Economics - Theses, Dissertations, and other Required Graduate Degree Essays

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Essays in economic prehistory

Author: 
Date created: 
2021-04-16
Abstract: 

This thesis consists of three papers that explore early human organization. In the first paper I argue that the economic and social structure of early humans would have resulted in an especially difficult consanguinity problem. In particular, adverse selection in the exogamous marriage market would have resulted in high levels of consanguinity and resulting fitness depression. A partial solution to this problem was the evolution of aversion to endogamy, known as the Westermarck effect, and was essential for the survival of our species. The second paper (joint with Haiyun Chen) develops a model that explains linguistic diversity as the cumulative result of strategic incentives faced by linguistic groups. In this model, autonomous groups interact periodically in games that represent either cooperation, competition, or a lack of interaction. Common language facilitates cooperation such as trade, whereas language unique to one group affords that group an advantage in competitive interactions. The relative frequency of cooperation and conflict in a region provides incentives for each group to modify their own language, and therefore leads to changes in linguistic diversity over time. Our model predicts that higher frequency of conflict relative to cooperation will increase a region's linguistic diversity. The third paper (joint with Gregory K. Dow and Clyde G. Reed) investigates the incidence of early warfare among foragers and farmers in prehistory. Our focus is specifically on conflict over land. Food is produced using inputs of labor and land, and the probability of victory in a conflict depends on relative group sizes. The group sizes are determined by individual migration and Malthusian population dynamics. Both factors result in larger populations at better sites, which deters attack. There are two necessary conditions for warfare: high enough individual mobility costs and large enough shocks to the relative productivities of the sites. Together, these conditions are sufficient. In particular, technological or environmental shocks that alter the productivities of sites can trigger warfare, but only if individual agents do not change sites in response. These results are consistent with evidence from archaeology and anthropology.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Arthur Robson
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.

Experimental methodology and its applications in economics

Author: 
Date created: 
2021-03-24
Abstract: 

This dissertation explores and applies experimental methods in economics. The first two chapters deal with the methodology of lab experiments, while the third presents a study on mobility apps. In the first chapter, I examine deliberating groups in a jury-like setting where subjects have private information and an opportunity to discuss it before a vote. The study uses a belief elicitation mechanism to incentivize subjects to truthfully report their beliefs both before and after they deliberate, allowing for the measurement of the change in beliefs. I find that deliberation tends to reduce the average error in beliefs, measured as the difference between the belief and the true outcome. The basic experiment follows past deliberation experiments in the literature. It features an abstract setting with private signals in the form of a randomly drawn red or blue ball. To test whether the results are generalizable, I replicated this experiment in a framed setting where subjects read the evidence from a real murder trial. I found no difference between the results of the experiments in these two different settings. The second chapter investigates the use of reinforcement methods in lab experiment instructions. We experimentally compare how methods of delivering and reinforcing experiment instructions impact subjects' comprehension and retention of payoff-relevant information. We find combinations of reinforcement methods that can eliminate half of non money-maximizing behaviour, and we find that we can induce a similar reduction via enhancements to the content of instructions. Residual non money-maximizing behaviour suggests this may be an important source of noise in experimental studies. The third chapter diverges from lab experiments to study Mobility as a Service (MaaS). We test whether a multimodal route-planning service caused users to use combined routes featuring both ride hailing and transit. We find that ride-hailing trips connected with rail stops increased from 3.0% of trips to 5.5% among existing users. In areas where the feature supported bus connections, trips connecting to bus stops increased from 4.6% to 8.7% among existing users.

Document type: 
Thesis
File(s): 
Supervisor(s): 
David Freeman
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.

