<p> This dissertation consists of four chapters on topics in labor and development economics. </p><p> Chapter 1 discusses innovation fluctuations in an aging economy. A three-stage overlapping generations model is constructed to simulate population trends and their consequent impact on innovation and economic development. Both the theoretical analysis and empirical verification show that countries with a low fertility rate have a higher innovation rate in a short period but a lower one in the long run. This chapter discusses the negative impact of an aging economy and yields the strong policy implication of providing a subsidy to boost the fertility rate, particularly for those developed European countries suffering from aging problems. </p><p> Chapter 2 focuses on the relationship between the unemployment rate, working efficiency, and working overtime. It is motivated by the widely observed phenomenon of working overtime in some East Asian countries as well as the consulting and investment banking sectors. Does working overtime indeed produce extra efficiency? I use data from the Panel Study of Income Dynamics (PSID) to answer this question. The answer is NO, and it has little impact on the unemployment rate. This chapter contributes to existing literature with a new empirical approach. It could also guide corporate management professionals in the enactment of proper overtime work policies. </p><p> Chapter 3 discusses the relationship between institutions and economic outcomes. The renowned MIT and Chicago political economists Daron Acemoglu and James Robinson argue that only inclusive political and economic institutions could lead to economic prosperity. Others dispute that their theory captures the whole picture. Bill Gates notably said that the theory of Acemoglu and Robinson must take into account other important factors. Chapter 3 contributes to this controversy. I find that economic prosperity could be harvested even by extractive institutions with immigrant-friendly policies. For example, countries like the United Arab Emirates, Qatar, and Singapore could enjoy a long-term economic boom due to a good immigration policy that attracts high-skilled and low-skilled immigrants from their neighbors. </p><p> Chapter 4 intends to determine the empirical relationship between income inequality and consumption inequality in China. Existing empirical literature shows that consumption inequality exceeds income inequality in China, which contradicts basic economic theory as well as evidence from the US, Canada, and Europe. I use the inverse relationship between necessity good consumption and income to derive the true income level of each individual. High-income communist party members and employees of government-related agencies tend to hide their grey income, and income inequality is thus underestimated. The relationship I uncover between income and consumption inequality is consistent with the empirical evidence on other countries.</p><p>

Regulations may end up harming the very people they are intended to protect, and an unexpected windfall may lead to upheaval rather than prosperity. In three chapters, I discuss how rents and regulations can affect lives and welfare in the developing world. In the first chapter, I examine employment protection legislation (EPL), which is intended to promote security for workers by placing restrictions on firing. Using India as a setting, I argue that EPL shifts jobs from the young to older workers. The identification strategy is based on Rajan and Zingales (1998), and relies on heterogeneity between manufacturing sectors. The impact of EPL is strongest in those manufacturing sectors where international evidence suggests employers most like to fire workers. Finally, I present suggestive evidence that the shift from young to old employment induced by EPL reduces total factor productivity of plants. The second chapter, coauthored with Eric Werker, demonstrates how rents slow down productivity growth. The negative effect is strongest in poor countries, suggesting that high profits stymie economic development rather than enable it. Consistent with the rent-seeking mechanism of our theory, we find that high rents are associated with a slower reduction in tariffs. We also provide evidence that a country's average mark-up in manufacturing is a strong negative predictor of future economic growth. The third and final chapter, which is based on joint work with Faisal Ahmed and Eric Werker, examines foreign aid and oil rents in the Middle East. Aid from oil-rich autocrats created unearned rents for many developing countries in the 1970s. We provide a theoretical explanation for this phenomenon, whereby autocrats experiencing a windfall in unearned income may find it optimal to donate some of it to other countries in order to make their own state a less attractive prize to potential insurgents.

