This thesis contains three essays on the role of tasks and technology in explaining the trends in reallocation of employment across occupations and sectors, and inequalities in the labor market. The first two chapters focus on the task content of occupations with special emphasis on the effect of interpersonal interactions in the changing structure of employment in the labor market. Chapter 1 studies structural change of employment at the task level. Interactions with customers are a key friction against the implementation of potentially better production styles and technologies, since customers are hard to train and should be satisfied according to their tastes. Using a wide range of data sources on tasks, detailed occupation employment, labor productivity, and computer adoption, Chapter 1 develops a novel task measure, interpersonal-service task intensity, to study the growing importance of service activity in the US labor market in recent decades and explores its linkages with technical change. The chapter explains the empirical findings with a model of structural change at the task level which suggests two distinct roles for interpersonal-service intensity and task-routinizability. Concerned with the reallocation of employment jointly across occupations and sectors, Chapter 2 quantifies the impact of interpersonal-service task intensity and routinization on job polarization and structural change of sector employment. I estimate a task-biased technical change model which is capable to address occupation-specific and sector-specific technical change separately and show that substantial portion of occupational and sectoral employment reallocation between 1987 and 2014 in the US can be explained by the two task aspects. While both types of tasks are significant drivers of job polarization, interpersonal-service tasks stand out in explaining the growth of service sector employment. Using the framework I also suggest answers to several issues in the related literature. Chapter 3 switches the focus of study from the task content to skills while keeping the occupation-based perspective. The last chapter studies the importance of within-occupation heterogeneity of skills in understanding the rising labor market inequalities. I document that employment and wage growth of occupations tend to increase monotonically with various measures of skill intensity since 1980 in the US, in contrast to the existing interpretation of labor market polarization along occupational wages. I establish robustness of the documented fact, explore the sources of the seemingly contrasting finding and argue that labor market polarization cannot be interpreted as polarization of skills that are comparable across occupations. The chapter reconciles the documented facts in an extended version of the canonical skill-biased technical change model which incorporates many occupations and within-occupation heterogeneity of skill types.

This thesis consists of three papers that examine sorting and inequality. In the first paper I present a model in which people sort into groups according to income and as a result become biased about the shape of the income distribution. Their biased beliefs in turn affect who they choose to interact with, and hence there is a two-way interaction between segregation and misperceptions about society. I show one possible application of this novel framework to the question of income inequality and the demand for redistribution. I demonstrate that under segregation an increase in income inequality can lead to a decline in perceived inequality and therefore to a fall in people's support for redistribution. I motivate my main assumptions with empirical evidence from a small survey that I conducted via Amazon Mechanical Turk. In the second paper I develop a general model of how social segregation and beliefs interact. Sorting decisions will be affected by beliefs about society, but these beliefs about society are in turn influenced by social interactions. In my model, people sort into social groups according to income, but become biased about the income distribution once they interact only with their own social circle. I define "biased sorting equilibria", which are stable partitions in which people want to stay in their chosen group, despite their acquired misperceptions about the other groups. I introduce a refinement criterion - the consistency requirement - and find necessary and sufficient conditions for existence and uniqueness of biased sorting equilibria. In the third paper I present a model in which a monopolist offers citizens the opportunity to segregate into groups according to income. I focus initially on the case of two groups and show that a monopolist with fixed costs of offering the sorting technology will see profits increase as income inequality increases. I then analyze how the monopolist's optimal group partition varies with inequality and show that for a broad field of income distributions, monopolist profits increase with inequality, while at the same time total welfare of sorting given the monopolist's optimal schedule decreases. In the last section I examine how these findings generalize if the monopolist doesn't face costs of offering the sorting technology and can therefore offer as many groups as she wants.