Essays in instrumental variables estimators

Author: 
Date created: 
2020-04-08
Abstract: 

This PhD thesis focuses on instrumental variable models. Often, econometric models are based on orthogonality conditions used to estimate parameters of interest. The literature on such models is vast, and numerous approaches have provided consistent and asymptotically normal estimators. The three chapters presented here consider different models featuring moment conditions that are estimated. In particular, it is aimed to study the finite performances of various estimators in different contexts, in order to provide guidelines on which procedure to select according to the problem at hand. The first chapter considers Euler equations, fundamental equation in dynamic stochastic macroeconomic models. I solve a generic stochastic growth model and use its solutions to generate samples in order to study the performances of moment based estimators. The second chapter studies the widely used linear model in a context where the variable of interest is endogenous. Given one has a valid instrument that satisfies the conditional moment restriction, many different estimators can be used based on the linear projection of the endogenous variable on the instrument, and transformations of it. I propose an approximate Mean Squared Error (MSE) criterion function to minimize over a set of transformations supplied by the researcher and show it is asymptotically optimal in the sense that the true MSE of the estimator using the optimal number of transformations converges in probability towards the minimum of the true MSE over the set of transformations proposed. In a simulation study, I show the competitive performance of this estimator compared to a variety of estimators used in the literature. I find that it proves particularly competitive when the degree of endogeneity is low, and when the relationship between the endogenous variable and the instrument is highly nonlinear. In other settings, its performance is roughly equivalent to that of the Two Stage Least Squares (2SLS) estimator. In the last chapter, I propose another alternative to instrumental variable estimators that considers the use of kernel based estimators when regressing the endogenous variable on the instruments. I show the resulting estimator is consistent and asymptotically normal, and includes the 2SLS estimator as a special case. Similarly to the second chapter, a simulation study is conducted to show its finite sample behavior.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Bertille Antoine
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.

Three essays in applied microeconomics

Author: 
Date created: 
2020-04-02
Abstract: 

In chapter one, Dr. Hendrik Wolff and I examine the effect of an Alabama immigration law on documented immigrants. Alabama's 2011 immigration law (H.B. 56) specifically targets, significantly limits the economic opportunities of, and intensifies the prosecution of undocumented immigrants. Using demographic and citizenship data we test whether the law has led to an unintended reduction of the documented immigrant population of the state. Our hypothesis is that documented immigrants will choose not to locate in Alabama, due to their connections with undocumented immigrants who choose not to live in Alabama because of HB.56. Using synthetic control on data from 2006-2017, we find a significant downward effect on the percentage of the population that is foreign-born non-citizens, and no effect of the law on immigrant citizens. Using data measuring new permanent residents we see no effect on new PRs after the passage of H.B 56. This suggests that the drop in Alabama's immigrant population is likely due to the intended effect of the law discouraging undocumented immigrants from living in Alabama, and that there does not seem to be a similar effect on documented immigrants. In chapter two, Dr. Eric Werker and I estimate community benefits stemming from the signing of benefit sharing agreements associated with two mining projects. Benefit-sharing agreements determine how resource extraction companies and stakeholder communities share the economic rents created by extractive activities. Besides direct financial compensation, BSAs can include preferential access to contracting opportunities for local firms, guarantees of direct employment for local individuals, and other benefits that can be economically quantified. This paper seeks to demonstrate that BSAs can be quantitatively modeled by estimating the expected size of benefits from two BSAs: the Newmont Ahafo gold mine in Ghana, and the Baffinland iron mine in Nunavut, Canada. We compare the levels of expected BSA benefits to a counterfactual scenario in which we imagine the companies carry out their extractive activities in the absence of signing a BSA and estimate the relative contribution from each of financial transfers, jobs, and contracting opportunities. We find that in the Ahafo case the impacted community's discounted benefits from the BSA amount to 1.08\% of the estimated life-of-mine revenue and 2.10\% in the Mary River case, with the primary contributions coming from jobs and financial transfers respectively. Quantifying potential BSA benefits can have practical value for future BSA negotiations and for monitoring the implementation of agreements. In chapter three Dr. Eric Werker and I use a newly created dataset to test hypotheses about what determines the government "take" of gold mining operations worldwide. We define government take as the share of net revenue of a mine collected by the mine's host country government in taxes and other payments. We construct a theoretical model to predict the government take, and then use linear regression to test the agreement between theory and the data. Investment decision theory predicts that governments should decrease their tax rate on mining operations to compensate multinational corporate investors for increased local development costs and political risks. However, higher political risk, and local development requirements are actually associated with higher government take. We find that country-level political economy variables have more predictive power in explaining the patterns determining the government take than the basic investment theory model. We interpret this as evidence that the conventional wisdom surrounding mining investment decisions is incomplete, and that political economy channels may have a role to play in describing the underlying process of determining government take of mining projects.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Hendrik Wolff
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.