Thesis (M.A.)--Boston University

This dissertation studies how pay incentives interact with learning about ability and labor turnover to shape the employment dynamics at a US call center. The first chapter provides an introduction to my work and summarizes my main results. The second chapter offers a descriptive analysis of the work environment, the production process, and the effects of pay incentives. The third chapter introduces learning about ability and turnover in a model of effort choice under moral hazard. This model is then used to evaluate the effects of changing pay incentives at the call center. The effect of incentives on effort is significant but small. The results indicate that turnover is a major channel through which incentives affect average performance. Simulating the estimated model shows that neglecting learning and turnover makes estimates of the effect of incentives on effort twice as big as they should be. The fourth chapter investigates how considerations about the quality mix shape pay policy and profits. Building on the estimation approach in chapter 3, the fourth chapter presents a two-step procedure that is used to estimate a fully structural version of the model introduced in the previous chapter. The results provide the basis for counterfactual policy analysis. The optimal policy, in the class of linear contracts in output, not only induces employees to exert effort but also acts as a selection mechanism that helps the firm build a workforce of high match quality over time. The results show that turnover is the major channel through which pay incentives affect profits.

This dissertation contains a collection of essays on human capital formation and social service provision in the United States. The chapters evaluate three policies targeted to populations for whom the development and retention of skills is particularly critical—young adults, children, and the near-homeless. The first and second chapters focus on uncovering methods that could enhance the performance of the U.S. educational system: the first chapter examines a policy that better aligns educational expectations and potential among secondary school students; the second chapter evaluates a policy that incentivizes teachers to improve achievement among students in high-poverty primary and secondary schools. The third chapter examines an intervention designed to assist high-need families on the brink of homelessness. The chapters are also linked methodologically: in each, I exploit the exact timing of policy events (i.e., testing mandates, the opportunity for teachers to earn bonuses, the availability of homelessness prevention services) to identify their causal effects.

Post-secondary education is becoming increasingly more common for students around the world. As quantity of education increases, it becomes less of a distinguishing factor to be simply a college graduate. For those who want to stand out, the quality aspects of education become more salient. Moreover, as this expansion happens in the number of colleges and college students, it becomes less common for governments to generously fund the college education of a lucky few. In addition, the cost to colleges to provide an education is also increasing. Taken together, simply as a measure of cost-comparison, choosing between colleges based on the potential quality-for-money is also an important reason for college quality's increasing salience. College quality matters, and this dissertation endeavors to show how and to what extent. The following three separate chapters estimate the returns to different forms of college quality. There has been an extensive literature that shows, in general, that more schooling is better. These chapters seek to shift the margin of analysis from the extensive margin of quantity to the intensive margin of quality. Thus, I ask the question: is better schooling better or, to put it another way, how much better is better schooling? In the first chapter, I estimate the returns to college quality, operationalized mainly through peer quality, using a regression discontinuity design and exploiting the two separate rounds (early and regular) of college admissions in Taiwan. In the second chapter, focusing on college prestige, I again use a regression discontinuity design to estimate the returns to scoring just above (vs. just below) the admissions cutoff for the lowest-ranked national college. The theory of action is that national colleges are uniformly more desirable than private colleges (excluding a few elite private colleges), if for no other reason than that their tuitions are subsidized by the government and thus much lower for the individual. The final chapter looks at a set of 11 colleges that had already been meeting the minimum requirements for being labeled a university (an important distinction in Taiwan's system), but for bureacratic reasons had not been allowed to change their label/rank until a policy change in 1997. Treating this policy change as a natural experiment, I use a difference-in-differences framework to show that cohorts entering these newly upgraded 11 universities earn statistically significantly more than cohorts entering prior to the change at the same colleges. A consistent picture emerges out of these three papers: college quality matters on several dimensions. These chapters are set apart from other papers in the literature by the causal interpretation given to both choice of college AND choice of college major. My estimates show that those who attend higher quality colleges, within the same college major, end up earning between one-tenth to one-fifth of a standard deviation more in their first year of employment after graduating. Peer quality, college prestige, and college reputation all appear to provide a return. But choice of college major appears to be one of the most important dimensions through which college quality operates, with the science-track college majors receiving most of those returns to quality.