The goal of this dissertation is to contribute to the literature on labour market properties of business cycle fluctuations for emerging market economies (EMEs) by using DSGE modelling and time series analysis. It consists of three essays and the following related topics are analysed. In the first paper, entitled "Labour Market Fluctuations: An RBC Model for Emerging Market Economies", we examine the labour market properties of business cycle fluctuations for a group of 15 EMEs and the US using annual data from 1970 to 2013. We find that on average, hours worked and employment volatility (relative to output volatility) are lower, while the volatility of productivity and wages are 2-3 times higher in EMEs than in the US. We then assess the performance of a standard RBC model with temporary and permanent productivity shocks to explain those facts observed in the data. We find that this model can account reasonably well for the relative volatility of hours to output; however, it fails to capture for the rest of the relevant moments for EMEs. In order to further improve the fit, we augment this model with capacity utilization, investment adjustment cost and indivisible labour. We find that each of these extensions improves the capability of the RBC model. Especially the model with investment adjustment cost improves its performance regarding the relative volatility of wages and hours, as well as the cyclicality of hours, compared to the standard RBC model. Lastly, we investigate the cyclical properties of the labour wedge (the wedge between the marginal product of labour and the marginal rate of substitution of consumption for leisure) and find that the total labour wedge (relative to output volatility) is more volatile over the business cycle in emerging economies (1.72) compared to the US (0.95). Further, fluctuations in the total labour wedge reflect the ones in the household component rather than the firm component of the wedge in EMEs and the US. In the second paper, entitled "Technology Shocks, Non-stationary Hours in Emerging Countries and DSVAR", we test a standard DSGE model on impulse responses of hours worked and real GDP after technology and non-technology shocks in EMEs. Most dynamic macroeconomic models assume that hours worked are stationary. However, in the data, we observe apparent changes in hours worked from 1970 to 2013 in these economies. Motivated by this fact, we first estimate a SVAR model with a specification of hours in difference (DSVAR) and then set up a DSGE model by incorporating permanent labour supply (LS) shocks that can generate a unit root in hours worked, while preserving the property of a balanced growth path. These LS shocks could be associated with very dramatic changes in labour supply that look permanent in these economies. Hence, the identification restriction in our models comes from the fact that both technology and LS shocks have a permanent effect on GDP yet only the latter shocks have a long-run impact on hours worked. For inference purposes, we compare empirical impulse responses based on the EMEs data to impulse responses from DSVARs run on the simulated data from the model. The results show that a DSGE model with permanent LS shocks that can generate a unit root in hours worked is required to properly evaluate the DSVAR in EMEs as this model is able to replicate indirectly impulse responses obtained from a DSVAR on the actual data. In the last paper, entitled "Informal Employment and Business Cycles in Emerging Market Economies", we examine the relationship between informal employment and business cycles in EMEs and investigate how informal employment is relevant in shaping the aggregate dynamics in these economies. The key features of stylized facts from our data is that it is countercyclical in Mexico, Colombia and Turkey but pro-cyclical in South Africa. In addition, informal employment is negatively correlated with formal employment in Mexico but positively correlated in Colombia, South Africa, and Turkey. To account for these empirical findings, we build a small open economy model with both formal and informal labour markets, and it subjects to stationary and trend shocks to total factor productivity. We also allow labour adjustment costs in the model as strict employment protection which differ among these economies. We then examine the effect of changes in the degree of employment protection on the informal employment and the business cycles in EMEs and the extent to which the informal sector acts as a buffer in the face of adverse shocks to the labour market. The results show that this model can capture some key stylized facts of the labour market in these economies and that the informal sector acts as a propagation mechanism for these shocks. Moreover, informal employment acts as a buffer as it is countercyclical while formal employment is pro-cyclical in the model which supports the results from the data except for South Africa. Regarding volatilities, informal employment does not act as a buffer since formal employment is more volatile than informal employment in the model which contrasts with the evidence in the data for these economies except Colombia.

