This dissertation is a collection of essays on bids and offer matching in a labor market for new entrants to white-collar jobs. The papers compare some of the different institutions for determining wages and conducting the hiring process in the market for new entrants to white collar jobs. The first essay analyzes how does a firm announce and commit to a wage prior to deriving specific information about applicants' productivity and the consequences of following this hiring process. In the model there are two firms and at least as many applicants as the number of firms. All applicants apply simultaneously to both firms in response to the job advertisement which also mentions a wage. Each firm derives the firm-specific productivity of the applicants from their applications which is private information to each firm. None of the applicants have any information about the firms' evaluation. There are four pure strategy Nash Equilibria in wage announcements. Both firms announce a high wage, both firms announce a low wage, both firms announce a high or a low wage, and one firm announces a high wage and the other firm announces a low wage. In the latter case there also exists a unique mixed strategy equilibrium reflecting a firm's uncertainty about the choice of the other firm. In equilibrium one or both firms may not hire and the equilibrium may not exhibit wage dispersion. The second essay analyzes the question; which is better, to announce and commit to a particular wage prior to deriving specific information about applicants' productivity or to offer wages privately after deriving the firm-specific productivity. The equilibrium policy, to be followed by the firms in the first place, is determined endogenously by comparing the ex ante expected profits associated with the equilibria under the different policies. Lack of prior information and the uncertainty about the possible match results in "offer wages privately" as always an equilibrium policy. However, if a low wage is the equilibrium strategy under all the policies, then "any pair of policies" is an equilibrium. This justifies one of the circumstances in which different policies might coexist. In equilibrium a firm's position is always filled and the equilibrium outcome may not exhibit wage dispersion. The third essay analyses the question, if "announcing a wage" is the strategy rule to be followed by the firms, then what should be the equilibrium timing of wage announcement, before or after receiving specific information about applicants' productivity. Two policies are compared. Under the first policy a firm announces and commits to a particular wage prior to deriving the match-specific productivity. Under the second policy a firm solicits applications, derives the firm-specific productivity, and then announces and commits to a wage. The equilibrium timing of wage, to be followed by the firms in the first place, is determined endogenously by comparing the ex ante expected profits associated with the equilibrium strategy under the different timings. It turns out that announcing and committing to a particular wage after deriving specific information is always an equilibrium timing because of the informational advantage. However, if a low wage is the equilibrium strategy under all the policies then any pair of policies is an equilibrium. In equilibrium one of the firm's position may remain unfilled. The equilibrium outcome may not exhibit wage dispersion. / Ph. D.

Theoretically, an equiproportionate change in prices and income should not affect the sales of products. This is known as the homogeneity of demand property on which the economic consumer demand theory is built. Rejection of this assumption is indicative of a state of mind called ‘money illusion’. Evidence from applied economics literature suggests that consumers respond asymmetrically to equal changes in prices and income. Such an asymmetry could be, among other things, due to the exclusion of marketing mix variables in their demand functions or inappropriate grouping of products. The main focus of the dissertation is to provide a theoretically consistent approach to include marketing variables in a sales response function. Specifically, advertising is hypothesized to act as a moderator in eliminating the asymmetry. A related issue investigated in this research is the existence and empirical testing of mental expenditure accounts. Grouping of products into mental expenditure accounts is thought to improve the homogeneity of demand. A system of equations is developed since the model involves prices and advertising of all products. The systems approach offers a consistent means to analyze sales when advertising programs interact; for example, orange juice advertising may affect the demand for milk and vice versa. The expenditure share system of equations is estimated using the Seemingly Unrelated Regression (SUR) estimation procedure to allow for dependence among error terms and cross-equation coefficients. Theoretically, this research tests the validity of the well established consumer demand theory. It provides an approach, consistent with neoclassical economic theory, to include marketing mix variables in sales response modeling. Managerially, this study helps in determining the level of advertising necessary to reduce the asymmetry in consumer response due to price and income changes. Substitution patterns obtained from the proposed analysis will aid managers to decide upon prices of closely related products within a category in the wake of income changes. The proposed model provides a methodology to explore and test market structure. / Ph. D.