Most students who enter a community college with the stated intention of attaining a credential or transferring to a four-year university leave without accomplishing either of those goals (National Center for Education Statistics, 2011). This dissertation attempts to contribute to the growing economic literature that seeks to understand the conditions and policies that can positively influence community college students' academic and labor market success. In the first essay, I examine the effectiveness of remediation for students who are identified to have the lowest skills in mathematics. Descriptively, while students assigned to remediation tend to have poor outcomes overall, students assigned to the lowest levels of remedial math have the worst outcomes of all students. I use data from the state of Virginia's 2004 cohort of students and use a regression discontinuity design and find that students assigned to the third lowest level of remedial math would have benefited if they had been able to skip that remedial course. In the second essay, I use administrative data to examine how working while taking classes affects community college students' academic outcomes. I use two different identification strategy: an individual fixed effects strategy that takes advantage of the quarterly nature of the data to control for unobserved and time-invariant differences among students, and an instrumental variable difference-in-differences (IV-DID) framework that takes advantage of the fact that there is an exogenous supply of retail jobs during the winter holidays. Using the IV-DID framework, I compare academic outcomes during the fall versus the winter quarter for students who are more likely to work in retail versus students who are less likely to work in retail, based on pre-enrollment association with retail jobs. I find small negative effects of working on GPA and possibly positive outcomes of working on credit accumulation. Finally, in the third essay, Madeline J. Weiss and I examine the returns to community college credentials using administrative data. Using an individual fixed effects identification strategy that compares trajectories of wages across individuals, we find positive and substantial wage returns to associate degrees and long-term certificates and no wage returns to short-term certificates, over and above wage increases for students who enrolled and earned some credits but never earned a credential or transferred. We also find that associate degrees tend to be awarded in low-returns fields, but that in almost any given field, the returns to associate degrees is higher than the returns to certificates.

This dissertation investigates how internal migration spreads local shocks to the national market. The first chapter describes a dynamic model of internal migration where in equilibrium there are always positive internal migration flows across locations. When a shock in one of these location happens, internal migration flows are diverted away from the shocked locations, spreading the shock nationally. The second chapter explains how this is the main mechanism through which international migration is absorbed. The third chapter, documents how this exact same mechanism helps to mitigate the disproportionate effect that the Great Recession had on particular locations.

This dissertation study focuses on a current and controversial phenomenon in Chinese universities and colleges--student working during academic semesters. The massification of Chinese higher education since the year of 1999 raises the level of competition in the job market of college graduates. More and more undergraduate students participate in work while enrolled, with a hope that the working experience could help them perform better in the job market. However, working during academic semesters might be harmful to students' educational achievement since it may occupy their time and energy for studying. In addition, it may not be able to provide students with valuable practical trainings, as many term-time jobs are low-skill and labor-intensive jobs. Therefore there is an increasingly passionate debate among educational policy makers on whether higher education institutions should encourage students to work during term time. The current Chinese literature consists of mostly sub-national descriptive studies with weak research design that provide little in-depth investigation on this issue. This dissertation is the first empirical study of the impact of term-time working on students' academic performance and early post-college labor market outcomes in Chinese four-year universities and colleges, using much more detailed national data and more advanced methods. The study employs a sequential explanatory mixed-method research design, involving both quantitative and qualitative methods. In the quantitative analysis, two quasi-experimental strategies including Instrumental Variable and Propensity Score Matching are used to identify the causal impact of term-time working on college outcomes. The data was collected by Tsinghua University in 2011 with a nationally representative sample of 49 institutions and 6,977 graduating students. A qualitative analysis is conducted to explore students' perceptions about the gains and losses from term-time working, in order to explain the quantitative findings. The qualitative data was collected from interviews with 18 working college students in 2 higher education institutions of different types. Overall, the study finds that working during term time has become a prevalent activity among undergraduate students in four-year universities and colleges in China. The quantitative analysis reveals that term-time working decreases students' academic performance, but increases the probability of being offered a job before graduation, though does not influence the starting salary for those who are offered a job. Such impacts vary for term-time work-study jobs, part-time jobs, and internships. Students in non-elite institutions are more vulnerable to the influence of working than those in elite institutions. The qualitative analysis reveals that students' term-time working behavior is primarily motivated by their financial need and eagerness of gaining social and practical experience, but is constrained by time availability. Term-time working influences students' academic performance through the impact on time allocation and management, and the impact on students' attitude and commitment towards studying. Students may gain valuable practical knowledge and skills and positive work attitudes in working, which contributes to their employability and competitiveness in the labor market. They may also be able to form clearer career goals through working in college. Students' motivation and job characteristics may influence their gains and losses from working. These findings have significant implications for educational policies regarding term-time working in Chinese four-year universities and colleges.