The implementation of employee ethnic representation has become a widespread practice for organisations operating within multi ethnic societies. However, scholars disagree on its effectiveness in positively influencing employees’ perceptions. Also, the process through which ethnic identification positively influences employee perceptions is currently unknown. The purpose of this study is to investigate the process through which ethnic identification influences employee psychological ownership perception. To achieve this aim, the thesis first reviews relevant literature which highlights the gap in literature and support the need for this study. For example, existing studies have not considered the components of psychological ownership and how they are influenced. This study contributes by showing that psychological ownership perception is a formative construct comprised of three distinct components; employee self-efficacy, organisational self-identity and employee voice. A review of literature on the empirical context show the importance of this study within the Nigerian context specifically noting Nigerians displayed high levels of ethnic identification. The problem that persist for organisations was how ethnic identification may be channelled to organisational identification. A quantitative cross-sectional survey data collection approach was adopted for this study. Structural equation modelling was used to analyse survey responses from 1,525 employees of selected public and private sector organisations in Rivers State, Nigeria. Findings suggest the following relational framework for linking ethnic diversity and employee psychological ownership perception; that employees who overtly identify with their ethnicity at work will positively attract co-worker social support and this is possible in an organisational climate that promotes interpersonal fairness. Co-worker social support positively mediates the relationship between employee ethnic identification and employee psychological ownership perception. The practical implication for organisations operating within a multi ethnic environment is human resource practitioners to pay attention to ethnic identification because of its influence on co-worker social support and employee psychological ownership perception. The originality of this thesis is seen in the relational framework designed to link ethnic diversity to employee psychological ownership perception. This study contributes to existing literature by explaining how employees’ ethnic identification influences their perception of psychological ownership. The study provides new insights on the components of employee psychological ownership perception and how they relate to ethnic identity. The investigation of psychological ownership perception at the individual component level is novel and provides new insight into how psychological ownership relates with antecedents that influences it.

This thesis contributes to the literature on strategic information transmission through providing new insights into strategic behavior under several communication frameworks. The thesis is comprised of five chapters. Chapter 1 provides an overview of the main topics and research methodologies presented in the next three chapters. Chapter 2 reports experiments in sender-receiver games with partially verifiable messages. We explore the role of verification control on strategic behavior and final outcomes. We find that behavior is closer to theoretical predictions when senders have verification control. However, the setting in which receivers have control over the verification action promotes higher average payoffs despite behavior being noisier. Chapter 3 investigates the effect of cheap talk on the interpretation of partially informative verifiable communication (evidence). Using experimental data from sender-receiver games similar to those in chapter 2 we find that cheap talk distorts receivers’ appraisal of evidence. Specifically, it makes receivers depart from theoretical predictions more than they do in a treatment where cheap talk is not present. Chapter 4 explores the effect of cheap talk in a sender-receiver game with sender state independent preferences and a state space with non-uniform distribution. This type of state space leads to the interests of the players to be either more likely aligned, or more likely conflicting. Using a simple theoretical analysis we show that if receivers dislike taking an action that is profitable for a deceiving sender (“sucker aversion”), communication can harm when interests are more likely aligned. However, when interests are more likely conflicting, communication helps due to senders’ “lying aversion”. We run experiments to test these predictions and find no effect of cheap talk when interests are more likely aligned. When interests are more likely conflicting, communication has a positive effect on payoffs but not due to the hypothesized mechanism. Chapter 5 provides a summary of the previous chapters’ results as well as a discussion which points out the limitations. Finally it delineates welcomed directions for future research.

This thesis re-examines a common assumption entering theoretical models of endogenous switching costs. Through a discrete choice experiment we test the hypothesis that consumers are heterogeneous in the way they respond when firms offer repeat purchase discounts through loyalty schemes. The assumption itself is important because in practice, heterogeneity in consumer switching costs holds implications for firms’ strategies and their resultant market shares. This thesis presents a flexible methodology for a discrete choice experiment inspired by the UK groceries sector using novel techniques in D-efficient experimental survey design. When fitting the data to the mixed logit model, we find that consumers’ taste varies significantly more for loyalty schemes than for any of the other variables entering the model. The results of our discrete choice experiment show that consumers differ significantly in how they respond to repeat purchase discount strategies. On this basis, it is likely that theoretical models of loyalty schemes overemphasise the effects of loyalty schemes on price competition. We argue instead, that a repeat purchase discount strategy will not result in a unilateral increase in artificial switching costs for all consumers in the market. We propose that forward looking firms are likely to recognise the limitations to scheme effectiveness due to heterogeneity in switching costs and will be more likely to invest in their customer base through future lower prices. Therefore from a competition policy perspective, we argue that in a fast paced retail market for non-durable goods, loyalty schemes are more likely to intensify competition for the benefit of consumers rather than act as an exclusionary device.

