect is, at worst, zero.

This thesis is in two parts. The first part considers a theoretical relationship between the natural variability of a stochastic model and its response to a small change in forcing. Over a large enough scale, both the real climate and a climate model are characterised as stochastic dynamical systems. The dynamics of the systems are encoded in the probabilities that the systems move from one state into another. When the systems’ states are discretised and listed, then transition matrices of all these transition probabilities may be formed. The responses of the systems to a small change in forcing are expanded in terms of the eigenfunctions and eigenvalues of the Fokker-Planck equations governing the systems’ transition densities, which may be estimated from the eigenvalues and eigenvectors of the transition matrices. Smoothing the data with a Gaussian kernel improves the estimate of the eigenfunctions, but not the eigenvalues. The significance of differences in two systems’ eigenvalues and eigenfunctions is considered. Three time series from HadCM3 are compared with corresponding series from ERA-40 and the eigenvalues derived from the three pairs of series differ significantly. The second part analyses a model of the coupled climate-economic system, which suggests that the pace of economic growth needs to be reduced and the resilience to climate change needs to be increased in order to avoid a collapse of the human economy. The model condenses the climate-economic system into just three variables: a measure of human wealth, the associated accumulation of greenhouse gases, and the consequent level of global warming. Global warming is assumed to dictate the pace of economic growth. Depending on the sensitivity of economic growth to global warming, the model climate-economy system either reaches an equilibrium or oscillates in century-scale booms and busts.

The thesis investigates, from a contextual and user perspective, the implementation processes of microfinance interventions and the effect of the implementation processes on households and businesses. The thesis’ central argument is that microfinance discourse has neglected the perspective of microfinance users and this can negatively affect microfinance interventions as development tools. The study examines two microfinance interventions, Nsoatreman Women Empowerment Programme and Sinapi Aba Trust, in Nsoatre, a rural community in Ghana. Data for the study is from secondary sources, 26 interviews and 100 questionnaires. The study was guided by the philosophical ideas underlying the Sustainable Livelihood Approach and the Interpretive Approach. Using qualitative, cross-tabulations and ordinal logistic regression, the analysis found that the microfinance institutions studied essentially employ top-down approaches and that the perception of microfinance as non-paternalistic is not supported by this study. The mode of group formation has significant ramifications on subsequent group activities and peer monitoring played a limited role in mitigating moral hazard. Service users exhibited noticeable lack of knowledge on intervention activities. Microfinance interventions contribute to household consumption more than it does to household asset accumulation. Poorer service users reported more household and business benefits. The findings suggest a reappraisal of the design of microfinance interventions, especially in rural areas.

The dissertation contains essays concerning the linkages between macroeconomy and financial market or the conduct of monetary policy via DSGE modelling. The dissertation contributes to the questions of fitting macroeconomic models to the data, and so contributes to our understanding of the driving forces of fluctuations in macroeconomic and financial variables. Chapter one offers an introduction to my thesis and outlines in detail the main results and methodologies. In Chapter two I introduce a statistical measure for model evaluation and selection based on the full information of sample second moments in data. A model is said to outperform its counterpart if it produces closer similarity in simulated data variance-covariance matrix when compared with the actual data. The "distance method" is generally feasible and simple to conduct. A flexible price two-sector open economy model is studied to match the observed puzzles of international finance data. The statistical distance approach favours a model with dominant role played by the expectational errors in foreign exchange market which breaks the international interest rate parity. Chapter three applies the distance approach to a New Keynesian model augmented with habit formation and backward-looking component of pricing behaviour. A macro-finance model of yield curve is developed to showcase the dynamics of implied forward yields. This exercise, with the distance approach, reiterate the inability of macro model in explaining yield curve dynamics. The method also reveals remarkable interconnection between real quantity and bond yield slope. In Chapter four I study a general equilibrium business cycle model with sticky prices and labour market rigidities. With costly matching on labour market, output responds in a hump-shaped and persistent manner to monetary shocks and the resulting Phillips curve seems to radically change the scope for monetary policy because (i) there are speed limit effects for policy and (ii) there is a cost channel for monetary policy. Labour reforms such as in mid-1980s UK can trigger more effective monetary policy. Research on monetary policy shall pay greater attention to output when labour market adjustments are persistent. Chapter five analyzes the link between money and financial spread, which is oft missed in specification of monetary policy making analysis. When liquidity provision by banks dominates the demand for money from the real economy, money may contain information of future output and inflation due to its impact on financial spreads. I use a sign-restriction Bayesian VAR estimation to separate the liquidity provision impact from money market equilibrium. The decomposition exercise shows supply shocks dominate the money-price nexus in the short to medium term. It also uncovers distinctive policy stance of two central banks. Finally Chapter six concludes, providing a brief summary of the research work as well as a discussion of potential limitations and possible directions for future research.

This thesis explores three major issues in the burgeoning empirical literature on the determinants of subjective well-being (SWB). While economic theory assumes that it is current consumption that matters to SWB, empirical work has focused almost exclusively on the effect of income. In Part 1, we use household panel data from Russia and Britain to show that neither the standard theoretical account, nor the standard empirical practice may be adequate. Consumption, income, and wealth each contribute separately to SWB, in particular via perceptions of status and anticipation of the future; and omitting consumption from SWB equations significantly understates the importance of money to SWB. Distinguishing between consumption and income is also important to identifying reference effects. In Part 2, we confirm earlier findings that others' income has a positive (informational) effect on SWB in Russia, but show that others' consumption has an offsetting negative (comparison) effect. The net effect depends on how we define individuals' reference groups. We develop a novel econometric model that lets us estimate these reference groups from the data. Contrary to previous results, we conclude that comparison dominates information. Most SWB analyses focus on the average effects of money, relationships, and other outcomes across a given population; yet there may be significant differences in what is important to different people. In Part 3, we employ parametric and semi-parametric random coefficient models to show that there are large differences in the determinants of individual SWB in Britain, and (in contrast to previous work) that such differences cannot simply be attributed to differences in individuals' reporting functions. While individual differences correlate with (some) observable demographic variables, they do not generally correlate with individuals' perceptions about what is important to them. The results of SWB research may therefore be a useful source of information.