This thesis contains 5 independent chapters together with an Introduction and a General Conclusion. All five chapters consider the problem of wage determination in an economy characterized by asymmetric information. The solution which is implemented, for example a pair consisting of the wage and the level of employment, is restricted to elicit all possible relevant information. This forces some additional constraints upon the optimization problem of the agents. Chapters 2 and 3 demonstrate that since the firm does not voluntarily share its information with other agents, the level of employment is not efficient. In both a separating and a pooling equilibrium, underemployment is the case. Note here that the equilibrium obtained changes qualitatively from Chapter 2 to Chapter 3. We return to this in the General Conclusion. Chapter 4 elaborates upon Chapter 2. It is shown that in an otherwise competitive economy, employment and investment are lowered since they are used as signalling devices, compared to the case of symmetric and perfect information. In a model characterized by monopoly, this conclusion is no longer true. The effect upon investment is no longer unambiguous. We also return to this in the General Conclusion. Chapters 5 and 6 consider economic policy in the case of a separating, respectively, pooling equilibrium. It is shown that in the case of a separating equilibrium, taxation can improve upon the situation. For a pooling equilibrium we show the existence of multipliers. General for these models is that the introduction of asymmetric information certainly does have an effect, but also that the results are possibly non-robust to assumptions with respect to the market form.

In entrepreneurship, the fear of failure has been identified as a significant barrier to entrepreneurial activity. The Global Entrepreneurship Monitor (GEM), the world's largest study of entrepreneurial activity, defines the fear of failure as a strong inhibitor for seizing opportunities and transforming entrepreneurial intentions into entrepreneurial actions. Contrary to entrepreneurship research, psychological theory offers a counterintuitive prediction of the outcomes of fear of failure. While early achievement theories argued that fear of failure inhibits behavior, later psychological research has found fear of failure to be dualistic in nature, sometimes motivating individuals to act while at other times inhibiting such action. Although there is no unified theory on fear of failure within the psychology literature, the theoretical background of this construct in entrepreneurship appears even more fragmented. An examination of the existing entrepreneurship literature on fear of failure reveals that scholars have used different definitions and measures to explain this phenomenon and investigate its effects on entrepreneurial behavior. Because these measures refer to a different nature of the fear of failure construct, it is very unlikely that they converge to capture the same phenomenon. Therefore, a clear understanding of the nature and effects of fear of failure in entrepreneurship is needed. In this respect, this thesis addresses the research question of how fear of failure can be defined and measured within the entrepreneurial process. Three articles have been developed to answer this research question. In Article 1, the conceptual issues associated with the current status of the literature on fear of failure in entrepreneurship and the characteristics of the entrepreneurial setting that shape the fear of failure experience are discussed. Building on these conceptual observations, Article 2 adopts a qualitative approach to investigate the experience of fear of failure antecedent and concurrent to the entrepreneurial process. Sixty-five entrepreneurs and potential entrepreneurs have been interviewed to show that fear of failure can be defined as a complex combination of cognition, affect, and behavior. Finally, in Article 3 four studies are conducted to develop and validate a new measure of entrepreneurial fear of failure. Findings from these three articles shed light on the fear of failure construct in entrepreneurship, which emerged as a context-sensitive phenomenon.

Insurance market failures are common in developing countries and one commonly proposed explanation for this is the presence of asymmetric information. In this paper I test for the relative importance of adverse selection and moral hazard for car insurance using a randomised experiment at the largest insurance company in Mongolia, randomly upgrading low coverage buyers to a higher coverage. With this experiment, I find significant ex-ante adverse selection for third party and theft risks, while there is no evidence of ex-post moral hazard for either risk. Moreover, I find no evidence of adverse selection or moral hazard for coverages differing in co-payment rates. I also discuss how certain market features, likely to be perceived as specific to this context, are common in other insurance markets in developing countries, and whether these factors are likely to be driving the results in this paper.