The main contribution of the thesis is the construction of noise-augmented asset pricing models. These models are the extension of Fama & French Three Factor Model (1992,1993) and subsequent improved version of Five Factor Model (2015), by adding a behavourial factor - investor sentiment (INVSENT). To the author’s knowledge, this is one of the first attempts to quantitatively reconcile risk based theory and behavioral finance by developing parsimonious asset pricing models for explaining value premium phenomenon, especially in the context of financial crises. Little research has been carried out on the value premium phenomenon over a short horizon during high volatility period. Previous empirical results show that over the long run, value stocks outperformed growth stocks, with considerable firm size effect. There are two competing schools of thoughts that explain the value premium phenomenon - risk based theories and behavior models. However, the occurrence of the Global Financial Crisis and Eurozone Crisis has opened a new and alternative window to study the value premium phenomenon and further examine the underlying reasoning. Firstly, in examining the risk and return relationship of value stocks and growth stocks of the Greater China stock markets during the two major financial crises, it show that growth stocks outperformed value stocks during both the Global Financial Crisis and Euro Zone Crisis in the China and Hong Kong stock markets. However, value stocks outperformed the growth stocks in the Taiwan stock market during the Global Financial Crisis and Euro Zone Crisis. The small size effect did not really diminish in the Greater China stock markets during two major financial crises. Also, standard risk measures – standard deviation and Sharpe ratio do not fully explain the risk and return relationship of these two stock selection strategies. Secondly, in explaining value premium under the Banko, Conover and Jensen Model (2006), mixed results are observed. During the Global Financial Crisis, industry book-to-market ratio is a strong signal in the China and Hong Kong stock markets, whereas the firm book-to-market ratio is a strong signal in the Hong Kong and Taiwan stock markets. Further analysis at the industrial level has revealed that industry book-to-market ratio is a more prominent factor than the firm book-to-market ratio. During the Euro Zone Crisis, the firm level book-to-market ratio is significant the Hong Kong stock markets, even after controlling for market capitalisation and beta. The study under the Fama and French Three Factor Model (1992, 1993) has shown that the three risk measures - market risk premium (MRP) factor, SMB factor and HML factor are semi-strong signals in explaining value premium in the Greater China stock markets during the two major financial crises. Furthermore, the investigation under the Fama and French Five Factor Model (2015) has shed light that the five risk measures - market risk premium (MRP) factor, SMB factor, HML factor, profitability factor (RMW) and investment factor (CMA) are semi-strong signals. Considering the values of adjusted R-squared and varying signals of the risk measures, it is argued that risk factors of the three asset pricing models do not fully explain value premium phenomenon in the Greater China stock markets during the two major financial crises. Thirdly, the study under the noise-augmented capital asset pricing models reveals that the investor sentiment (INVSENT) factor is a statistically significant determinant of the stock returns in the Hong Kong stock markets during the Euro Zone Crisis. The investor sentiment (INVSENT) factor is only weakly significant or insignificant statistically in the China and Taiwan stock markets during these two financial crises. For the risk measures in the Fama and French’s models, market risk premium (MRP) factor, SMB factor, HML factor, profitability factor (RMW) and investment factor (CMA) are semi-strong signals. The adjusted R-squared values of the noise-augmented asset pricing models are higher than the original Fama and French models. The findings of this research are expected to provide a fresh insight to the investment managers in the asset allocation and portfolio management decision. The practical implication is that when investing during the period of financial crises, one has to firstly, be selectively in stocks and hence businesses involved, relying on the principles embodied in the risk based model – Fama and French Five Factor Model. Then, be aware of the mispricing caused by the investor sentiment. The mispricing may present opportunities for contrarian investment strategy.