To Schumpeter or not to Schumpeter, That is the Endogenous Growth Question: An Empirical Approach to Post-Soviet Countries

Author: 
Date created: 
2020-04-14
Abstract: 

This paper examines three empirical predictions of the Schumpeterian endogenous growth theory (1) the positive relation between innovation and growth rate, (2) the inverted U-shape relationship between competition and innovation, and (3) the positive effect of industry R&D spread on R&D investment. I examine the case of 10 Post-Soviet countries over the period 1996-2016. My analysis considers both aggregate and firm-level data while using a panel data methodology with fixed effects approach. My findings provide evidence of a positive relation of R&D investment, a measure of innovation, with growth. Meanwhile, there also appears to be a "stepping on toes" effect on growth with the R&D share, a measure of innovation commonly used in the theoretical literature. I find no evidence of an inverted-U relation at the industry-level. Instead, I find a positive relation between the industry spread of R&D investment and the firm's own investment. This finding suggests catching-up decisions by laggard firms and continued investment by lead firms.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Fernando Aragon
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) M.A.

Three essays on occupational choice, financial market frictions, learning and dynamic incentives

Author: 
Date created: 
2019-07-29
Abstract: 

This thesis consists of three essays studying the ramifications of financial market frictions. The first two chapters focus on occupational choices in the presence of learning and market frictions (credit constraints and weak enforcement respectively). A common theme of the second and third chapters is strategic default and dynamic incentives in a microfinance market. In the first chapter, I develop a dynamic occupational choice model combining financial constraints with learning, i.e. the exploration of the agent’s own entrepreneurial ability. The occupational choice is between entrepreneurship and a fixed-wage job. What I find is that, if learning does take place, financial constraints not only postpones entrepreneurship, but also cause a long-run effect in reducing the number of entrepreneurs in the economy. In other words, learning perpetuates the welfare loss caused by borrowing constraints. Using PSID data, I find evidence consistent with learning. The observed business entry and exit patterns cannot be explained by borrowing constraints alone, but can be explained by my model with both borrowing constraints and learning. In the second chapter, I investigate the impact of loan enforcement on the experimenting time of the micro-entrepreneurs who rely on loans for their working capital in each period, and the impact on their expected lifetime payoff. Like in the first paper, I assume agents learn their entrepreneurial abilities by running business projects. I find that experimentation is less with default possibility than without. Besides, the possibility to default strategically leads to a lower expected lifetime payoff. In the third chapter, I analyze the efficacy of dynamic incentives. Shapiro (2015) points out an inherent fragility of dynamic incentives in microfinance without collateral or long-term loans. He shows that the dynamic incentive mechanism unravels for all except a single value of initial beliefs. In this chapter I show that his concern is overcome by a small (yet crucial) modification of the environment by introducing any proportion of “commitment type” borrowers who never default by nature. I prove that all inefficient equilibria in Shapiro’s model are ruled out by adding an infinitesimal proportion of commitment-type borrowers. Moreover, a unique efficient equilibrium exists. In the unique equilibrium the loan terms become more favourable over time, and the proportion of non-defaulters converges to one.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Alexander Karaivanov
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.

Three essays on the economics of family ties

Author: 
Date created: 
2019-07-10
Abstract: 

The thesis includes three chapters on the economics of family ties. In chapter 2, I examine the effect of kin ties beyond family—measured by cousin marriage rates—on institutional quality of societies—measured by corruption index. We show that higher cousin marriage rates are associated with higher corruption level. We also use historical measures and instrumental estimation method to provide some causal evidence. In chapter 3, we provide evidence from bribery experiments in three countries (Canada, Iran, and Ecuador) to show that strong family ties facilitate nepotistic relationships at the expense of strangers. In chapter 4, using individual-level data from the United States, I examine the effect of age at leaving parental home on future incomes. Late emancipation of young adults is considered as an important consequence of stronger family ties, with important economic implications for within- and across-countries. I show that late emancipation is associated with lower future incomes among American youths. Controlling for individual unobservables, the results suggest that the relationship might be causal.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Simon Woodcock
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.

