This dissertation investigates the effects of changes in technologies and trade-related policies on income inequality. The first chapter shows that an advancement in labor saving technologies, known as automation, raises the agglomeration of economic activity in large cities and increases wage inequality across regions. I show novel stylized facts about the relationship between city size and the routineness of tasks performed by workers. I develop a general equilibrium model of a spatial economy where automation affects the type of tasks performed by workers and is related to a firm's choice of production location. The model generates several predictions that are consistent with stylized facts and existing empirical evidence: larger cities have greater agglomerations of firms and grow larger when firms can automate more tasks in the production process. The model predicts that an increase in automation raises wage dispersion between larger and smaller cities. A 20% rise in automation increases wages in the top decile of largest cities by about 8% and lowers wages in smaller cities by about 2-8% and hence widens the wage gap by about 10 to 16 %.
The second chapter investigates the effect of exchange rate volatility on the intensive and extensive margin of trade, and on income inequality within a country. It finds that the greater volatility in exchange rates lowers trade margins and income inequality. I derive testable predictions regarding the impact of exchange rate volatility on trade margins at the firm level and on income distribution at the industry level. I empirically test these predictions using firm-level microdata. Empirical results provide clear support in favor of the model's predictions about the effects of volatility on trade margins.
Finally, in the third chapter, my coauthors and I investigate the effect of Bangladesh’s graduation from Least Developed Country (LDC) status on the price of insulin, an essential medicine for diabetes, and on households’ welfare and poverty. We find that upon Bangladesh’s graduation from LDC status, the price of insulin could rise as much as 11 times the current price for patented insulin if an unregulated monopoly is allowed. This would significantly reduce welfare and increase the incidence of poverty for households with members suffering from diabetes.
| Identifer | oai:union.ndltd.org:bu.edu/oai:open.bu.edu:2144/45288 |
| Date | 28 October 2022 |
| Creators | Islam, Md. Deen |
| Contributors | Garetto, Stefania |
| Source Sets | Boston University |
| Language | en_US |
| Detected Language | English |
| Type | Thesis/Dissertation |
| Rights | Attribution 4.0 International, http://creativecommons.org/licenses/by/4.0/ |
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