The first essay uses Chinese Urban Household Survey (CUHS) data from 1988 to 2003 to conduct a cohort analysis of household income, household consumption, and household saving rate, and then uses synthetic panel data to explore the determinants of household saving rate. The cohort analysis not only offers stylized patterns of age profiles on household income, household consumption, and household saving rate but also their profiles of cohort effect and age effect by decomposition work. The cohort analysis likewise tests the relation between cohort effect and productivity growth. Overall, the empirical results present a different pattern compared with other studies and also contradict with the general predictions of the standard model in the consumption theory. In investigating the determinants of household saving rate, this essay examines the roles of household income, economic growth rate, inflation rate, and demographic variables, especially from the perspective of income inequality and systematic difference among cohorts. / The second essay examines the existence of a precautionary saving motive due to labor income uncertainty, using CUHS data from 2002 to 2003. Methodologically, this essay adopts a novel method to construct the proxy for labor income uncertainty, by the ratio of infra-group dispersion conditional on the individuals' labor income determinants to labor income. The empirical results present robust evidence that labor income uncertainty negatively affects household consumption, and there exists obviously different responses to labor income uncertainty from three perspectives: between old households and young households, among different households whose household heads are in different occupations, and between households whose household heads work in the State-owned Units and their counterparts. / The third essay then attempts to explore the determinants of housing wealth and housing price by a hedonic pricing model and evaluate the housing wealth effect on household consumption behavior. For the determinants of housing wealth and housing price, this essay demonstrates that incomplete property rights depress the value of housing asset by both a theoretical model and the empirical results. Regarding housing wealth's effect on household consumption behavior, the empirical results show that the housing wealth effect is significant and that it is obviously smaller for those observations whose houses' property rights are incomplete, compared with their counterparts. / Zhou, Shaojie. / "August 2007." / Advisers: Jun Sen Zhang; Hong bin Li. / Source: Dissertation Abstracts International, Volume: 69-02, Section: A, page: 0704. / Thesis (Ph.D.)--Chinese University of Hong Kong, 2007. / Includes bibliographical references (p. 219-222). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. [Ann Arbor, MI] : ProQuest Information and Learning, [200-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. Ann Arbor, MI : ProQuest dissertations and theses, [200-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstract in English and Chinese. / School code: 1307.

This dissertation explores different aspects of the interaction between money and asset prices. The first chapter investigates how a firm’s financing affects its decision to update prices: does linking interest rates to inflation alter the firm’s optimal price updating strategy? Building on the state dependent pricing models of Willis (2000) and the price indexing literature of Azariadis and Cooper (1985) and Freeman and Tabellini (1998), this model investigates the financing and price updating decisions of a representative firm facing state-dependent pricing and a cash-in-advance constraint. The model shows the circumstances under which a firm’s financing decision affects its price updating decision, and how the likelihood of changing prices affects the amount borrowed. It also illustrates how the use of nominal (as opposed to inflation-linked) interest rates leads to a lower frequency of price updating and higher profits overall for a firm facing menu costs and sticky prices. The second chapter extends the bank run literature to present a theoretical mechanism that explains how money supply can affect asset prices and asset price volatility. In a two period asset allocation model, agents faced with uncertainty cannot perfectly allocate assets ex-ante. After income shocks are revealed, they will be willing to pay a premium over the future fundamental value for an asset in order to consume in the current period. The size of this premium is directly affected by the supply of money relative to the asset. This paper explores the relationship between economy-wide monetary liquidity on the mean and variance of equity returns and in relation to market liquidity. At an index level, I test the impact of money-based liquidity measures against existing measures of market liquidity. I proceed to do a stock level analysis of liquidity following Pastor and Stambaugh (2003). The results indicated that measures of aggregate money supply are able to match several of the observed relationships in stock return data much better than market liquidity. At an individual stock level, monetary liquidity is a priced factor for individual stocks. Taken together, these papers support the idea that changes in the money supply have consequences for the real economy. / text

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This dissertation uses original datasets from the U.S. and Japan to explore issues in spatial economics and public finance. In the first chapter, I study how the relocation of inventors affects local and aggregate growth through technological diffusion across U.S. cities. I propose a quantitative spatial theory of growth and knowledge diffusion through internal migration. My model highlights two mechanisms by which productivity growth can be higher in one city than in another: (1) agglomeration forces and (2) knowledge inflows through internal migration. Using data on US cities, I find that knowledge diffusion explains approximately 40 percent of the spatial variation in productivity changes, and agglomeration forces explain the rest. I quantify the dynamic effects of place-based policies and find that reducing the costs of migrating to a small number of cities can improve aggregate efficiency while reducing disparities in productivity across cities. Growing spatial inequality has led policymakers to enact tax breaks to attract corporate investment and jobs to economically peripheral regions. In the second chapter, co-authored with Cameron LaPoint, we demonstrate the importance of multi-plant firms’ physical capital structure for the take-up and efficacy of place-based policies by studying a national bonus depreciation scheme in Japan which altered the relative cost of capital across locations, offering high-tech manufacturers immediate cost deductions from their corporate income tax bill. Combining corporate balance sheets with a registry containing investment by plant location and asset type, we find the policy generated big gains in employment and investment in building construction and in machines at pre-existing production sites, with an implied partial equilibrium fiscal cost per job created of $16,000. The policy produced a welfare gain of $56.72 billion, or roughly 40% of one year’s worth of average annual corporate profits. For eligible firms, plant-level hiring in ineligible areas outstripped that in eligible areas, suggesting reallocation of resources within firms’ internal capital and labor markets mitigates the spatial misallocation inherent in subsidizing low-productivity areas. How governments should choose the frequency of payments has received little attention in the literature on the optimal design of benefits programs. In the third chapter, co-authored with Cameron LaPoint, we propose a simple model in which the government chooses the interval length between payments, subject to a tradeoff between the costs of providing more frequent benefits and welfare gains from mitigating consumption non-smoothing. Using a high-frequency retail dataset that links consumers to their purchase history, we apply the model to the Japanese National Pension System. Our evidence suggests suboptimal intra-cycle consumption patterns with negligible retailer price discrimination. Model calibrations support the worldwide prevalence of monthly payment systems.