Prompted by calls to examine social and environmental disclosure beyond developed countries and, in particular, by studies that have begun to investigate practices in the Middle East and North Africa (MENA) region, this study presents a comprehensive analysis of corporate environmental disclosure (CED) by firms in Arab MENA countries. Using a detailed research instrument consisting of 55 items in five categories, a multi-country content analysis of the annual reports of 180 industrial and service sector companies listed on nine of the region’s major stock markets was conducted for a five-year period from 2010 to 2014. Consistent with previous studies that applied balanced panel data, the further statistical analysis was conducted by using Ordinary Least Squares (OLS) technique and supported by carrying out other estimations including a fixed-effects model, lagged-effects model, a weighted disclosure index model, and a two-stage least square (2SLS) model. Theoretically, an institutional framework has been employed to interpret CED practices in the MENA region using the three isomorphic pressures (i.e., mimetic, coercive, and normative). The calculation of an unweighted disclosure index indicates that, although the level of disclosure might be considered relatively low, it increased significantly over the period 2010 to 2014. There are some differences between countries in any given year, but the growth in disclosure is observed to be a region-wide phenomenon. Analysis of five categories of environmental disclosure and the behaviour of different types of the company not only reveals some interesting patterns but also reinforces the picture of a widespread general increase in disclosure. Although firm-specific characteristics (i.e., firm size, profitability, leverage, industry, auditor type) are positively and significantly related to CED in the MENA region, the influence of country-level governance (i.e., voice and accountability, government efficiency, and control of corruption) is heterogeneous in that they may have enhanced or reduced CED levels in annual reports across the nine MENA countries. Additionally, CED reflects the different region-specific pressures (i.e., business cultures and business environment). By using institutional theory, the study argues that country-level institutional factors, representative of the social context of a company’s operational environment may either encourage or discourage the adoption of CED in the countries across the MENA region. Since a relatively comprehensive disclosure index was used, it is unlikely that the study was biased against any particular country or type of company and so it provides a sound basis for comparison across the Arab MENA region. The study also provides a systematic picture for policymakers in the region as well as future researchers.

This dissertation can be thematically grouped into two categories: monetary theory in the so called New Monetarist search models where money and credit are essential in terms of improving social welfare, and optimal time-consistent monetary and fiscal policy in New Keynesian dynamic stochastic general equilibrium (DSGE) models when the government cannot commit. Arguably, the methodology and conceptual frameworks adopted in these two lines of work are quite different. However, they share a common goal in helping us understand how and why monetary factors can affect the real economy, and how monetary and fiscal policy should respond to developments in the economy to improve social welfare. There are two chapters in each part. In the first chapter, recent advances based on the pre-eminent Lagos-Wright (LW) monetary search model are reviewed. Against this background, chapter two introduces collateralized credit inspired by a communal responsibility system into the creditless LW model, in order to study the role of money and credit as alternative means of payment. In contrast, the third chapter revisits the classic inflation bias problem associated with optimal time-consistent monetary policy in the cashless New Keynesian framework. In this chapter, fiscal policy is trivial, due to the assumption of lump-sum tax. As a follow-up work, chapter four studies optimal time-consistent monetary and fiscal policy mix as well as debt maturity choice in an environment with only distortionary taxes, endogenous government spending and government debt of various maturities. Chapter 1 introduces the tractable and influential Lagos-Wright (LW) search-theoretic framework and reviews the latest developments in extending it to study issues concerning the role of money, credit, asset pricing, monetary policy and economic growth. In addition, potential research topics are discussed. Our main message from this review is that the LW monetary model is flexible enough to deal with numerous issues where fiat money plays an essential role as a medium of exchange. Chapter 2, based on the LW framework, develops a search model of money and credit motivated by a historical medieval institution - the community responsibility system. The aim is to examine the role of credit collateralized by the community responsibility system as a supplementary medium of exchange in long-distance trade, assuming that entry cost and the cost of using credit are proportional to distance, due to factors like direct verification and settlement cost and indirect transportation cost. We find that both money and credit are useful in the sense of improving welfare. In addition, the Friedman rule can be sub-optimal in this economy, due to the interaction between the extensive margin (that is, the range of outside villages which the representative household has trade with) and the intensive margin (that is, the scope of villages where credit is used as a supplementary medium of exchange). Finally, higher entry cost narrows down the extensive margin, and similarly, higher cost of using credit, ceteris paribus, reduces the usage of credit and hence lowers social welfare. Chapter 3 reconsiders