Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics and Social Science, 1960. / Vita. / Includes bibliographical references (leaves [250]-[252]). / by William Francis Massy. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002. / Includes bibliographical references. / This thesis is the collection of three independent studies that analyze the interplay between institutions and economic development. In Chapter 1, I examine the relationship between wealth inequality and institutions. I present a model of regulated entry where entrepreneurs form coalitions of potentially varying size to bribe the regulator. The prevalence of capture is thus determined by the distribution of wealth. In a dynamic framework and depending on initial conditions, the economy may be either on a path towards institutional change where inequality eventually vanishes; or, it may be on a path towards institutional sclerosis, which exhibits a polarization of society into two classes with a wealthy elite dominating the increasingly impoverished masses. Chapter 2 investigates the relationship between trade and financial development. I thus present a simple model of trade in the presence of factor market imperfections. I consider an economy in which entrepreneurs undertake projects, and in doing so, contribute to the development of financial institutions. Such spillover fails to be internalized so that trade potentially induces externality losses that outweigh allocative gains. Financial markets in poorer countries deteriorate as a consequence of specialization. Static inefficiencies are exacerbated in a dynamic framework, leading poorer countries to fall into a liquidity trap. The predictions of the model suggest that trade and financial liberalization should be undertaken simultaneously and that temporary protectionist policies can be welfare improving. / (cont.) Finally, Chapter 3 consists of a study I jointly did with Lakshmi Iyer, in which we look at the impact of land rights on economic outcomes. We examine the impact of a land reform in Viet Nam which gave households the power to exchange, transfer, lease, inherit and mortgage their land-use rights. We expect this change to increase incentives as well as ability to undertake long-term investments on the part of households. Our differences-in-differences estimation strategy takes advantage of the variation across provinces in the issuance of land-use certificates needed to enforce these rights. We find that the additional land rights led to significant increases in the share of total area devoted to multi-year crops, as well as some increase in irrigation investment. / by Do Quy Toan. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006. / Includes bibliographical references. / This dissertation consists of four essays on human capital, institutions, and incentives. In the first essay, I investigate the effects of voucher-school competition on educational outcomes in Chile. I present a theoretical model that produces three empirical predictions: voucher-school competition 1) improves student outcomes; 2) may put stronger pressure on public schools to increase quality; and 3) has weaker effects when public school budget constraints are softer. I exploit the interaction of the number of Catholic priests and the institution of the voucher system as a potentially exogenous determinant of voucher school entry. Using this instrument, I confirm the main predictions of my theoretical model. In the second essay, I show that cross-country differences in schooling persist to the present because colonial factors influence the extent of institutional variables, such as democracy and political decentralization. By using the number of native cultures before colonization as an instrument for political decentralization, I show that the degree of democratization positively affects the development of primary education, whereas political decentralization is the more important explanation for differences in higher levels of schooling. / (cont.) In the third essay, coauthored with Robert Woodberry, we show that competition between Protestant and Catholic missionaries increased schooling in former colonies. Our evidence implies that Protestant missionaries increased schooling in Catholic countries, and that the impact of Protestant and Catholic missionaries on educational outcomes was similar when missionaries of both denominations faced the same legal and institutional treatment. We interpret these results in the context of an economic rationale in which different institutions created differences in competitive pressures faced by Catholic and Protestant missionaries. Finally, in the fourth essay, I investigate the evolution of the skill premium in Chile over the last decades. I present evidence that patterns of skill upgrading in Chile have followed the evolution of the same variable in the US, consistent with a model of endogenous technological choice where new technologies are produced in developed countries and adopted in developing economies. / by Francisco A. Gallego. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1998. / Includes bibliographical references (leaves 135-138). / by Ksenia Yudaeva. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006. / Includes bibliographical references (p. 109-112). / This dissertation consists of three essays on the effects of low-skilled immigration on US prices and labor markets. The first essay uses confidential data from the Consumer Price Index to estimate the causal effect of low-skilled immigration on the prices of non-traded goods. Then, it combines wage and price effects with consumption patterns of native skill groups to determine the net benefits and distributional impacts of immigration on the native economy. The results suggest that a 10 percent increase in the share of low-skilled immigrants in the labor force decreases the price of immigrant-intensive services by 1.3 percent. I also find that wage effects are significantly larger for low-skilled immigrants than for low-skilled natives because the two are imperfect substitutes. Overall, the results imply that the low-skilled immigration wave of the 1990s increased the purchasing power of high-skilled natives by 0.65 percent but decreased the purchasing power of low-skilled natives by 2.66 percent. The second essay, coauthored with Jose Tessada, is motivated by the first essay's finding that low-skilled immigration reduces the prices of services such as housekeeping and babysitting. Because these services are close substitutes for home production, a decrease in their price should affect natives' time use. / (cont.) Using time-use surveys, we find that low-skilled immigration has increased the consumption of market-provided household services and has decreased the time women spend on household chores. As a result, women have significantly increased their supply of market work, both at the intensive and extensive margin. We estimate that the immigration flow of the 1990s decreased by 20 minutes the time women spend daily on household chores and increased by 5 percentage points the likelihood that a woman reports working in the market. The third essay formalizes and empirically explores how immigrants' lack of English skills determines immigration's impact on the US labor market. I present a theoretical model in which low-skilled native workers can perform both "manual" and "language" tasks, immigrants perform manual tasks only, and the two tasks are q-complements. The model predicts that an immigration flow reduces the relative returns to manual skills and makes some natives shift from manual to language occupations. / (cont.) Using data from the Occupation Information Network and the Census, I find that: (1) within a city, occupations that require fewer language skills have a higher ratio of low-skilled immigrants to natives, and (2) after an immigration shock, there is a disproportional reduction in the wages of natives that work in manual occupations. / by Patricia Cortes. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2012. / Cataloged from PDF version of thesis. / Includes bibliographical references (p. 123-128). / In Chapter 1, I study the effects of wealth inequality on economies where financial markets are imperfect. I exploit the idea that inequality should have a different effect across sectors. Using a difference-in-difference strategy, I show that sectors that are more in need of external finance are relatively smaller in countries with higher income inequality. I then build a model in which sectors differ in their fixed cost requirement, agents face collateral constraints, and production is subject to decreasing returns. A calibrated version of the model is consistent with the documented facts on inequality and cross-sector outcomes. At the calibrated parameters, wealth inequality exacerbates the effect of financial frictions on the economy. Quantitatively, wealth inequality can generate losses of up to 46 percent of per capita income. In Chapter 2, co-authored with Claire Lelarge and Michael Peters, we explore the ingredients that a model of import behavior should have in order to be consistent with the firm level evidence. We build a model where firms are heterogeneous in their factor neutral productivity, and prices, fixed costs and input qualities are common across firms. Using a comprehensive dataset of French firms, we test the qualitative predictions of such model. The model fares well in describing firm's expenditure across imported varieties, but fails to account for the pattern of expenditure between domestic and foreign inputs. We conclude that a mechanism inducing firm-level heterogeneity in the relative price of domestic varieties is needed to model import demand. In Chapter 3, I study the effects of financial frictions on the pattern of cross-industry growth rates. I document two facts: (i) externally dependent sectors tend to grow faster along the economy's development path, and (ii) externally dependent sectors grow disproportionately faster in countries with better financial institutions. I argue that financial frictions can account for these facts. I build a dynamic two-sector model in which sectors differ in their liquidity requirement and agents face collateral constraints. Financial frictions generate faster growth in the sector with higher liquidity requirement. I identify conditions under which financial development leads to higher excess growth in the externally dependent sector. / by Joaquin Blaum. / Ph.D.

Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Economics, 2012. / Cataloged from PDF version of thesis. / Includes bibliographical references. / Optimal intertemporal investment solution paths are derived for both, firms operating in perfect financial markets and those facing credit constraints, due to imperfect capital markets. However, as in these markets, saving and investment decision may not be separable, we obtain the optimal dynamic path of these decisions for agents that own capital but do not have any access to credit and extend the analysis when these agents have some access to credit but yet face credit constraints from financial intermediaries. We next consider agents without physical capital and who derived their income from wages and/or financial assets. We study their optimal intertemporal decisions, among, consumption, financial assets and durable goods, first under perfect capital markets and then when credit constraints are present. The above results may be useful for both, the comparative dynamic analysis of agents with different type of endowments and immersed in imperfect financial markets and also to derive, from micro foundations, the aggregate demand and supply functions of intertemporal macro models for developing economies. The distinction between different types of agents according to their endowment may also help to assess the wealth and income distribution implications of economic policy. / by Ruben Ojeda Cardenas. / S.M.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references. / In this thesis, I explore the consequences of frictions in financial intermediation. I theoretically analyse two financial contracts commonly found in the modern shadow banking system-rehypothecation and securitisation. Rehypothecation is the direct repledging of the collateral received in a debt contract by the intermediate lender, while securitisation is the use of the debt contract itself as collateral. I show that rehypothecation enables more efficient reuse of the collateral by the intermediate lender. I emphasise the role of the limited pledgeability of the intermediary in differentiating between the two contracts. In what has significant implications for monetary policy, I also show that open market operations undertaken with the intention of increasing liquidity and investment will take away collateral from the rehypothecation chain and be counterproductive to investment down the chain. I also examine the possibility of distortions created by large global financial institutions on emerging financial markets. In the context of India, I find that prices of firms that receive foreign institutional investor flows are not differentially affected relative to the firms that don't. / by Ameya Muley. / Ph. D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 153-167). / Chapter 1 focuses on the recent dramatic shift in attitudes toward LGBT individuals in the U.S. and the accompanying rise in the number of Americans who have openly come out. We develop a model of stigma with Schelling-style tipping dynamics. Regions may be stuck in equilibria with low LGBT support and few openly gay individuals. These equilibria can be escaped via trigger events, that by causing even a small number of individuals to display their support for LGBT causes, can cause more individuals to come out, leading to more support, etc. We then evaluate our model with a large, online archival dataset on the timing of coming out decisions and public displays of support for LGBT causes for several million Americans. Using state-specific shocks to each, aggregate network data, and instrumental variables, we show how increases in LGBT support lead to elevated coming out rates in highly connected areas, and vice-versa. Chapter 2 studies a recent hypothesis that posits maternal vitamin D levels during pregnancy may affect the probability the fetus later develops asthma. Employing two large-scale studies, we test this hypothesis using a natural experiment afforded by historical variation in sunlight, a major source of vitamin D. Specifically, holding the birth location and month fixed, we see how exogenous within-location variation in sunlight across birth years affects the probability of asthma onset. We find highly significant evidence in both datasets that increased sunlight during the second trimester substantially lowers the subsequent probability of asthma. Finally, Chapter 3 is an evolutionary game theory paper about population structure. We provide a general, modularity-based framework for studying evolutionary games on structured populations under 'weak selection' that includes many previously known results as special cases. Our framework helps to show how these past disparate results are connected, and we exploit this insight to develop a general method for quantifying in closed form the effect of population structure on evolutionary dynamics. We illustrate our framework by proposing and solving a new model that generates a simple rule for the evolution of cooperation on endogenous dynamic networks. / by Nils Christian Wernerfelt. / Ph. D.

Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002. / Includes bibliographical references. / Countries that have pursued distortionary macroeconomic policies, including high inflation, large budget deficits and misaligned exchange rates, appear to have suffered bigger exchange rate crises, more macroeconomic volatility and also grown more slowly during the postwar period. Does this reflect the causal effect of these macroeconomic policies on economic outcomes? One reason to suspect that the answer may be no is that countries pursuing poor macroeconomic policies also have weak "institutions," including political institutions that do not constrain politicians and political elites, ineffective enforcement of property rights for investors, widespread corruption, and a high degree of political instability. Two papers in this thesis document that countries that inherited more "extractive" institutions from their colonial past were more likely to experience high volatility and economic crises during the postwar period. More specifically, societies where European colonists faced high mortality rates more than 100 years ago are much more volatile and prone to crises. We interpret this relationship as due to the causal effect of institutions on economic outcomes: Europeans did not settle and were more likely to set up extractive institutions in areas where they faced high mortality. Once we control for the effect of institutions, macroeconomic policies appear to have only a minor impact on volatility and crises. This suggests that distortionary macroeconomic policies are more likely to be symptoms of underlying institutional problems rather than the main causes of economic volatility, and also that the effects of institutional differences on volatility do not appear to be primarily mediated by any of the standard macroeconomic variables. / (cont.) Instead, it appears that weak institutions cause volatility through a number of microeconomic, as well as macroeconomic, channels. The third paper reports relevant findings from bond markets. There appears to be no higher cost of borrowing for emerging market borrowers if their bonds are easier to restructure in the case of default. Given our findings on institutions, we suggest that default is likely to remain a recurrent event in many countries, and suggest that bond issuers and lenders should consider bonds that are easier to restructure. / by Yunyong Thaicharoen. / Ph.D.