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This dissertation consists of three independent essays. We briefly introduce these essays in chapter 1 and leave a comprehensive introduction to each essay. Chapter 2 considers a vertically separated industry where production takes time and vertical mergers shorten production time. We investigate the impact of vertical mergers on the downstream firms' ability to collude and show that vertical mergers facilitate downstream collusion. Chapter 3 provides a theoretical foundation for a puzzling empirical observation that advertising follows an inverted U shape for some new products. Chapter 4 analyzes an incumbent's response to a competitive entry. We show that if the quality of the entrant is uncertain, the incumbent can "jam" the quality signalling of the entrant. Finally, chapter 5 summarizes main conclusions of three essays. / text

Scale invariance, collective behaviours and structural reorganization are crucial for portfolio management (portfolio composition, hedging, alternative definition of risk, etc.). This lack of any characteristic scale and such elaborated behaviours find their origin in the theory of complex systems. There are several mechanisms which generate scale invariance but maximum entropy models are able to explain both scale invariance and collective behaviours.<p>The study of the structure and collective modes of financial markets attracts more and more attention. It has been shown that some agent based models are able to reproduce some stylized facts. Despite their partial success, there is still the problem of rules design. In this work, we used a statistical inverse approach to model the structure and co-movements in financial markets. Inverse models restrict the number of assumptions. We found that a pairwise maximum entropy model is consistent with the data and is able to describe the complex structure of financial systems. We considered the existence of a critical state which is linked to how the market processes information, how it responds to exogenous inputs and how its structure changes. The considered data sets did not reveal a persistent critical state but rather oscillations between order and disorder.<p>In this framework, we also showed that the collective modes are mostly dominated by pairwise co-movements and that univariate models are not good candidates to model crashes. The analysis also suggests a genuine adaptive process since both the maximum variance of the log-likelihood and the accuracy of the predictive scheme vary through time. This approach may provide some clue to crash precursors and may provide highlights on how a shock spreads in a financial network and if it will lead to a crash. The natural continuation of the present work could be the study of such a mechanism. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

Indiana University-Purdue University Indianapolis (IUPUI) / Accurate estimation of alcohol price elasticity is important for policy analysis – e.g.., determining optimal taxes and projecting revenues generated from proposed tax changes. Several approaches to specifying and estimating the price elasticity of demand for alcohol can be found in the literature. There are two keys to policy-relevant specification and estimation of alcohol price elasticity. First, the underlying demand model should take account of alcohol consumption decisions at the extensive margin – i.e., individuals' decisions to drink or not – because the price of alcohol may impact the drinking initiation decision and one's decision to drink is likely to be structurally different from how much they drink if they decide to do so (the intensive margin). Secondly, the modeling of alcohol demand elasticity should yield both theoretical and empirical results that are causally interpretable. The elasticity estimates obtained from the existing two-part model takes into account the extensive margin, but are not causally interpretable. The elasticity estimates obtained using aggregate-level models, however, are causally interpretable, but do not explicitly take into account the extensive margin. There currently exists no specification and estimation method for alcohol price elasticity that both accommodates the extensive margin and is causally interpretable. I explore additional sources of bias in the extant approaches to elasticity specification and estimation: 1) the use of logged (vs. nominal) alcohol prices; and 2) implementation of unnecessarily restrictive assumptions underlying the conventional two-part model. I propose a new approach to elasticity specification and estimation that covers the two key requirements for policy relevance and remedies all such biases. I find evidence of substantial divergence between the new and extant methods using both simulated and the real data. Such differences are profound when placed in the context of alcohol tax revenue generation.