This dissertation consists of three empirical essays on agricultural incentives, risk, and rural labor markets. Chapter 1 empirically estimates the effect of agricultural price support policies on crop choice and input (mis-)allocation, with important implications for spillover effects to other sectors. Agricultural price support policies are a popular way to alleviate the risk inherent in volatile prices, but, at the same time, may distort input allocation responses to agricultural productivity shocks across multiple sectors. This could reduce productivity in the agricultural sector in developing countries. I empirically test for misallocation in the Indian agricultural setting, with national price supports for rice and wheat. I first motivate the setting using a two-sector, two-factor general equilibrium model and derive comparative statics. I then use annual variation in the level of the national price supports for rice and wheat relative to market prices, together with exogenous changes in district-level agricultural productivity through weather shocks, in a differences-in-differences framework. I derive causal effects of the price supports on production patterns, labor allocation, wages, and output across sectors. I find that rice area cultivated, rice area as a share of total area planted, rice yields, and rice production all increase, suggesting an increase in input intensity (inputs per unit area) dedicated to rice. Wheat shows a similar increase in input intensity. The key input response is a reallocation of contract labor from the non-agricultural sector during peak cultivation periods, which results in an increase in wages in equilibrium in the non-agricultural sector (especially in response to price supports for the labor-intensive crop, rice, of 23%). The reallocation of labor reduces agricultural productivity by 82% of a standard deviation, and simultaneously reduces gross output in non-agricultural firms by 2.6% of a standard deviation. I also find that rice- and wheat-producing households do not smooth consumption more effectively in response to productivity shocks in the presence of price supports. Chapter 2 (with Emily Breza and Supreet Kaur) demonstrates the influence of collective action - specifically, through social sanctions imposed by informal labor unions - on labor supply in rural labor markets. A distinguishing feature of the labor market is social interaction among co-workers---providing the ingredients for social norms to develop and constrain behavior. We use a field experiment to test whether social norms against accepting wage cuts distort workers' labor supply during periods of unemployment. We undertake our test in informal spot markets for casual daily labor in India. We partner with 183 existing employers, who offer jobs to 502 randomly-selected laborers in their respective local labor markets. The job offers vary: (i) the wage level and (ii) the extent to which the offer is observable to other workers. We document that unemployed workers are privately willing to accept work at wages below the prevailing wage, but rarely do so when this choice is observable to other workers. In contrast, observability plays no role in affecting take-up of jobs at the prevailing wage. The consequences of this behavior are substantial: workers are giving up 38% of average weekly earnings in order to avoid being seen as breaking the social norm. In a supplementary exercise, we document that workers are willing to pay to punish anonymous laborers who have accepted a wage cut. Costly punishment occurs both for workers in one's own labor market, and for workers in distant other labor markets---suggesting the internalization of norms in moral terms. Our findings support the presumption that, even in the absence of formal labor institutions, collusive norms can constrain labor supply behavior at economically meaningful magnitudes. Chapter 3 investigates how households use engagement in criminal activity to smooth consumption in the face of agricultural risk. About 400,000 barrels of oil are stolen per day in the Niger Delta region. Much of this oil is stolen by militia groups with the help of local youth (who have the requisite knowledge about the terrain and placement of the pipelines). I use exogenous variation in households' access to oil pipelines, together with local shocks to agricultural productivity (both self-reported and due to variation in rainfall) to show that a proxy for theft from oil pipelines increases in the vicinity of households located close to pipelines that suffer unanticipated crop losses. This coincides with non-food expenditure-smoothing for these households (relative to households that are far from pipelines). Finally, I look at heterogeneity by household characteristics to identify households that are more likely to be affected by agricultural shocks or more likely to be targets for militia recruitment - households with young unemployed men and young men who are not in school, and households that lack financial infrastructure in their vicinity (which I take to be a proxy for a household's ability to access credit when faced with economic shocks). The findings from this paper suggest that there is potential for large spillover savings - in terms of reducing theft of oil from pipelines - for any policy that provides credit or other kinds of risk-mitigation mechanisms to households.