<p> My dissertation contributes to quantitative macroeconomic approaches to family economics. Compared to dominant microeconometric methods, macroeconomic models have advantages in understanding economic mechanisms behind social phenomena, measuring general equilibrium effects, obtaining quantitative impacts of economic factors, making international comparisons and conducting policy experiments. This thesis applies macroeconomic methods and explores the determinants of family behaviors, particularly female labor supply. </p><p> In the first chapter, I study the decline in the female labor force participation rate in the United States in the 1990s and 2000s. This chapter shows that structural changes in the child care market play a substantial role in influencing the evolution of female labor force participation. I provide new estimates of long-term trends in the child care market that hourly expenditures rose by 32% and hours of daycare used declined by 27%. I propose a life-cycle model of married couples and predict that the rise in child care costs leads to a 5% decline in total employment of females, holding all else constant. </p><p> In the second chapter, I further study the causes of the increase in child care costs in the United States. I propose a hypothesis that expansion of child care subsidies to lower income households distorted the incentives for home-based child care providers. I provide a simple and tractable model of the child care market to analytically and numerically explain the hypothesis. I also propose the empirical evidence in the period of expanding child care subsidies to support the hypothesis. </p><p> In the third chapter, I study the world&rsquo;s largest decline in the female labor force participation rate in Turkey: it has fallen from 72% in 1955 to 29% in 2011. This chapter argues that, (i) the main industry has shifted from agriculture to non-agriculture, (ii) because of the social stigma against non-family market work for Turkish women, they have failed to move from agriculture to other sectors. I propose a simple general equilibrium model and conduct a cross-country comparison. The model captures the Turkish decline well with the stigma effect. This chapter suggests a quantitative importance of cultural factors.</p><p>

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Financial constraints influence corporate policies of firms, including both investment decisions and external financing policies. The relevance of this phenomenon has become more pronounced during and after the recent financial crisis in 2007/2008. In addition to raising costs of external financing, the effects of financial crisis limited the availability of external financing which had implications for employment, investment, sale of assets, and tech spending. This thesis provides a comprehensive analysis of the effects of financial constraints on share issuance and repurchases decisions. Financial constraints comprise both internal constraints reflecting the demand for external financing and external financial constraints that relate to the supply of external financing. The study also examines both operating performance and stock market reactions associated with equity issuance methods. The first empirical chapter explores the simultaneous effects of financial constraints and market timing on share issuance decisions. Internal financing constraints limit firms’ ability to issue overvalued equity. On the other hand, financial crisis and low market liquidity (external financial constraints) restrict availability of equity financing and consequently increase the costs of external financing. Therefore, the study explores the extent to which internal and external financing constraints limit market timing of equity issues. This study finds that financial constraints play a significant role in whether firms time their equity issues when the shares are overvalued. The conclusion is that financially constrained firms issue overvalued equity when the external equity market or the general economic conditions are favourable. During recessionary periods, costs of external finance increase such that financially constrained firms are less likely to issue overvalued equity. Only unconstrained firms are more likely to issue overvalued equity even during crisis. Similarly, small firms that need cash flows to finance growth projects are less likely to access external equity financing during period of significant economic recessions. Moreover, constrained firms have low average stock returns compared to unconstrained firms, especially when they issue overvalued equity. The second chapter examines the operating performance and stock returns associated with equity issuance methods. Firms in the UK can issue equity through rights issues, open offers, and private placement. This study argues that alternative equity issuance methods are associated with a different level of operating performance and long-term stock returns. Firms using private placement are associated with poor operating performance. However, rights issues are found empirically to be associated with higher operating performance and less negative long-term stock returns after issuance in comparison to counterpart firms that issue private placements and open offers. Thus, rights issuing firms perform better than open offers and private placement because the favourable operating performance at the time of issuance generates subsequent positive long-run stock price response. Right issuing firms are of better quality and outperform firms that adopt open offers and private placement. In the third empirical chapter, the study explores the levered share repurchase of internally financially unconstrained firms. Unconstrained firms are expected to repurchase their shares using internal funds rather than through external borrowings. However, evidence shows that levered share repurchases are common among unconstrained firms. These firms display this repurchase behaviour when they have bond ratings or investment grade ratings that allow them to obtain cheap external debt financing. It is found that internally financially unconstrained firms borrow to finance their share repurchase when they invest more. Levered repurchase firms are associated with less positive abnormal returns than unlevered repurchase firms. For the levered repurchase sample, high investing firms are associated with more positive long-run abnormal stock returns than low investing firms. It appears the market underreact to the levered repurchase in the short-run regardless of the level of investments. These findings indicate that market reactions reflect both undervaluation and signaling hypotheses of positive information associated with share repurchase. As the firms undertake capital investments, they generate future cash flows, limit the effects of leverage on financial distress and ultimately reduce the risk of the equity capital.