the inflation bias problem associated with the renowned rules versus discretion debate in a fully nonlinear version of the benchmark New Keynesian DSGE model. We ask whether the inflation bias problem related to discretionary monetary policy differs quantitatively under two dominant forms of nominal rigidities - Calvo pricing and Rotemberg pricing, if the inherent nonlinearities are taken seriously. We find that the inflation bias problem under Calvo contracts is significantly greater than under Rotemberg pricing, despite the fact that the former typically exhibits far greater welfare costs of inflation. In addition, the rates of inflation observed under the discretionary policy are non-trivial and suggest that the model can comfortably generate the rates of inflation at which the problematic issues highlighted in the trend inflation literature. Finally, we consider the response to cost push shocks across both models and find these can also be significantly different. Thus, we conclude that the nonlinearities inherent in the New Keynesian DSGE model are empirically relevant and the form of nominal inertia adopted is not innocuous. Chapter 4 studies the optimal time-consistent monetary and fiscal policy when surprise inflation (or deflation) is costly, taxation is distortionary, and non-state-contingent nominal debt of various maturities exists. In particular, we study whether and how the change in nominal government debt maturity affects optimal policy mix and equilibrium outcomes, in the presence of distortionary taxes and sticky prices. We solve the fully nonlinear model using global solution techniques, and find that debt maturity has drastic effects on optimal time-consistent policies in New Keynesian models. In particular, some interesting nonlinear effects are uncovered. Firstly, the equilibrium value for debt is negative and close to zero, which implies a slight undershooting of the inflation target in steady state. Secondly, starting from high level of debt-GDP ratio, the optimal policy will gradually reduce the level of debt, but with radical changes in the policy mix along the transition path. At high debt levels, there is a reliance on a relaxation of monetary policy to reduce debt through an expansion in the tax base and reduced debt service costs, while tax rates are used to moderate the increases in inflation. However, as debt levels fall, the use of monetary policy in this way is diminished and the policy maker turns to fiscal policy to continue the reduction in debt. This is akin to a switch from an active to passive fiscal policy in rule based descriptions of policy, which occurs endogenously under the optimal policy as debt levels fall. It can also be accompanied by a switch from passive to active monetary policy. This switch in the policy mix occurs at higher debt levels, the longer the average maturity of government debt. This is largely because high debt levels induce an inflationary bias problem, as policy makers face the temptation to use surprise inflation to erode the real value of that debt. This temptation is then more acute when debt is of shorter maturity, since the inflationary effects of raising taxes to reduce debt become increasingly costly as debt levels rise. Finally, in contrast to the Ramsey literature with real bonds, in the current setting we find no extreme portfolios of short and long-term debt. In addition, optimal debt maturity, implicitly, lengthens with the level of debt.

This thesis is comprised of six Chapters on US Conventional and Unconventional Monetary Policy and their interaction with fiscal policy, both domestically and internationally. Chapter 1 introduces the main themes of the thesis. Chapter 2 studies the theoretical background of the thesis. After setting out key themes and the theoretical background in the introductory Chapters, the first core Chapter, i.e. thesis Chapter 3, examines the interaction between fiscal and monetary policy. Price puzzles are a repeated feature of empirical VAR models studying the effect of monetary policy. These price puzzles are often believed to appear due to the lack of information. However, we show that whether monetary and fiscal policy are active or passive influences the appearance of the price puzzle. This is because an active fiscal policy and a passive monetary policy can encourage private expenditure through a positive wealth channel. An active fiscal policy means fiscal authorities set expenditure regardless of tax revenues, while a passive monetary policy refers to a weak response of the policy interest rate to inflation. Finally, we find evidence in this Chapter that fiscal policy stimulates economic activity, i.e. it is non-Ricardian. Chapter 4 examines the effect of monetary and fiscal policy interactions in an international context. In particular, it considers the international spillovers of US monetary policy, whilst account for fiscal policy. This Chapter shows that US government debt influences the duration of the responses to a monetary contraction. Furthermore, it is shown that an increase in US government debt influences both the short and long-term interest rates, inflation, and output in the Euro Area and UK. This is through a positive wealth effect. In addition, the results of Persistence Profiles test, i.e. how fast we converge upon equilibrium following a shock, suggest that accounting for US government debt delays the return to equilibrium following monetary policy shocks. This may be due to the impact of fiscal policy on inflation and its persistence. Chapter 5 studies Unconventional Monetary Policy (UMP). It is shown that UMP increases output and inflation in the US, and generates spillovers to the Euro Area and UK. Furthermore, we present evidence that the portfolio balance is the transmission channel of UMP. That is UMP contributes to lowering the bound yields while it increases the price of assets. Chapter 6 concludes and summarizes the thesis, and provides a discussion of policy implications.