Essays on firm-level distortions and aggregate productivity

Author: 
Date created: 
2019-06-25
Abstract: 

The development economics literature assigns a significant role to productivity in explaining the differences in standards of living across countries. This thesis studies the role that firm-level distortionary policies can have on productivity and revisits the empirical significance of productivity differences across countries. The first paper of this thesis (Chapter 1) develops a theory to quantify the impact of distortionary policies on aggregate productivity. I use firm-level data to measure the degrees of allocation and selection inefficiencies across countries in different levels of development. The results show that there are more severe selection distortions in developing economies where as documented in the literature, a greater level of misallocation is observed as well. Furthermore, I find that almost the entire gap in the output per-worker between rich and poor countries can be eliminated by removing the inefficiencies caused by such distortionary policies where approximately half of the effect can be attributed to the selection margin. The second paper of this thesis (Chapter 2) proposes a theoretical method to disentangle the role that different channels play in creating misallocation. Higher levels of measured misallocation can be explained by distortionary policies as well as more severe adjustment costs of capital formation in developing economies. Using data from the manufacturing firms in the US and China, I identify the role of these two channels in each country. I find that the adjustment costs play a minor role and it is the distortionary policies underlying Chapter 1 that are responsible for the most of the measured misallocation observed in both countries. The last paper of this thesis (Chapter 3) is centered around an empirical question: To what extent does productivity explain the differences in standards of living across countries? The difficulty in measurement of human and physical capital at the country level has led to drastically different answers to this question in previous work. In this paper, I use firm-level data to estimate productivity at the firm-level and use it to construct a measure of productivity at the country level. The results show that less than 55% of the income differences across countries can be explained by differences in productivity.

Document type: 
Thesis
File(s): 
Supervisor(s): 
John Knowles
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.

Testing for structural change in AR(1) models with wavelets

Author: 
Date created: 
2019-04-11
Abstract: 

This paper develops a new procedure to test the changes in the autocorrelation structure of an AR(1) process by constructing a test statistic of cumulative sum (CUSUM) of squares based on a specific frequency decomposition of the variance using the maximal overlap discrete wavelet transformation (MODWT). The wavelet approach is appealing since it is based directly on the different behavior of the spectra of autoregressive processes with different coefficients. A feasible version of the test and the empirical quantiles of the test statistic are given. We demonstrate the size and power properties of the proposed test through Monte Carlo simulations.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Bertille Antoine
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) M.A.

Three essays on applying structure analysis in financial econometrics

Author: 
Date created: 
2018-11-23
Abstract: 

This thesis is composed of three essays on applying different structure analyses in financial econometrics. The first chapter, entitled "Application of Wavelet-based Structures in Time-Series Index Forecasting", is based on a joined work with Ramazan Gencay and M. Ege Yazgan, which is published in Economics Letters in 2017. This essay explores the potential of wavelet-based multiresolution analysis in forecasting. A hierarchical structure for a single time series index is defined and estimated in frequency domain, based on which a forecast combination technique is applied to achieve an improvement in forecast accuracy. The second chapter, entitled "Application of Network Structures in Stock Return Volatility Forecasting", is based on a joined work with Xiao Yu and Ramazan Gencay. This essay explores the potential of network analysis in forecasting stock return volatility. A customer and supplier network structure is identified and incorporated in the usual reduced form stock return volatility model. Results show that there is a propagation dynamic of stock return volatility along supply chain, and incorporating customer channel improves the accuracy of volatility forecasting. The third chapter, entitled "Application of Network Structures in Mutual Fund Performance Forecasting", is based on a joined work with Ramazan Gencay, which is published in Singapore Economic Review in 2018. This essay explores the relationship between mutual fund performance persistence and the network structure of mutual funds. By constructing a network of mutual funds based on the commonality of their stock holdings, we can identify mutual funds that are more likely to possess momentum in performance.

Document type: 
Thesis
File(s): 
Supervisor(s): 
Ramazan Gencay
Department: 
Arts & Social Sciences: Department of Economics
Thesis type: 
(Thesis) Ph.D.