This thesis contains four chapters that participate to the literature between development economics, banking and organisational economics. The first chapter shows that deposit volatility and costly bank liquidity increase the long ­term lending rates offered by banks, which reduce loan maturities,long-term investment and output. Together with my co-author(Ali Chaudhary from the State Bank of Pakistan), we formalise this mechanism in a banking model and analyse exogenous variation in deposit volatility induced by a Sharia levy in Pakistan. Data from the credit registry and a firm-level survey show that deposit volatility and liquidity cost: 1) reduce loan maturities and lending rates; 2) leave loan amounts and total investment unchanged;3) redirect investment from fixed assets towards working capital. A targeted liquidity program is quantified to generate yearly output gains between 0.042% and 0.205%. The second chapter,with my co-author(Francesco Strobbe from the World Bank), focuses on the importance of liquidity regulation in absence of deposit insurance and credible safe-asset commitment by banks. We show that bank liquidity regulation creates a commitment device on repaying depositors in bad states,which can: 1) stimulate a deposit inflow, moderating the limited liability inefficiency; 2) promote bank profits and branching, if deposit growth exceeds the inter mediation margin decline. Our empirical test exploits an unexpected policy change, which fostered the liquid assets of Ethiopian banks by 25% in 2011. Exploiting the cross sectional heterogeneity in bank size and bank-level databases,we find an increase in deposits, loans and branches, with no decline in profits. The third chapter focuses on the role of financial regulation, starting from the observation that it can create a demand for government bonds, generating government revenue gains. Together with my co-author (Francesco Strobbe from the World Bank),we study an Ethiopian banking regulation introduced in 2011, forcing banks to purchase a negative-yield government bond. High-frequency bank data and public finances documentation allow tracking the subsequent government revenue gain. This policy is compared to three alternatives: raising funds competitively on international markets;distorting the state-owned bank lending; and raising deposits through state-owned bank branches. Our results suggest that the revenue gain is moderate(1.5--2.6% of tax revenue); banks amass more bonds; their profitability slows without turning negative (from 10% to 2%). In the fourth chapter I study the impact of World Bank managers on project success through the value-added method. Manager effects are interpretable as performance indices and are more volatile than country effects. Both correlate positively with determinants of productivity (i.e., schooling and institutions respectively) and provide evidence of a negative assortative matching,with high-performing managers assigned to low-performing countries. Exploiting a novel variation for World Bank board access, I find a significant manager premium for countries in the board. All of these results are consistent with the World Bank behaving as a planner which assigns its managers as project inputs to client countries.

This thesis studies two topics in the macro-labour literature: investment in human capital and fertility decisions. The thesis comprises of three chapters, the first studying the effects of private tutoring in Korea and its resemblance to a human capital rat race and the second and third investigating the rapid decline in fertility rates experienced in developing countries over the past few decades. With many countries having reached universal primary and secondary education, parental spending on education for supplementary and enrichment purposes has begun to resemble a rat race. In many Asian countries, it is normal for students to receive some or several forms of private tutoring alongside formal schooling. However, unlike the returns to schooling or the effects of school quality on student achievement which have been widely studied, the effects of private tutoring have received limited attention. In the first substantive chapter of this thesis, I exploit exogenous variation in spending on private tutoring caused by the imposition of a curfew on the operating hours of tutoring institutes in Korea, to estimate the impact of spending on tutoring on long-term educational and labour market outcomes. The first stage estimates highlight the severity of the rat race, with curfews imposed as late as 10pm still constraining tutoring expenditure. While I do not find any significant effects of tutoring expenditure on entering college, when I interact tutoring expenditure with parental education, I find a significant, positive effect of tutoring on attending any college for children of less educated parents, while the effect for children of more educated parents is not significantly different from zero. Given that the less educated parents spend much less on tutoring, these results indicate diminishing marginal effects of tutoring, while the lack of an effect in the specification linear in tutoring expenditure points to the average impact (local to those constrained by the curfew) being close to zero. I also find that tutoring expenditure has a positive effect on both completing a four year degree and on being employed. I place these empirical findings within an asymmetric information framework to explain how the use of test scores as a signal for ability leads to inefficiently high investments in tutoring, leading to a rat-race equilibrium. The second paper highlights the trends in fertility rates observed in developing countries, pointing out that cross-country differences in fertility rates have fallen very rapidly over the past four decades, with most countries converging to a rate just above two children per woman. In the second substantive chapter in the thesis, my co-author and I argue that the convergence in fertility rates has taken place despite the limited (or absent) absolute convergence in other economic variables and propose an alternative explanation for the decline in fertility rates: the population-control programmes started in the 1960s which aimed to increase information about and availability of contraceptive methods, and establish a new small-family norm using public campaigns. Using several different measures of family planning programme intensity across countries, we show a strong positive association between programme intensity and subsequent reductions in fertility, after controlling for other potential explanatory variables, such as GDP, schooling, urbanisation, and mortality rates. We conclude that concerted population control policies implemented in developing countries are likely to have played a central role in accelerating the global decline in fertility rates and can explain some patterns of that fertility decline that are not well accounted for by other socioeconomic factors. In the third main chapter of the thesis, we build on the findings presented in the previous chapter by studying a quantitative model of endogenous human capital and fertility choice, augmented to portray a role for social norms over the number of children. The model allows us to gauge the role of human capital accumulation on the decline in fertility and to simulate the implementation of population-control policies aimed at affecting social norms on family size. We also consider extensions of the model in which we allow a role for the decline in infant and child mortality and for improvements in contraceptive technologies (the second main component of the population-control programmes). Using data on several socio-economic variables as well as information on funding for family planning programmes to parametrise the model, we find that, as argued in the previous chapter, policies aimed at altering family-size norms provided a significant impulse to accelerate and strengthen the decline in fertility that would have otherwise gradually taken place as economies move to higher levels of human capital and lower levels of mortality.

This study describes the joint dynamics of the U.K. risk-free government bonds and risky corporate bond yields using a large set of macroeconomic and market variables. In this context, the thesis develops for the new understanding of the determination of the yield curve and contributes to the literature in three ways. First, this study introduces and consistently estimates a no-arbitrage affine term­structure model which takes fll advantage of a data rich environment and disentangles the individual effects of the factors driving the risk-free term structure of interest rates and credit spreads. The study incorporates three observable risk dimensions, the traditionally studied variables of real activity and inflation, together with a novel factor which represents financial market activity. The empirical results indicate that the impact of the market factor is comparable in absolute value to the impact of the inflation and the real activity factors at medium and long-term maturities of risk-free yields and also corporate credit spreads. At short maturities, the market factor is at least as important as inflation but less important than real activity. For corporate credit spreads, the impact of the market factor is more pronounced at short and long maturities for lower-rated BBB bonds and at short and medium maturities for higher-rated A bonds. Also, the influence of both macroeconomic and market activity is more pronounced in corporate bond credit spreads than in risk-free gilts. Second, the empirical analysis in this study confirms, in line with earlier studies, that the market prices of risk vary considerably over time. The results also indicate that the market price of real activity risk tends to be negative, whereas the market price of inflation risk is close to zero, on average, and the price of market risk is positive. Finally, this compares the out-of-sample forecasting performance of the proposed model with five other competitor models drawn from the literature for the U.K. risk-free bond yields. The forecasting exercise is conducted separately over three sub-periods containing the pre-crisis, crisis and post-crisis period that feature rich term structure dynamics with highly volatile risk-free yields. The proposed model outperforms the competitor no-arbitrage models and forecasts particularly well yields at short and long maturities for all forecast horizons.

The goal of this dissertation is to motivate a cognitive based view of corporate entrepreneurship (CE) propagation. In doing so, it advocates that the literature requires a more in-depth view of how organisational members choose to instigate or participate in entrepreneurial behaviour within the organisation confines. In addition to what organisational contextual factors bear on this decision making process. As such I move away from the top-down organisational level of analysis perspective that dominates the field and re-focus on the ‘individual in CE.’ To achieve this, I draw on socio-cognitive perspectives and the growing body of work on cognitive mechanisms in entrepreneurship research (Baron, 1998). Specifically, I utilise the entrepreneurial cognition entrepreneurial intentions (EI) as the best predictor of entrepreneurial behaviour and the EI formation model Shapero’s Entrepreneurial Event (SEE), (Krueger, 1993; Shapero, 1982) to understand how organisational members choose to act entrepreneurially. This research is interpretive in nature. A qualitative single case study with 3 embedded units and two data collection phases was employed to explore the Large East Midlands Trust (LEMT), a large acute hospital in the publically funded National Health Service (NHS). LEMT represents an unconventional setting for CE research, which is traditionally conducted in the private sector. However, the aftermath of the 2008 economic crisis has compelled public institutions such as the NHS to become more entrepreneurial (DH, 2010; Darzi, 2008). The main analytical techniques employed are within-case and cross-unit pattern analysis to elicit findings on this unusual organisational context and how its members are moved from CE inaction to CE action. The findings of this research indicate that top-down inducements do not move LEMT’s organisational members to CE action. Primarily, because there is an underlying cognitive infrastructure represented by organisational member’s multiple social identities: (1) NHS identity and (2) professional identity that impede the emergence of CE. Probing these NHS and professional identities further revealed them to be resistant to change. However, my findings indicate that if interrupted by a precipitating event, professional identity can be reformed via identity work processes, which facilitate the emergence of CE activity.